How Much Money Do You Need This Year?
Posted 01-02-2009 at 05:35 PM by Debbie Songster
2009 a brand-new year. I remember when 2008 started I couldn't wait for the year to end. And now that 2009 is here it seems like 2008 went by so fast.
We always look forward to a new year starting, so we can start fresh. What have you done to start off 2009 right?
Have you created or modified your business plan for this year? If you have an online business creating a plan is really necessary. For most people though, creating the plan is the hardest part of the job. The first thing you can do when creating your plan is to figure out exactly how much money you want to make. Start with your yearly figure and then break it down into how much you have to make per month to reach that yearly figure. After you know how much you need to make each month break that down further into a daily figure.
Let's take an example.
If I want to make $150,000 a year. I take that amount and divide by 12 which gives me $12,500. I take the $12,500 and divide that by 31 days - that equals $403. So to make $150,000 a year I would need to make $403 every single day to reach that goal.
(actually if you want to be precise divide the year by 365 days and you get $411 per day)
Now have you thought about what you're selling? Let's face it you're not going to make any money unless you're selling something. So to get our goal of $403 per day obviously we need to be selling something. As much as we'd like it to it's certainly not going to fall out of the sky.
Let's look at some of the things that we can sell to achieve our $403 per day goal.
Information products are a good choice because there's low investment in the product. Unlike physical products, information products are created once but sold over and over again. You might invest hundred dollars creating an e-book and after the first few sales to recoup your investment the rest is pure profit.
Physical products on the other hand, come with built-in expenses. Each item you buy has to be marked up in price to give you a profit. Physical products have to be inventoried which means investing money to have stock on hand. Your profit margins are lower with physical products as well.
You could drop ship your physical products but your profit margins are even lower than if you carry them in inventory. Most drop shippers will charge an extra fee per address to process the order for you. The benefit is not having to invest your own money in inventory and risk having it just sit there. Waiting for it to be sold.
Affiliate products are a good choice. There is no upfront investment needed and you don't have to deal with customer support. The challenge is finding good products to promote that have a decent commission attached to them. Once again you can sell physical products as an affiliate but the commissions are only about 10% to 15%.
Software, membership programs, and e-books make good affiliate products to promote.
So let's look at our $403 per day goal. If we were to sell an e-book as an affiliate and the average e-book price was $47, and the commission rate was 50% we would have to sell 17 e-books to reach our daily goal. If the commission rate on that $47 e-book was 70% we would only have to sell 12 to reach our goal.
12 to 17 e-books per day is an ambitious goal. This is where having multiple streams of income is valuable. Sales with any product will fluctuate so it's not smart to put all our hopes of sales on one product. Multiple websites with multiple products is what's needed to comfortably reach that $403 per day goal. Now there are more ways to make money on a website then promoting a product but products are going to be the bulk of your income.
Obviously we're talking a gross figure not a net figure at hundred $150,000 per year. We haven't factored in any expenses but that's the beauty of doing an online business - our expenses are usually minimal. Unless you get into PPC and that's a whole different ballgame.
So, have you figured out how much you need per year to be happy making a living online?
We always look forward to a new year starting, so we can start fresh. What have you done to start off 2009 right?
Have you created or modified your business plan for this year? If you have an online business creating a plan is really necessary. For most people though, creating the plan is the hardest part of the job. The first thing you can do when creating your plan is to figure out exactly how much money you want to make. Start with your yearly figure and then break it down into how much you have to make per month to reach that yearly figure. After you know how much you need to make each month break that down further into a daily figure.
Let's take an example.
If I want to make $150,000 a year. I take that amount and divide by 12 which gives me $12,500. I take the $12,500 and divide that by 31 days - that equals $403. So to make $150,000 a year I would need to make $403 every single day to reach that goal.
(actually if you want to be precise divide the year by 365 days and you get $411 per day)
Now have you thought about what you're selling? Let's face it you're not going to make any money unless you're selling something. So to get our goal of $403 per day obviously we need to be selling something. As much as we'd like it to it's certainly not going to fall out of the sky.
Let's look at some of the things that we can sell to achieve our $403 per day goal.
Information products are a good choice because there's low investment in the product. Unlike physical products, information products are created once but sold over and over again. You might invest hundred dollars creating an e-book and after the first few sales to recoup your investment the rest is pure profit.
Physical products on the other hand, come with built-in expenses. Each item you buy has to be marked up in price to give you a profit. Physical products have to be inventoried which means investing money to have stock on hand. Your profit margins are lower with physical products as well.
You could drop ship your physical products but your profit margins are even lower than if you carry them in inventory. Most drop shippers will charge an extra fee per address to process the order for you. The benefit is not having to invest your own money in inventory and risk having it just sit there. Waiting for it to be sold.
Affiliate products are a good choice. There is no upfront investment needed and you don't have to deal with customer support. The challenge is finding good products to promote that have a decent commission attached to them. Once again you can sell physical products as an affiliate but the commissions are only about 10% to 15%.
Software, membership programs, and e-books make good affiliate products to promote.
So let's look at our $403 per day goal. If we were to sell an e-book as an affiliate and the average e-book price was $47, and the commission rate was 50% we would have to sell 17 e-books to reach our daily goal. If the commission rate on that $47 e-book was 70% we would only have to sell 12 to reach our goal.
12 to 17 e-books per day is an ambitious goal. This is where having multiple streams of income is valuable. Sales with any product will fluctuate so it's not smart to put all our hopes of sales on one product. Multiple websites with multiple products is what's needed to comfortably reach that $403 per day goal. Now there are more ways to make money on a website then promoting a product but products are going to be the bulk of your income.
Obviously we're talking a gross figure not a net figure at hundred $150,000 per year. We haven't factored in any expenses but that's the beauty of doing an online business - our expenses are usually minimal. Unless you get into PPC and that's a whole different ballgame.
So, have you figured out how much you need per year to be happy making a living online?
Total Comments 0
