Doing The Maths - No Wonder Niche Marketing Isn't Easy...

[Nick Brighton]

Hey folks,

Lord knows why, but I decided to attempt some maths on an early Sunday morning, to plan for some new expenses.

As a niche marketer, it's fair to say profit margins are always going to be fairly modest (depending on your niche) but after looking at some general sums I just did, it never dawned on me how small your profit margins can really be when you look at niche marketing as a business...

For example, here's a typical scenario:

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OUTGOINGS:

$97 for eZine Articles Platinum Account
$15 for domains and hosting (very modestly speaking!)
$120 for article outsourcing (for 20 x articles per month)
$67 for a membership (assuming you're a member of some sort of training/membership site)

Total outgoings: $299

(And that's for just one site, with 20 articles being written per month to keep up with the competition)

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Now, let's assume your single site makes a modest $150 per month. With just one site out there, you'll actually be down by -$149.

So, on to site two...

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Do the same sums from above, and let's unrealistically assume your 2nd site also makes $150 per month.

New outgoings: $419

(that includes the same flat fees of $179, plus another $120 for 20 more articles each month for your new site)

Total profit: -$119

(That's $300 earnings from both websites, minus your total $419 expenditure)
=======================================

Now let's add a 3rd site making $150 per month...

New outgoings: $539

(again, that includes the same usual fees of $179, plus another $120 for 20 more articles each month for your new site)

Total profit: $-89

(That's $450 earnings from all three sites, minus your $539 expenditure)

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As you can see, after 3 x sites being "reasonably promoted", each making $150 per month, you'd still be losing money.

The point is, that in order to be successful in any kind of marketing online, you need to do a few things:

1. Make sure each project covers your expenditure and that you profit from it, so that when you scale up, you won't lose money (or if you start out losing money, then at least you know how many sites you'll need to create to make a profit

2. Work out where the profit starts for each site, so that you know when to move on (or when to call it quits and try a different niche)

3. Plan for costs. For example, these sums don't even take into consideration PPC costs!

4. Know this from the start - is there sufficient buyers in your niche to get a good ROI on all these fancy tools, memberships, guides that you're paying for each month?

I know, I know, it's very possible to make more than $150 from each site per month - but I am posting this because myself included, I have been guilty of letting sites go stale before reaching decent profit margins (because I didn't work out the maths first).

I also know that in theory, the more sites you create, the more your profits will increase. That's great, but especially for newbies who spend 6 months creating 3 websites that generate a consistent $150 each per month, then it's easy to get discouraged if after 6 months, you're still $89 out of pocket, after spending approx $500 in promotion.

Just food for thought, that's all!

Kind regards,

Nick

P.S - This is also another reason why it's ESSENTIAL to build a list - because then you can begin to generate profits from each site waaaaaaaay beyond $150, over and over again!

[Kevin Williams]

Great read, although I could never bring myself to outsourcing articles - I love writing and don't trust other people. Still, thanks for showing the numbers in a concise way, kinda makes me glad I make money with CPA

[jlandells]

Hi Nick,

I think the problem is that newbies are encouraged to spend way too much when they first start! The EZA platinum account is not necessary to start with - especially with only 20 articles a month coming in! To be honest, for $120 I'd be tempted to outsource my article writing to a part-time VA in the Philippines where you'd probably get 40-50 each month. The extra articles could be used to generate additional content not just on EZA and hence drive more traffic to your site and bump your profits.

Finally, I'd encourage newbies not to tie themselves into a $67 monthly coaching program until they've absorbed everything that this (and other) forums have to offer, by which point they should be making more than the $67 profit each month,

Does that make sense?

Cheers,
-John.

[NicSennen]

Premium membership of EZA is not necessary, especially for newbies, so that's $97 a month you don't need to spend. (Platinum membership is free)

Outsourcing articles - also not necessary - write your own or rewrite plr. When I do outsource articles I pay $50 for 20 well-written 400/500 words.

Make free sites to start off with - squidoo, hubpages, blogger, weebly, yola etc. or just use cheap redirects to affiliate products (.info less than $1 and no need for hosting)

I do have a $33 a month membership, but could do without it.

Essential monthly spend for newbies = $0

[phil.wheatley]

Interesting post! Actually, when people want more money, they often forget that one quick way is to cut your outgoings! From time to time, I total up all the services and continuity programs I've signed up too and are normally shocked out how much I am spending!

Then, as mentioned by John, sign up for things as you need them, not all at once.

Phil

[mpruben]

My advice would be to run away from niche marketing and leave it to me

Seriously though, you don't need the EZA premium account, a regular platinum (free) account is fine. You don't need any sort of monthly membership, all the information you need is in these forums. You don't need to pay that much for articles. If you can't write your own articles, or edit cheap outsourcers writing, then go for a different business model.

Take away these two and you have a very different return.

I have plenty of niche sites where I've written a dozen decent quality articles then not touched them again. They are still making $150+ a month after two and three years.

[anomaly]

interesting post ...

you do make some good points although I do agree with the posters above too - certainly when i started off my only realistic expense was domains & hosting ... everything else I did by myself and essentially i still do ...

but where I think a good analogy with your post is time - many people don't factor in how much time they are putting in to make that $150 a month ... if you're doing 5 hours work a month, it's not too bad ... if you're working on it every single night, then you should be looking elsewhere ...

therefore definitely some form of cost / benefit analysis is definitely worthwhile

[Nick Brighton]

Great replies, and exactly my sentiments.

The point I really wanted to make was not in specific tools to use, or even specific costs, but in scalability and profit margins, and how some simple maths can tell you how much traffic, conversion rate and general sales you need to make for each site before you blindly hack away at each site.

Many people think that they'll be just fine writing for themselves, but often, their desired income will become capped after time if they refuse to outsource.

And whilst it's great not paying for premium services or specialist training, there's always a need to invest in your own business and marketing skills, and have an edge over the competition.

And the other point which someone else picked up on is time - many people don't have the time or energy to rewrite $2.50 articles, or get backlinks, or whatever.

As long as you're trading time for money, you'll remain trapped! When you work out a way to leverage other people's time and still take a good profit, well, then you're really in a business you can scale.

The beauty is, you can't really lose in internet marketing - as you can always sell your sites to investors!

[Ernest Frank]

Originally Posted by jlandells

Hi Nick,

I think the problem is that newbies are encouraged to spend way too much when they first start! The EZA platinum account is not necessary to start with - especially with only 20 articles a month coming in! To be honest, for $120 I'd be tempted to outsource my article writing to a part-time VA in the Philippines where you'd probably get 40-50 each month. The extra articles could be used to generate additional content not just on EZA and hence drive more traffic to your site and bump your profits.

Finally, I'd encourage newbies not to tie themselves into a $67 monthly coaching program until they've absorbed everything that this (and other) forums have to offer, by which point they should be making more than the $67 profit each month,

Does that make sense?

Cheers,
-John.

Hello,

Need your help.
Can you tell me where can I outsource to your mentioned "...part-time VA in the Philippines" ?

Thanks.

BR
EF

[TristanPerry]

An interesting post, and it's definitely worthwhile sitting down and planning out costs.

It is a business (even if you have a low turnover/income), hence you should be aware of your costs.

However for just 20 articles per month, I don't think it'd be worth outsourcing them nor buying the premium EZA subscription. Some of your costs are somewhat liberal, which I'll look at below:

20 articles per month is under one per day. And for article marketing, you only need to write around 300 words. And a 300-word article can be written in perhaps 5 minutes.

Thus outsourcing for under 5 minutes per day (over a month, for 20 articles) seems a tad silly to me.

Especially since you're suggesting to pay $6 per article which is $0.02 per word - for article marketing this is a bit high. I know you can pay $0.10 per word or higher for the best writers out there, but for article marketing you can pay $0.01 per word and still get a good enough article. Even if it contains a few grammar mistakes, this can be fixed easily enough.

So that $120/month expensive is a tad too high and for less than 5 minutes per day I'd personally do it myself.

The premium EZA subscription also isn't a necessity since you'd be submitting less than one article per day. Would be better to simply get to platinum (or even basic/basic plus) and keep submitting. Then, after a week or so, you'll be getting one article per day approved and live - thus one backlink per day no matter whether you are free or paid.

I've never used a membership course but $67 per month? There's a heck of a lot of free information here and I'd suggest to pay for a one-off book rather than paying over $800 per year in membership fees.

So yeah, to me I'd list the costs as the following:

~$100 for a one-off payment for a good quality book (am guessing at the price there, admittedly) which can then be used over and over again, saving a significant amount per month and per site in the short-medium (and beyond) term.

$8 per year for a domain name at Moniker.com - which is $0.67 per month per site.

~$15 per month for a reseller hosting account, which can host all your sites (so if you had, say, 15 sites, this would just be $1 per month per site)

So whilst your post is an interesting one and you are right that costs will scale up, it's easy to get into this without paying much per month.

Buy an eBook which outlines everything that needs to be done, and count this as an initial investment.

The only other cost is $0.67 per month ($8/year) for domains and around $15 (total) per month for any number of sites (within reason) that you host.

So your monthly expenses per site could be around $1 (if you had 15 sites to share the hosting costs around), instead of the ~$300 that you predict.

But yours is an interesting idea and you are completely right that this is a business hence you need to do your costs.

[Hamida Harland]

As a niche marketer, it's fair to say profit margins are always going to be fairly modest (depending on your niche) but after looking at some general sums I just did, it never dawned on me how small your profit margins can really be when you look at niche marketing as a business...

I disagree - I find my profits are pretty good when it comes to niche marketing. I wouldn't keep a site unless it was making over $1000 a month (I don't use PPC either). My expenses are pretty much what you detailed except I also subscribe to SENuke and outsource stuff like link building, directory submissions etc.

I also know that in theory, the more sites you create, the more your profits will increase.

Maybe, but I've halved my workload since I cut down the amount of sites I kept - I used to have 30-50 sites at any one time (each making $300+), however I've sold most of the smaller earners in just the last few months and kept about 8 sites. Each of these I'm now concentrating on properly, building a list etc, and each makes over $1000 (my best makes over $5000 a month). For me, the less sites I have the more my profits are increasing.

[Liam Hamer]

When I started getting heavily into article marketing a couple of months ago, I decided I would only get a Premium account when I was making at least 4 times as much as the cost each month. I'm not as yet, so I'm happy with my Platinum membership. I think most people are capable of writing 20 articles in a month, I would only outsource if I really didn't feel capable of writing that many, or I wanted more than 20 so I could dedicate my time to other things. As for the membership site - Warrior Forum membership is free, War Room membership is $37 one time payment. This place is a daily IM education all on it's own I personally don't think the amount of money you mentioned is necessary for most people, but I guess it all depends on a number of factors.

[bgmacaw]

Well, I have over 500 domains plus a good number of Blogger blogs in operation, most of them are niche marketing sites, and it doesn't cost me anywhere near that much per site. Most of these are based around Adsense, eBay or other affiliate or CPA offer along with a smaller number of digital product sales sites.

I don't outsource much, I prefer to do most of it myself since I've been doing software and web development along with project management for years. I do write my own programs and scripts to help me automate some things and I've bought some programs to help out too (thanks Big Mike).

Based on what you're saying it looks like you're thinking toward creating a niche authority site. This does get more expensive and time consuming, but, even then, you can use economy of scale and automation to bring the price down.

[ramone_johnny]

I run dozens of niche sites and basically run them all FREE. How on earth you managed to get those figures I have no idea?

Domains are dirt cheap - $7 a year.
Hosting is next to nothing $9.95 a month for unlimited sites.

Yeah, ok outsourcing articles costs money but, surely having articles written at $5 an article isnt worth complaining about???

At most, say you have 50 articles written per site, thats $250 plus $7 for hosting and depending upon how many sites you have hosted under the one account your expense here could be as low as a dollar or even less.

Thats say $260 total cost, and it then has ongoing earning potential 24/7, with running costs which are almost zero. Infact if you run adsense, you should be in profit for the year without even selling anything! Making sales is a bonus.

Unlike traditional business, internet business operational costs are almost zero, and earning potentials are unlimited. This in turn lowers risk.

If youre concerned about running costs of online business then youre obviously doing something very wrong.

[jlandells]

Originally Posted by Ernest Frank

Hello,

Need your help.
Can you tell me where can I outsource to your mentioned "...part-time VA in the Philippines" ?

Thanks.

BR
EF

Check the WSO forum - I think there was someone there offering this kind of service.

-John.