[2013] Making cash building websites offline. Best of all. Offering them free!

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darune123 14 years ago

Reading through all the post, it seemed that something was implied, but not really mentioned:

Customers pay for solutions.

Whether it is free websites with upgrades, additional upsells, hosting, etc. . . .

Customer want solutions to their problems, and getting found online and traffic to customers is the end result.

In 2013 I want to focus on providing customer solutions, not offers. With that in mind I know my offline and online business will grow.
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Monkeh

14 years ago

Ahhh, good idea. Build your own hosting get paid directly. Thank you for that.

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bluecoyotemedia

14 years ago

always words of wisdom from I am nameless

I always find certain truths to most of the posts you make

and I appreciate you taking time out to do this

eddie

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TheCG

14 years ago

Hostgator has a reputation for finding ways to deny referral payments.

Alot of work to "maybe" get paid.

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ckbank 14 years ago

Yes, but providing a service for free will increase your conversion rate dramatically.
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Now that's what I call Guerrilla Marketing.
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- iAmNameLess 14 years ago
  
  Originally Posted by ckbank
  
  Yes, but providing a service for free will increase your conversion rate dramatically.
  
  In theory.
  
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  ckbank 14 years ago
  
  Originally Posted by iAmNameLess
  
  In theory.
  
  Everything is in theory until action is taken. But, I do have one question. Which hosting companies would allow a person to do this? As far as I know, most of them don't allow incentives and a free website would be considered an incentive. Reseller account maybe? But I have no idea how reseller hosting works.
  
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  Now that's what I call Guerrilla Marketing.
  
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mydream247

14 years ago

Yes, but what price do you value your time? Giving away sites, and charging 5.00 per month hosting, makes more since to charge 9.95 setup, and 5.00 month "hosting special". 9.95 is still great deal, and anyone who will buy will know this price is cheap, free means freebie seekers, and headache customers.

Good luck.

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Monkeh

14 years ago

I think offering them free is the hook. Vistaprint does it. 250 free business cards, don't think it'd be that much of a headache if a successful company is using the free strategy.

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14 years ago

Originally Posted by Monkeh

I think offering them free is the hook. Vistaprint does it. 250 free business cards, don't think it'd be that much of a headache if a successful company is using the free strategy.

You don't have Venture Capitalists firms funding you. Nobody wants a crappy free site. People want something that provides value to them. Why would a business waste time on a website if it isn't going to bring them more business? Trust me... it isn't a hook. And they AREN'T using the "free" strategy.. they have recurring income and services that cost quite a bit of money. You will see.

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DABK

14 years ago

Ever done anything with vistaprint?

Yup, 250 are free, except you have to give them your contact info, so they can market to you properly, sell you an additional 1k cards, envelopes, etc. Plus, they have many, little ways of making the order be $40 or more, while the 250 original cards are free.

Plus, their setup allows them to spend a lot less on the free stuff than you do when creating a free site.

Free can be an awesome marketing tool, if you know how to use it.

Originally Posted by Monkeh

I think offering them free is the hook. Vistaprint does it. 250 free business cards, don't think it'd be that much of a headache if a successful company is using the free strategy.

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knewedge

14 years ago

In Dan's example you would make $62,400 in year 2 doing absolutely nothing though.

Just wanted to point out the exponential growth in hosting since it is a recurring income.

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14 years ago

Originally Posted by knewedge

In Dan's example you would make $62,400 in year 2 doing absolutely nothing though.

Just wanted to point out the exponential growth in hosting since it is a recurring income.

You believe it is doing absolutely nothing? Insanity...

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14 years ago

Originally Posted by knewedge

In Dan's example you would make $62,400 in year 2 doing absolutely nothing though.

Just wanted to point out the exponential growth in hosting since it is a recurring income.

Your math is off.

3 customers per day = 60 per month for 12 months. That is 720 hosting customers.

$20/month for hosting = $14,400 per month = $172,800 per year.

My problem is that the customer service aspect and fees associate with this business model will seriously eat into profits. You cannot service 720 customers as a one man show in a local business environment.

To scale to this size, you need much more infrastructure.

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Joe Mobley

14 years ago

Pat Flynn makes over US$20,000 per month as an affiliate for Bluehost.com.

Go here,

My Monthly Income Report - November 2012

Scroll down a little. Look under Affiliate Earnings. For Novenber, 2012 his Bluehost.com affiliate earnings were US$23,850.

Is this the only hosting model to follow? - Nope.
Is this the best hosting model for you? - Depends on you.
Can this be lucrative? - Looks like it.

You can see other monthly income reports here,

My Income Reports

Joe Mobley

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14 years ago

Originally Posted by Joe Mobley

Pat Flynn makes over US$20,000 per month as an affiliate for Bluehost.com.

Go here,

My Monthly Income Report - November 2012

Scroll down a little. Look under Affiliate Earnings. For Novenber, 2012 his Bluehost.com affiliate earnings were US$23,850.

Is this the only hosting model to follow? - Nope.
Is this the best hosting model for you? - Depends on you.
Can this be lucrative? - Looks like it.

You can see other monthly income reports here,

My Income Reports

Joe Mobley

He absolutely does, agree.

The difference is, Pat Flynn does 0 work setting up or maintaining the sites he earns that commission. Plus, he has a MASSIVE amount of loyal followers, myself included.

Totally diferent scenario here.

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Gabby12

13 years ago

Originally Posted by Dan McCoy

My problem is that the customer service aspect and fees associate with this business model will seriously eat into profits. You cannot service 720 customers as a one man show in a local business environment.

To scale to this size, you need much more infrastructure.

I believe that this is why many prefer to use the affiliate model. Use the free site as a lead in to upsells and the $100 sign-up. There is no tech support to worry about. Many of us are 1 man shows and several hundred hosting customers could be a nightmare. Let hostgator deal with that.
I see the main benefit of this model as being the upsell factor, there are many who have had success.
Also not everyone needs to scale to 14k month and are satisfied with more modest earnings.

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webdave

14 years ago

Hostgator sells reseller accounts where each customer you sell to will get their own cpanel login. The key to making money giving sites away is by upselling things like seo, videos, etc.

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pmarketing

14 years ago

iAmNameLess is right- you cannot do the same business model as "big guys" do. Take a mailchimp for example. They are offering free email marketing for customers with up to 2000 contacts. But- did they start business that way, by offering free service? Hell no! They became THE MAILCHIMP first, and then started the "freemium" business model.

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pmarketing

14 years ago

Just get a resellers account, or better yet-get the dedicated server and host your clients there.

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mrjosco

14 years ago

If you get them to pay the recurring hosting fee directly to you - at whatever price you can negotiate for monthly hosting - then I am not as 'down' on the idea as others. Truth is, you are selling them hosting with a special benefit - free web design. Free doesn't have to be 'crappy', because it is free. Just get a developer license on some nice and sharp wordpress themes.

The truth is, if you are upgrading a way outdated (think one long page, frames, etc) to a nice sleek look for "free", but provide the hosting, then you are actually getting a monthly income customer that you should be able to keep with an incredibly high retention rate that could easily hit 95%.

Which means that one customer, with their "free" website could result your average customer generating over $160 in revenue. And that is just by charging $9.99 a month with no set up fee.

Of course, that revenue is over 3 years and is far less valuable than $160 today - but a couple hours work for $160? Sounds good to me.

Not to mention you also build a base of customers that allow you a quick and easy access to new customers. You can upsell a wide range of services, based on the industry of your customers, that include SEO, Facebook Page Creation, Direct Mail Marketing, etc. that can be done for one time fees or recurring fees.

These business owners, if treated well, can also refer you to more customers than you can handle.

So the business model isn't broken. The idea of using Hostgator referral program for your income is a little silly - but using a hosting reseller account and selling the monthly hosting can be very lucrative.

And it isn't really a dangerous waste of time. For instance - Let us say you spend 2 hours creating a website for a restaurant to offer for 'free' and they back out or don't like the offer or love their hosting company or whatever. So what? You now have a predesigned website to sell to other restaurant prospects that can be customized in just a few minutes.

But, like any opportunity, it isn't easy. The more customers you get - the more time you have to spend taking care of them.

And to get the customers, you have to bust your butt and do a lot of cold calls and cold walk-ins. Ouch.

People talk about how 'freebie' seeking customers are difficult to deal with. I have news for you: All types of customers are difficult to deal with. It is called having and running your own business. It has lots of upsides, but it can also be a pain in the arse.

Of course, I don't necessarily suggest starting with a price of $9.99 per month - and if you are giving a website away for free when you could be selling it for $99 and then getting the hosting on the back end, then you are throwing money out the window.

And despite what some here are saying about how sure they are and how they know which method works best - they don't. Because they aren't you and your prospects aren't theirs. The best way to work would be to try both.

See how many people you can close with a $99 website vs a free website. See how many of the $99 website people buy hosting on the back end and what their retention rate is vs free website customers. See how $99 customers act when 'upsold' other services vs the 'free' hosting only customers and determine which set of customers have a higher value for the amount of effort.

You may find what people are saying is true. You may find they are blowing smoke. They don't know anymore than you do until YOU test it with YOUR prospects.

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14 years ago

Originally Posted by Monkeh

Sometime ago someone told me they were making websites banking at around 8k a month. I was impressed, but it's a very tedious job designing to meet your clients specifications. He told me he cared very little about design, because he offered his sites for FREE...obvious question, how the heck do you make 8k then?

He said he was an affiliate for Hostgator. So what he did was post signs and flyers offering free websites, he would then tell them they have to pay for their own hosting, which is incredibly cheap $4 dollars what-not and his upsell was charging them 20 dollars if they wanted modifications. 8k a month, told me it kept him busy on the weekends. So I thought I'd pass this along to you guys. Maybe you can add some twists that we can do to make this even more profitable? I'd appreciate your input. Let's start 2013 right!

The math here should tell you something. Maybe I'm misreading this, and the monthly profit is more, but I see $20 a month. To get to $8,000 per month recurring, you need 400 regular clients.

What if, instead, you could provide a more value added service for $250 profit per month? Then you would need 32 clients. Or a really needed service, like a full service marketing and business growth program, at $1,000 profit per month, and find 8 exclusive clients to get thar same $8,000 per month.

So, what if, like the previous poster says, you sort I'd use the website as a loss leader or way in?

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mrjosco

14 years ago

Originally Posted by Daniel LaRusso

The math here should tell you something. Maybe I'm misreading this, and the monthly profit is more, but I see $20 a month. To get to $8,000 per month recurring, you need 400 regular clients.

What if, instead, you could provide a more value added service for $250 profit per month? Then you would need 32 clients. Or a really needed service, like a full service marketing and business growth program, at $1,000 profit per month, and find 8 exclusive clients to get thar same $8,000 per month.

So, what if, like the previous poster says, you sort I'd use the website as a loss leader or way in?

Or, why don't you just sell one product for $8,000 a month?

I get the point you and these other 'experts' are trying to make. Heck, it would be nice if I could design a single website and sell it for $1,000,000. Then I only have to do one job!

But there are major flaws in the theory. First, every dollar of price increase reduces your prospects. It also increases the level of your competition.

Lower pool of potential clients and higher pool of more talented competitors. Those are barriers to entry. They also usually coincide with other barriers - such as bigger competitors with larger reach and greater economies of scale. That means you can turn your $50 investment into a $50 profit. They, however, can make the same profit with a $5 investment.

A classic (and now dead) example is video rental shops. A mom and pop would pay $60 for a movie with rights to rent it out. They would be able to rent that video for $5 a day. Blockbuster would pay $5 for that same video with that same right (because they purchased many, many more) and they would rent that same video out for $5.99 per day. It is no wonder that Blockbuster killed the mom and pop and redbox killed Blockbuster.

These same situations translate to all areas of business. The amount of skill and resources you need increases in proportion to the level of service and pricing you are seeking. At really high levels you can't even produce the value all on your own - you would need partners. Which makes even more barriers to entry.

Look, I have run a few businesses. I have had some modest success and some major failures. But one thing, both in offline and online world, is I have never found it difficult to give something away for free. Never. Heck - Try the experiment that Oprah did years ago. Take a jar and fill it with rocks. Place a sign on the jar that says "FREE ROCKS". People will stuff rocks in their pockets, even though all they are doing is creating an inconvenience (heavier pockets) when doing so.

But don't just take my word for it. Thousands of companies have used "free" - from all industries with all sizes. Adobe lets users have a free, fully functional trial of all of their software. Often times this is for software that costs hundreds of dollars per license. Why give a free trial? Because FREE works.

Or look at the world of apps. Almost all app developers - whether large mega corporations or individual app creators, follow a similar model. They have a 'free version' of their app that either offers a 'paid' version for more functionality or they offer 'upsells' within the application.

Of course, I bet the warriors responding on this forum would laugh at their model? I can see it now:

"Pffft. Why be so STUPID as to offer a FREE app and try to upsell a 5.99 version when you could just make one app and sell it to a bank for $10,000,000 dollars! What a stupid idea."

So stupid it has worked for millions of businesses in all industries with all models with incredible success.

Heck, my current industry - which is a complex business to business service in a nearly perfectly competitive business market - uses a 'free' consultation as a hook. The free consultation is very similar to the same consultation we have given to major corporations for $100,000. Yet, we give it away for free to small independent run businesses. Why? Because there are only so many corporations in our market that are willing to pay $100,000 for it. So we give it away for free and offer value in some of our back end services that create long term customers.

But of course, that is silly. We should stop all this foolish marketing to smaller clients and live or die on the $100k consultation, right?

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14 years ago

Originally Posted by mrjosco

Or, why don't you just sell one product for $8,000 a month?

I get the point you and these other 'experts' are trying to make. Heck, it would be nice if I could design a single website and sell it for $1,000,000. Then I only have to do one job!

But there are major flaws in the theory. First, every dollar of price increase reduces your prospects. It also increases the level of your competition.

Lower pool of potential clients and higher pool of more talented competitors. Those are barriers to entry. They also usually coincide with other barriers - such as bigger competitors with larger reach and greater economies of scale. That means you can turn your $50 investment into a $50 profit. They, however, can make the same profit with a $5 investment.

A classic (and now dead) example is video rental shops. A mom and pop would pay $60 for a movie with rights to rent it out. They would be able to rent that video for $5 a day. Blockbuster would pay $5 for that same video with that same right (because they purchased many, many more) and they would rent that same video out for $5.99 per day. It is no wonder that Blockbuster killed the mom and pop and redbox killed Blockbuster.

These same situations translate to all areas of business. The amount of skill and resources you need increases in proportion to the level of service and pricing you are seeking. At really high levels you can't even produce the value all on your own - you would need partners. Which makes even more barriers to entry.

Look, I have run a few businesses. I have had some modest success and some major failures. But one thing, both in offline and online world, is I have never found it difficult to give something away for free. Never. Heck - Try the experiment that Oprah did years ago. Take a jar and fill it with rocks. Place a sign on the jar that says "FREE ROCKS". People will stuff rocks in their pockets, even though all they are doing is creating an inconvenience (heavier pockets) when doing so.

But don't just take my word for it. Thousands of companies have used "free" - from all industries with all sizes. Adobe lets users have a free, fully functional trial of all of their software. Often times this is for software that costs hundreds of dollars per license. Why give a free trial? Because FREE works.

Or look at the world of apps. Almost all app developers - whether large mega corporations or individual app creators, follow a similar model. They have a 'free version' of their app that either offers a 'paid' version for more functionality or they offer 'upsells' within the application.

Of course, I bet the warriors responding on this forum would laugh at their model? I can see it now:

"Pffft. Why be so STUPID as to offer a FREE app and try to upsell a 5.99 version when you could just make one app and sell it to a bank for $10,000,000 dollars! What a stupid idea."

So stupid it has worked for millions of businesses in all industries with all models with incredible success.

Heck, my current industry - which is a complex business to business service in a nearly perfectly competitive business market - uses a 'free' consultation as a hook. The free consultation is very similar to the same consultation we have given to major corporations for $100,000. Yet, we give it away for free to small independent run businesses. Why? Because there are only so many corporations in our market that are willing to pay $100,000 for it. So we give it away for free and offer value in some of our back end services that create long term customers.

But of course, that is silly. We should stop all this foolish marketing to smaller clients and live or die on the $100k consultation, right?

All I'm hearing is blah blah blah because everything you're mentioning is completely irrelevant to this thread and misguided at best. A free quote, free consultation, completely different than a free website in exchange for a "MAYBE" on the hosting actually being credited to you through an affiliate program. It is pure idiocy to suggest that the model being mentioned is good... or even average because it is not.

NOW... your free trial line, is something they can do because the program is already made.

Nobody is going to give VC funding to a company that is giving away free websites. (Which is and has been required by many major companies who have a free model)

Not everybody is supposed to be your customer. Can't imagine scaling that up either.

You also say,

But there are major flaws in the theory. First, every dollar of price increase reduces your prospects. It also increases the level of your competition.

There are no flaws in the theory because it isn't theory, it is reality. It is what I do every single day.

My best advice to the OP, since he won't listen to experience, is to go out and try it. See how this free model works, and see if you even get 50% of the people you sign up to actually be cleared by hostgator in 2-3 months.

I sell to people who use DIY website programs, people who have been built free websites, and they simply don't value it. If their business isn't successful enough to pay, then they aren't worth my time.

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mrjosco

14 years ago

Originally Posted by iAmNameLess

All I'm hearing is blah blah blah because everything you're mentioning is completely irrelevant to this thread and misguided at best. A free quote, free consultation, completely different than a free website in exchange for a "MAYBE" on the hosting actually being credited to you through an affiliate program. It is pure idiocy to suggest that the model being mentioned is good... or even average because it is not.

NOW... your free trial line, is something they can do because the program is already made.

Nobody is going to give VC funding to a company that is giving away free websites. (Which is and has been required by many major companies who have a free model)

Not everybody is supposed to be your customer. Can't imagine scaling that up either.

You also say,

There are no flaws in the theory because it isn't theory, it is reality. It is what I do every single day.

My best advice to the OP, since he won't listen to experience, is to go out and try it. See how this free model works, and see if you even get 50% of the people you sign up to actually be cleared by hostgator in 2-3 months.

I sell to people who use DIY website programs, people who have been built free websites, and they simply don't value it. If their business isn't successful enough to pay, then they aren't worth my time.

If you read what I say, you would note I said NOT to use hostgator referral, but to charge them directly.

Of course you have to remove head from butt, dismount high horse and read the whole thread.

I think you have a lot of good points - but you fall to the same stupid mentality many others do. That is the mentality of "What I do works, therefore it is the only and best way".

I have no question what you do works. I hope it continues to work and you make buckets of money. But it is not the only way that works and it is not necessarily the best way.

And you seem to think making a 'free' website is difficult. With the right tools you can make a sleek, professional website that is a massive improvement to a business's current website (if they even have one) and you can do it in less than an hour using the tools available.

We aren't suggesting he do a $10,000 custom design with custom graphics. We are suggesting that an 'entry level' free website that provides better value than the businesses current website be exchanged for them using his hosting services -which, btw, can be acquired at about the same hosting cost the business is currently paying.

And the 'free website' model with selling hosting has been used by hundreds (if not thousands) of people who are making pretty good money. It is also reality.

Tip to improve your input: Just because what you do works, doesn't mean it is the only thing that works. It also doesn't mean it is the BEST way. In fact, the best way will be very different for everybody as we all have different talents, resources and target markets.

Originally Posted by iAmNameLess

There are no flaws in the theory because it isn't theory, it is reality. It is what I do every single day.
.

Actually, there are flaws in the theory. I pointed them out pretty clearly. You do make a very valid point though with your clear "well, I say different" rebuttal. Thank you for that great input.

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14 years ago

Originally Posted by mrjosco

And you seem to think making a 'free' website is difficult. With the right tools you can make a sleek, professional website that is a massive improvement to a business's current website (if they even have one) and you can do it in less than an hour using the tools available.

This is my problem, right here.

You are out prospecting and you land two or even three free clients a day. You had to prospect several hours to land them. Let's just be generous and say it took three hours to get three clients.

And now by the time you get pics together, deal with talking to the customer, support issues, emailing, copying, pasting, creating, you are in at least another hour.

Sure, there are tools available that would allow you to put together a site in under and hour if you have everything, I mean everything fully worked out in advance. But on average, this ain't gonna happen and you will have other issues that eat up time.

At the very, very minimum you are in 2.5 hours by the time you handle billing and setup. So, you are looking at about 8 hours per day running at maximum efficiency, no interruptions, no hiccups, to do those three customers.

For a commission to HostGator - nope. Not even close to worth it. This comes out to about $1200 a month MAX.

To charge direct hosting? Let's say you charge them $20 a month. If you are a closing BEAST and get three a day NO MATTER WHAT five days per week, you have 15 the first week, you have $1200 by the end of month one. $2400 by the end of month two. At then end of 12 months you have $14,400 a month.

Sounds great! But we ALL know that closing three per day, every day, aint gonna happen. That would be 720 websites per year! Most people would run out of prospects and creative ways to find more leads.

To make this happen, there needs to be some sort of large media campaign, which eats into the profits big time. It eats into design time big time. It eats into setup time big time. Not to mention customer service issues, bandwidth charges, outsourcing costs, business admin etc etc.

This model might work if you want to profit $35k (being generous) by the end of the year, but I sincerely doubt anyone here is looking to work full time, deal with the hassles for 35k. It ain't a perfect world, and that business model is totally flawed.

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bluecoyotemedia

14 years ago

Originally Posted by Dan McCoy

This is my problem, right here.

You are out prospecting and you land two or even three free clients a day. You had to prospect several hours to land them. Let's just be generous and say it took three hours to get three clients.

And now by the time you get pics together, deal with talking to the customer, support issues, emailing, copying, pasting, creating, you are in at least another hour.

Sure, there are tools available that would allow you to put together a site in under and hour if you have everything, I mean everything fully worked out in advance. But on average, this ain't gonna happen and you will have other issues that eat up time.

At the very, very minimum you are in 2.5 hours by the time you handle billing and setup. So, you are looking at about 8 hours per day running at maximum efficiency, no interruptions, no hiccups, to do those three customers.

For a commission to HostGator - nope. Not even close to worth it. This comes out to about $1200 a month MAX.

To charge direct hosting? Let's say you charge them $20 a month. If you are a closing BEAST and get three a day NO MATTER WHAT five days per week, you have 15 the first week, you have $1200 by the end of month one. $2400 by the end of month two. At then end of 12 months you have $14,400 a month.

Sounds great! But we ALL know that closing three per day, every day, aint gonna happen. That would be 720 websites per year! Most people would run out of prospects and creative ways to find more leads.

To make this happen, there needs to be some sort of large media campaign, which eats into the profits big time. It eats into design time big time. It eats into setup time big time. Not to mention customer service issues, bandwidth charges, outsourcing costs, business admin etc etc.

This model might work if you want to profit $35k (being generous) by the end of the year, but I sincerely doubt anyone here is looking to work full time, deal with the hassles for 35k. It ain't a perfect world, and that business model is totally flawed.

Dan

the free model works. absolutely.

last year I was involved ina project ( ended my part because of partner issues)

before I left we were close to 200 clients and we were charging $57 bucks per month which included

any updates wordpress etc
minor edits and revisions with focus on the word minor
business class hosting. sounds good right

just using a reseller account with hostine and each client was on separate ip address.

we had 4 fulltime web people on payroll paying each $800 per month
we always start with templates and build from there
we included complete site, mobile site, and a simple info app ( using skybuilder)

there was a very good reason why we gave these to the lucky 100 business owners and this made very good sense to them. ( please do not ask)

we drafted thier account monthly using check by phone recurring

and this is scalable. each designer could handle doing 2 sites per day. one doing copy and one doing follow up customer service

all customer support for the free sites clients was ticket support only.

now if your a one man show.. and you have no money then the free route will be a grind and unscalable.

you need some infrastructure because its all about acquisition and attrition.

the reason we went with free also makes it alot easier to find salespeople so your not depended on some hot shot sales guy.. you can plug in lower tier people to do the initial.

now the profit margin increases exponentially when i follow up to sell additional services. SEO, video marketing lead gen.

I would follow up with our current customers and would offer additional services and a quick tip is to keep these sales totally separate from the recurring hosting.

we did not mingle recurring so if I signed up a new seo client and we charged $2500.. and $995 per month we would send them monthly invoices manually.

since we have a relationship and we actually delivered a really nice value

that eliminates the hardest part and made the upsells alot simpler.

I am sure these guys are up to at least 400 clients and from the looks of it customers are generally staying for at least 12 months before they start to fall off for whatever reason. and here is a general observation

when I say fall off its not that they call and want to cancel its because something happens.. they change banks, new owners, go out of business.. etc

the goal is to get them all into the recurring revenue model so we can charge thier checking accounts.

here is what I have found and this is from my actual real experience .
the business owner usually is the one that writes the checks. but from that point and onward his book keeper is the one that does the books.

so once the initial recurring check draft clears and the book keeper asks the owner what is this and he replies its for the internet company.. that's it.. he will never ask again and the recurring checks will just keep on recurring

this was the 2nd time this has been confirmed because I used to deal with restaurants in the 90's and it was the same thing.

now that I have some seed capital I am going to replicate this model again for this year.

eddie

[ 2 ] Thanks
3 replies

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14 years ago

Originally Posted by bluecoyotemedia

now if your a one man show.. and you have no money then the free route will be a grind and unscalable.

you need some infrastructure because its all about acquisition and attrition.

Thanks Eddie. I agree completely with all of your points and the part I quoted above is exactly I was trying to say.

Thanks

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flnz400

14 years ago

This sounds good to me in theory, but I'm wondering how much time it actually takes to prospect those 200... How do you get paid for that? Or afford to pay someone without bleeding red for months?

It seems like an awful lot of time would be spent acquiring 2 a day for 20 days a month...all for 12 month retention @ $57 with nothing on the front end?

(Maybe I'm missing something, but I'm thinking spend less time prospecting, close two 5k web design deals or similar, and do less work for the same money no?)

Btw, my intent is not to challenge you directly or be a dick... I really want to understand this because I love the idea of diversification of small backed payments. I can see how you build momentum, but I'm not seeing how the initial acquisition phase is pheasible.

My issue is that anytime I've ever done anything free, "helped someone out", "discount for non profits", nothing up front because time are tough and I support local blah blah blah, etc... It's always turned out to be a pain in the ass in one way or another compared to clients I charge a premium. (Dont value my time, take 3 weeks to get you photos/site details, aren't invested themselves, cumbersome to work with...this is not your experience???)

Make sense or am I just not getting it?

Originally Posted by bluecoyotemedia

Dan

the free model works. absolutely.

last year I was involved ina project ( ended my part because of partner issues)

before I left we were close to 200 clients and we were charging $57 bucks per month which included

any updates wordpress etc
minor edits and revisions with focus on the word minor
business class hosting. sounds good right

just using a reseller account with hostine and each client was on separate ip address.

we had 4 fulltime web people on payroll paying each $800 per month
we always start with templates and build from there
we included complete site, mobile site, and a simple info app ( using skybuilder)

there was a very good reason why we gave these to the lucky 100 business owners and this made very good sense to them. ( please do not ask)

we drafted thier account monthly using check by phone recurring

and this is scalable. each designer could handle doing 2 sites per day. one doing copy and one doing follow up customer service

all customer support for the free sites clients was ticket support only.

now if your a one man show.. and you have no money then the free route will be a grind and unscalable.

you need some infrastructure because its all about acquisition and attrition.

the reason we went with free also makes it alot easier to find salespeople so your not depended on some hot shot sales guy.. you can plug in lower tier people to do the initial.

now the profit margin increases exponentially when i follow up to sell additional services. SEO, video marketing lead gen.

I would follow up with our current customers and would offer additional services and a quick tip is to keep these sales totally separate from the recurring hosting.

we did not mingle recurring so if I signed up a new seo client and we charged $2500.. and $995 per month we would send them monthly invoices manually.

since we have a relationship and we actually delivered a really nice value

that eliminates the hardest part and made the upsells alot simpler.

I am sure these guys are up to at least 400 clients and from the looks of it customers are generally staying for at least 12 months before they start to fall off for whatever reason. and here is a general observation

when I say fall off its not that they call and want to cancel its because something happens.. they change banks, new owners, go out of business.. etc

the goal is to get them all into the recurring revenue model so we can charge thier checking accounts.

here is what I have found and this is from my actual real experience .
the business owner usually is the one that writes the checks. but from that point and onward his book keeper is the one that does the books.

so once the initial recurring check draft clears and the book keeper asks the owner what is this and he replies its for the internet company.. that's it.. he will never ask again and the recurring checks will just keep on recurring

this was the 2nd time this has been confirmed because I used to deal with restaurants in the 90's and it was the same thing.

now that I have some seed capital I am going to replicate this model again for this year.

eddie

Thanks
1 reply

{{ DiscussionBoard.errors[7570082].message }}

bluecoyotemedia

14 years ago

Originally Posted by flnz400

This sounds good to me in theory, but I'm wondering how much time it actually takes to prospect those 200... How do you get paid for that? Or afford to pay someone without bleeding red for months?

It seems like an awful lot of time would be spent acquiring 2 a day for 20 days a month...all for 12 month retention @ $57 with nothing on the front end?

(Maybe I'm missing something, but I'm thinking spend less time prospecting, close two 5k web design deals or similar, and do less work for the same money no?)

Btw, my intent is not to challenge you directly or be a dick... I really want to understand this because I love the idea of diversification of small backed payments. I can see how you build momentum, but I'm not seeing how the initial acquisition phase is pheasible.

My issue is that anytime I've ever done anything free, "helped someone out", "discount for non profits", nothing up front because time are tough and I support local blah blah blah, etc... It's always turned out to be a pain in the ass in one way or another compared to clients I charge a premium. (Dont value my time, take 3 weeks to get you photos/site details, aren't invested themselves, cumbersome to work with...this is not your experience???)

Make sense or am I just not getting it?

I have a question

are you a salesperson... a web designer.. or a businessman???

btw

I should have also pointed out that there is a $57 first month deposit before we consider it a sale.

the times that it comes up as slight objection we explain that we are providing real world value here and we need to have some monetary commitment so not to deal with non serious businesses.

using a telemarketing company at the time that actually semi closed the initial and 2nd follow up with internal employee'

keep in mind I am out of the process 100%

I step in for the upsell additional services.

we broke even after 2nd month and from there the expenses hovers slightly as the cashflow grows.

and you can scale this model once you get your internal systems in place.

sure you can close 2 $5000 deals but... it's you who is doing the closing not some 2nd tier person.

so if your not selling then you have to replicate yourself. and let me tell you

really good salespeople know there shit and they also know thier value

that is the main problem.. I don't want to depend on any one individual and I would rather work on my business than in it.

if you have no money for infrastructure then this will be a grind and not scalable.

once I recreate this model I can just focus on testing new lead funnels to lower my telemarketing costs...

take a look at this diary of a startup.. great info and inside look on building a business with little cash $15000

Diary of Opening A New Business

pura vida

eddie

ps. you know there is an addiction like feeling when on the first of the month you click on a button and generate $20,000 of check drafts..

years ago I delt with restaurants with a similar recurring model

and I remember being back in that queens apartment on the first day of the month waking up in my underwear and printing those check drafts

I was doing this before it became known and I learn this method from the infamous Don Alm!!!! the business was menufax.

Thanks

Signature

Skunkworks: noun. informal.

A clandestine group operating without any external intervention or oversight. Such groups achieve significant breakthroughs rarely discussed in public because they operate "outside the box".
https://short-stuff.com/-Mjk0fDExOA==

{{ DiscussionBoard.errors[7570344].message }}

Scott Stevens

13 years ago

Originally Posted by bluecoyotemedia

Dan

the free model works. absolutely.

last year I was involved ina project ( ended my part because of partner issues)

before I left we were close to 200 clients and we were charging $57 bucks per month which included

any updates wordpress etc
minor edits and revisions with focus on the word minor
business class hosting. sounds good right

just using a reseller account with hostine and each client was on separate ip address.

we had 4 fulltime web people on payroll paying each $800 per month
we always start with templates and build from there
we included complete site, mobile site, and a simple info app ( using skybuilder)

there was a very good reason why we gave these to the lucky 100 business owners and this made very good sense to them. ( please do not ask)

we drafted thier account monthly using check by phone recurring

and this is scalable. each designer could handle doing 2 sites per day. one doing copy and one doing follow up customer service

all customer support for the free sites clients was ticket support only.

now if your a one man show.. and you have no money then the free route will be a grind and unscalable.

you need some infrastructure because its all about acquisition and attrition.

the reason we went with free also makes it alot easier to find salespeople so your not depended on some hot shot sales guy.. you can plug in lower tier people to do the initial.

now the profit margin increases exponentially when i follow up to sell additional services. SEO, video marketing lead gen.

I would follow up with our current customers and would offer additional services and a quick tip is to keep these sales totally separate from the recurring hosting.

we did not mingle recurring so if I signed up a new seo client and we charged $2500.. and $995 per month we would send them monthly invoices manually.

since we have a relationship and we actually delivered a really nice value

that eliminates the hardest part and made the upsells alot simpler.

I am sure these guys are up to at least 400 clients and from the looks of it customers are generally staying for at least 12 months before they start to fall off for whatever reason. and here is a general observation

when I say fall off its not that they call and want to cancel its because something happens.. they change banks, new owners, go out of business.. etc

the goal is to get them all into the recurring revenue model so we can charge thier checking accounts.

here is what I have found and this is from my actual real experience .
the business owner usually is the one that writes the checks. but from that point and onward his book keeper is the one that does the books.

so once the initial recurring check draft clears and the book keeper asks the owner what is this and he replies its for the internet company.. that's it.. he will never ask again and the recurring checks will just keep on recurring

this was the 2nd time this has been confirmed because I used to deal with restaurants in the 90's and it was the same thing.

now that I have some seed capital I am going to replicate this model again for this year.

eddie

Thanks for sharing your experiences. I see no reason why this model cannot be built as a one man show in the initial stages, slowly, and then scaled-up with more infrastructure over time.

Thanks

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14 years ago

Free is harder to give away than $500 is to sell.

Why not start with $500 websites, +hosting for $10/month and raise your design prices as you get more experience?

Are you afraid of selling or do you just not see your own value to the client? Get out there, stop planning your business, start meeting people and just tell them you can give them a brand new updated website for a very reasonable price.

You will see, it isn't as hard as you think.

[ 3 ] Thanks
2 replies

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kirbymarketingconcierge 14 years ago

be careful.

offering a freebie, and believing you're worthless.

or as Michael Gerber said "you are your business"

or as we know from sales training, books, and lectures - you're selling you.

did anybody catch Iamnameless's 1 liner?

priceless!

a guy walks into a bar......
- [ 1 ] Thanks
- 1 reply
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- kirbymarketingconcierge 14 years ago
  
  oh man. life teaches the best lessons.
  
  my cursor froze up.
  
  had to replace the batteries that I just replaced 3 weeks ago!
  
  and guess what?
  
  just checked and these were from the 99 cent store.
  
  maybe we do get what we pay for.
  
  [ 1 ] Thanks
  
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14 years ago

Originally Posted by Dan McCoy

Free is harder to give away than $500 is to sell.

I agree completely. The conversions really don't change much except that these people do not value quality and will not be returning customers when you raise your prices.

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1 reply

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14 years ago

Originally Posted by iAmNameLess

I agree completely. The conversions really don't change much except that these people do not value quality and will not be returning customers when you raise your prices.

I really value reading your comments, and have followed them for a good while. This thread, and particularly your comments, have opened my eyes about something that I've not even realized until now.

I really enjoy the thought of selling and the thought of making money from selling. Always have. But I've been undervaluing myself for a LONG time, and have been afraid to truly prospect for a long time. I'm talking decades, as I just realized.

I'm now 40 years old. When I was a kid, about 12 or 13, I mowed lawns for extra money. I got a few clients through referrals/word of mouth, but it didn't fill up my calendar like I wanted, so I had this idea. I'd go out door to door telling folks I cut grass, and that I have a unique approach. I don't have a set price. I'll do your lawn for you, and, when I'm through, after you inspect it, you pay me based on what you think it's worth and how good a job you think I did. Sounded brilliant to me. But I got nowhere with it, because it was AVOIDING true prospecting - going out there on my bike, knocking on those same doors, and asking if I could save them time by me cutting their lawn so the homeowners could go fishing or to the beach or whatever, and pay me $10 a week, or whatever.

My prospecting avoidance goes DEEP, I tell you.

The moral of the story, I guess, is, like IAmNameless and others have said time and time again. It doesn't matter how I feel about prospecting, having enough quality conversations with qualified prospects to learn about them and show them how I can provide value to them is what it's all about.

Easier said than done though.

Thanks again to the great bunch of folks on this forum, especially IamNameless

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flnz400

14 years ago

Sorry bud, but the math here doesn't add up. Netting $100/sign up per referral commish is 80 sites a month.

Who builds 20 websites a weekend in their free time?

Like others mentioned, zero recurring income on that workload would be nuts.

Disclaimer- if you mentioned you built an SAS script with templates and this was all automated, then ok you're on to something.

Thanks

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14 years ago

Whatever floats your boat bro. But the OP flat out said, the max monthly recurring is $20.

And its a LOT easier to get 400 or even 1,200 app downloads when you never have to actually talk to a prospect than it is to get 400 live clients.

Thanks

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CageyVet

14 years ago

So I have a hybrid of this business model going right now. I offer websites for a starting price of $495(goes up from there) and then offer a maintenance/hosting package for $25 a month or they can get their own hosting through a hosting company that I usually get an affiliate commission. The commissions are not 100% of the time due to various factors like they find a super cheap deal, free hosting they want to use or the conditions for the affiliate offer are not met.

The $495 gets the client a 5 page WordPress site which is chosen out of a pool of about 25 different themes. At this price point, I add their Logo, company name, contact info, 2 colour scheme of their choose and what they want the 5 pages to be titled. Then it is sent off to my outsourced WordPress monkey who completes it in 48 hours. The themes that I utilize for these websites are purchased themes from themeforest and some premium theme companies, so they are not crappy and fit the majority of the businesses that just want an new updated website just fine. Which is the market this system is going after, the business that needs a small brochure type website just to have an online presence.

The client decides on if they want my maintenance/hosting from my reseller account, get it from my preferred hosting provider or go it their own. My hosting/maintence is regular reseller hosting but I have an outsource person make sure plugins and wordpress is up to date plus backups are being sent to the cloud. This makes it so I can send the client an email every month with the work completed and a status report, which sometimes includes an upsell or other offer for services.

The system is quite simple and on 1 single client you make $700 for the year, which includes the expense of the reseller hosting and the outsourced work.

I only meet about half of the clients in person with this system during the entire website creation process. I do talk to about 80% of them on the phone or skype to get details or maybe upsell on a bigger website project.

There is NO REASON to go with any type of free model for this system because the clients that want something for free always want expect more than you are willing to offer or they are so cheap that the next step in your sales funnel after the free website is turned down to often. There are more than enough businesses that need a decent low cost website and love the idea someone is looking after the technical side of the website for them at a minimal cost.

Thanks

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msu

14 years ago

To those wondering how someone could put together 20 websites over a weekend, the answer is to use WordPress and a free theme (many of which very good).

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Joe Mobley

14 years ago

Originally Posted by Daniel LaRusso

Totally diferent scenario here.

I thought that different scenarios was (were?) what the OP was interested in.

Originally Posted by Monkeh

Maybe you can add some twists that we can do to make this even more profitable? I'd appreciate your input.

Joe Mobley

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club20coaching

14 years ago

LOL I give away free lead capture pages but not websites!!! I still get lots of good leads and don't have to put as much time into it.

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MarkJez 14 years ago

Originally Posted by club20coaching

LOL I give away free lead capture pages but not websites!!! I still get lots of good leads and don't have to put as much time into it.

Great idea! I love it If you offer a free website to a prospective client (and just charge $25 per mth hosting/maintenance fees) they may turn round and say Thanks, but I already have a website

However, if you offer them a "lead capture page" instead, I bet that at least 90% of prospective clients won't have one. Most may not realise they need one until we educate them otherwise.

Offering something for free to clients makes it massively easier to upsell them to high paying ticket items after you have gained their trust and gratitude with the freebie offer.

In addition, as mentioned above, the law of reciprocity normally kicks in automatically - and this can result in unexpected referrals and upsells.

I've read about entrepreneurs growing multi-million dollar businesses because they gave away something for free on the front-end, in order to create big profits on the back-end (Book source: Free by Chris Anderson 2009)
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mojo1 14 years ago

Originally Posted by club20coaching

LOL I give away free lead capture pages but not websites!!! I still get lots of good leads and don't have to put as much time into it.

Your post just solved a major problem for me as I was thinking about how to get ramped up without a major outlay of time and use the one page website templates I plan to use.

I will sell a low cost, or free one page sites (jury is out on this one) in exchange for hosting and was working on my pitch but the words "lead capture" instead of simply using the phrase "free website" to describe to cold calling prospects just leaped off the page and made it all make sense when I cold call this week.
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hellboy99

14 years ago

I've begun this idea just a while ago. Believe it or not, it does work. The great part about it is upsells and the law of reciprocity (they feel like they owe you.) Also, just because they're "free", you can charge them for any revisions.

Alot of them will say "I'm willing to pay to get it as I like". They key is to point out how much they're saving.

I say that I'm trying to expand my portfolio as a way to credit why its free. I set up an online form on my website that they could fill out and I use that information to whip together a clean, minimalistic website that has appeal and looks better that 50% of most websites, for a nominal cost. Then I make them pay through paypal.

I like the idea because you selling a "product" more that you are selling a service. Hope I make sense.

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Raineer

14 years ago

Went through all the posts and was a good read. Frankly, I am offering free websites to offline businesses but only for my portfolio. Once that's done, I'll be ready to charge premium and get them on hosting fee.

Thanks!

Thanks

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