Okay.. lately I've been making some pretty good money designing and selling WordPress themes, but I want to push it and see how much money I can make with affiliate marketing.

Sorry if this is an extremely retarded question, but I've always wondered this and have yet to find an answer.

Basically I'm a bit confused on how building profitable email lists goes.

So I figure building a list with pay per click... say you pay $0.80 per click (I'm not sure if that's realistic or if you can easily achieve lower cost per click, not really sure how it all works) and you pay $1000 for 1250 people ($1000/.8 = 1250)

Say you're sending people from this ad to a landing page with an opt-in form which usually from what I heard converts anywhere from just a few percent to 60% or 70%, maybe even more not sure. Let's say it converts at 50%, just to be safe, and you get 625 signups onto your mailing list from spending $1000.

Also, from what I've heard, emails typically convert at around 1%-3%. So let's say I send an email to my 625 subscribers, promoting a $30 product, and 1% buys. That's only 6 people. So basically, I spent $1000 to get 625 subscribers, where I only make $180 back (6 subscribers * $30). So I just lost $820. It doesn't make sense.

How do people make money? Do they make profit by continuing to email these people more products until they've earned their money back and then some?

Or am I just completely wrong with all of this? Really been bugging me - any help/comments would be appreciated.