Is your venture worth the effort? Evaluating the effort needed to make $100.

Discussion in 'General Business' started by DigitalMatt, Aug 13, 2013.

  1. #1
    Hi all,
    I am new to the forum, but have already found an incredible amount of helpful resources. In the spirit of community, here is an interesting article I found that helps you estimate how much effort you need to exert in order to make $100. Is your new venture worth the effort?

    The author concludes:
    If you need 10,000+ visitors to make $100 then it’s most likely not worth it.
    If you need 1,000+ visitors (and less than 10,000) you have a tough road ahead of you but it’s doable.
    If you need fewer than 1,000 visitors then you’re in good shape.

    The full article with additional information can be found here!
    How much traffic do you need to earn $100?
    If you can’t make $100 from a website then it’s not worth spending 20+ hours building content, doing SEO, building back links, social media, etc.

    So you need to figure out approximately how many visitors you need to earn $100. I understand this is tricky to calculate so we’re going to make some estimations to get a ballpark figure i.e. do you need 100 visitors, 10,000 visitors, or 1 million visitors?

    4 Important Formulas

    Product Formula: (Use when you sell a product directly from your site)
    visitors = total_earnings / (earnings_per_sale * conversion_rate)

    Affiliate Formula (Use when you are an affiliate for product)
    visitors = total_earnings / (earnings_per_sale * affiliate_click_through_rate * conversion_rate)

    AdSense Formula
    visitors = total_earnings / (earnings_per_click * adsense_click_through_rate)

    Visitor Value Formula (How much is each visitor worth?)
    visitor_value = total_earnings / visitors

    Definitions:

    • total_earnings: How much do you want to make? For our examples we will use $100.
    • earnings_per_sale: The amount you earn from 1 sale i.e. $7.00
    • conversion_rate: If you have 100 visitors how many will buy your product? 0.02 means 2 out of 100 purchased.
    • affiliate_click_through_rate: If you have 100 visitors come to your site, how many will end up at the product’s sales page? 0.1 means 10 out 100.
    • earnings_per_click: How much does AdSense pay you when 1 visitor clicks on the AdSense ad? i.e. $0.10
    • adsense_click_through_rate: If you have 100 visitors how many will click on an AdSense ad? 0.07 means 7 out of 100
    Assumptions:
    Estimating conversion rates, click through rates, etc is hard so here are a few default numbers you can use in your calculations

    • conversion_rate: 0.01
    • affiliate_click_through_rate: 0.1
    • earnings_per_click: $0.05
    • adsense_click_through_rate: 0.05
    Many of you can achieve much better numbers than those listed above but I want to be conservative in my estimates.

    Example 1
    John sells a do-it-yourself car repair ebook on his website for $7 and has a 0.01 conversion rate. John will use the Product Formula to calculate how many visitors he needs to earn $100:

    visitors = $100 / ($7 * 0.01) => 1,429 visitors

    visitor_value = $100 / 1,429 => $0.07 per visitor

    Example 2
    Mary sells a video series on cat yodeling for $200 on her site and has a 0.01 conversion rate. Mary will use the Product Formula to calculate how many visitors she needs to earn $100:

    visitors = $100 / ($200 * 0.01) => 50 visitors

    visitor_value = $100 / 50 => $2 per visitor

    Example 3
    Cindy is an affiliate for the Learn Spanish Today audio series and earns $3 commission for each sale. Her affiliate_click_through_rate is 0.1 (10/100 website visitors click the link to the sales page). And the sales page has a conversion rate of 0.01. Cindy will use the Affiliate Formula to calculate how many visitors she needs to earn $100:

    visitors = $100 / ($3 * 0.1 * 0.01) => 33,333 visitors

    visitor_value = $100 / 33,333 => $0.003 per visitor (that’s 1/3 of a penny!)

    Example 4
    Tony runs Google AdSense ads on his game review site and earns $0.05 per click and has an adsense_click_through_rate of 0.05. Tony will use the AdSense Formula to calculate how many visitors he needs to earn $100:

    visitors = $100/ ($0.05 * 0.05) => 40,000 visitors

    visitor_value = $100 / 40,000 => $0.0025 per visitor (that’s 1/4 of a penny!)
     
    DigitalMatt, Aug 13, 2013 IP