If you’re planning to make enough money from your site/blog to support yourself or build a business around, you’re probably wondering what it will take to get there. I get questions from readers on a regular basis about how much time and effort and how many visitors are needed to start earning a living. It’s a common thing to want to know.
The good news is, it’s partially up to you how much traffic you’ll need to reach your income goals. There are many ways to go about supporting yourself online, and we’ll cover a few options here.
A Little Background
If you’ve read much of this blog, you probably know I’m a big fan of startups and lifestyle businesses. You’re not crazy for wanting to support yourself through an online business.
I’ve been working online myself over the past four years and absolutely love both the challenges and satisfaction that come from helping people through a web-based business and being rewarded for it.
However, I’ve learned that there are many different ways to earn revenue online, and the model you choose will affect how many visitors you need to earn enough to support yourself or your business.
“How many visitors do I need” is a question that can only be answered when we know how much revenue your site will earn per visitor, how many visitors will become customers, and how much revenue you’re trying to earn.
Approaches for Earning a Living from Your Website
Approach 1: build a site so massive you can attract advertisers.
When people first start thinking about earning a living online, advertising is usually the revenue source that comes to mind first. “I’ll just build a really popular site and then slap some ads on it” is the type of thing newbie entrepreneurs might think.
But here is the reality of online advertising. Advertising won’t pay you anything significant unless you attract massive traffic. And even when you have that massive traffic, the payout is probably much lower than you can earn through other revenue models.
Typical CPM rates (the amount an advertiser will pay you per thousand page views) might be around $5 or less, depending on the size of your site, your topic and your visitor’s demographics.
That means if you’re trying to earn just $5,000 per month, you would need over 1 million page views. Can you build your site’s traffic to that level? Sure, but it will take significant effort, and .I’d say $5k/month a pretty awful return for that effort.
Another thing to note about advertising is that it generally isn’t even an option for smaller sites. Advertisers want to reach a large audience, and they don’t deal much with sites which have less than 100k page views per month. Google Adsense and some other advertising networks will work with smaller sites, but the CPM rates tend to be lower.
Approach 2: forget about advertisers and maximize your value per visitor.
Let’s compare our $5k/month advertising example to other revenue models.
The three other most common revenue models online are: selling products, selling services and affiliate marketing. I assume you know what selling products and services is about, but maybe you’re new to the concept of affiliate marketing. Essentially, affiliate marketing is when another business pays you a commission for referring customers.
If you’re working to earn $5k/month, we also need to know how much revenue you’ll earn from each customer, and how many of your visitors will become customers.
Let’s take affiliate marketing as an example. Let’s say you represent an affiliate offer that meshes well with your site’s purpose, and that if you refer a customer to purchase that product you’ll earn a 50% commission on the $50 sale price. That’s $25 for every customer you refer. (this would be a common situation in affiliate marketing, btw)
So, you’ll need to make 5,000 / 25 = 200 sales per month to reach your $5k goal.
Next, you need to know how many visitors will end up purchasing the product you’re representing. This will depend largely on how you offer the product, and how relevant/helpful it is to your visitors.
For example, if you just slap up a 125×125 banner ad in your sidebar, you won’t get many sales per visitor. If you write a blog post about the offer, however, and include some useful information and a compelling reason why your visitors should buy the product, you’ll make a whole lot more sales.
So, let’s say you write a great post about your affiliate product, and that 25% of your visitors click through to the affiliate product’s page. Then, 1% of those visitors end up purchasing the product.
Are you with me here? Sorry for all the calculations, but this is the type of thing you want to think about when planning a revenue model.
Anyway, 1 / (1% x 25%) = 400. That means 1 out of 400 of your visitors will purchase the product, resulting in a $25 commission. To reach your goal of 200 sales, you would need 200 sales * 400 visitors per sale, or 80,000 visitors to view your offer.
Your “CPM” (or revenue per 1000 visitors, just to compare to our advertising example) is 25 / 400 * 1000 = $62.50 earned per 1000 visitors. If each visitor views 2 pages on your site on average, we need to further divide by 2 for comparison (CPM is measured in terms of page views, not visitors). That would make your “comparative CPM” $31.25. That’s more than 6 times better than our advertising example.
These are simple back-of-the envelope calculations, and your actual results could be better or worse. In my experience with affiliate marketing, I’ve had results as good as $500 per 1000 visitors for a well-targeted product to a very specific audience.
A More Realistic Example
In reality, your revenue model will probably be more sophisticated than offering one single affiliate product to your audience. Instead, you might mix a combination of affiliate marketing, selling your own products and offering some services. You could even mix in some advertising if it makes sense.
In that case, you should be able to improve further on our affiliate marketing example by a significant margin. A freelancer might be able to earn $5k per month from inbound marketing on their website with just 10,000 visitors per month, for example. That would be a return of $500 per 1000 visitors. Mix in some products and affiliate offers and that number could be higher.
Targeting is Key
The big wildcard in all of this is how interested your visitors are in what your site offers. This is known as targeting. Essentially, the more interest a visitor has in your topic, the more likely they will be to purchase something from you or perform other actions you want them to.
You may have seen the effects of targeting in your own promotions already. An easy way to see this in action is with guest posting on other blogs.
If the topic of the blog you guest post on is very related to your own blog, you’ll find that visitors from that other blog are likely to subscribe to your blog. Those visitors would be said to be “well targeted.” If your site is about dog training, and you guest post on a site about mountain biking, those poorly targeted visitors would be unlikely to care much about your site.
Got all that? Good, now stop thinking in terms of “visitors” and “traffic.”
Which ever approach you’re contemplating, this type of revenue modeling exercise is useful just to know how many people you’re probably going to have to reach. Beyond that, however, thinking in terms of “visitors” and “traffic” will actually hinder your progress.
Instead, you need to be thinking in terms of “people” and “relationships” and your “audience.”
Your visitors won’t buy anything from you unless you help them out, provide value and think of them as individual people. To really maximize the revenue you earn per visitor, you first have to maximize the value you provide to them through your content, products and services.
I hope this discussion helps put some bounds around just how big your site will need to be to earn a living from it.
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