Going online can be a great adventure--and a lot of fun--for any
small business. But if you want your Web site to be more than a
hobby, you need to put some thought into how to make it profitable.
No matter what your business is, you should always be thinking
about ways to diversify your revenue streams to boost your
profits.
So to get you thinking about new strategies, I've put
together a list of the seven ways you can earn income on the Web,
and then I've explained how you can incorporate all of these
methods to create success.
Online Profit
Steams
Whether you're just beginning to develop your business model or
simply analyzing an existing business, your chief focus should be
on how you're going to generate income. There are seven ways to
generate revenue on the Web:
- Sell your own products
- Sell your own services
- Drop ship products
- Recommend affiliate products
- Sell ad space
- Create a joint venture with like-minded businesses
- Start an affiliate program
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Let me explain each of these a little further:
1. Sell your own products. The main advantage to selling
your own products is that you ultimately control how much profit
you make on every sale and you therefore have the potential for the
biggest profit margin. You know exactly what each product costs,
and you can try out different price points to see what works the
best. People appreciate good value, and removing the middleman is a
great way to provide your customers with competitive prices that
keep them coming back for more.
2. Sell your own services. Whether you're a
small-town dentist, a high-priced online legal consultant, a real
estate agent, a tutor, a landscaper, a bed and breakfast owner, an
auto-mechanic, a caterer, a fitness trainer or anything in between,
you can profit from selling your service online. It's easy to
get started selling a service online, but your revenue potential,
in most cases, is limited. That's because, unlike someone
selling a physical product that can be stored and shipped on
demand, you can only provide as many services as your time
allows.
When you sell a service, you're essentially selling a
relationship with yourself. And this requires that you spend more
time and effort establishing your credibility and developing
rapport with your visitors than is typically required on a site
selling a physical product. You not only need to establish the
benefits of the service you're offering, you also need to
establish the value of you providing this service.
3. Drop ship products. If you want to sell products
without the hassles of tracking your inventory, setting up
warehouse space and maintaining a confusing shipping/receiving
infrastructure, drop-shipping may be the choice for you. Drop
shipping lets you sell quality, brand-name products on your site
for a hefty profit, while the drop shipper takes care of fulfilling
the order. They warehouse the stock, pack the orders and ship them
out to your customers.
4. Recommend affiliate products. Recommending affiliate
products creates a "no-risk" partnership that allows you
to promote another company's products or services on your site
to earn a percentage of their sales. As one of the company's
"affiliates" or promotion partners, you earn a commission
each time someone you've referred to their site makes a
purchase. To advertise their wares, you might post a banner on your
site that links to the affiliate program's site, or you might
publish an article about the company and their products in your
newsletter.
5. Sell ad space. Once your site has lots of highly
targeted traffic, or a large, targeted opt-in list, you may be able
to sell advertising. Advertisers are willing to buy ads when
they're being directed at large numbers of their target market.
Nowadays, though, advertising revenues are a lot less than they
used to be, so I don't recommend you plan on making this your
sole source of income. Selling ad space can be a great additional
profit stream, but it's unlikely to keep your business afloat
on its own.
6. Create a joint venture with like-minded businesses.
Joint ventures are all about related businesses teaming up and
combining skills, products, services and resources to create new
streams of income and profit. One great way to profit through joint
ventures is to seek out products or services that would benefit
your visitors, and then approach the companies that provide those
products or services. Ask them if you can recommend their product
or service on your site for a portion of the profits. Most
companies will gladly agree to this arrangement--after all,
there's no risk for them since they only pay you when you refer
a paying customer.
7. Start an affiliate program. With your own affiliate
program, you can recruit an army of people (your affiliates) who
will recommend your product on their web site for a percentage of
any sale they refer. You have the power to exponentially increase
your income as more and more affiliates sign up and you continue to
teach your existing affiliates how to increase their commission
checks (and your income).
It's one of the most powerful forms of online advertising I
know. It allows you to grow your profits while keeping your
business small, since you don't have to go out and spend money
on salespeople and advertising. Your affiliates do the advertising
for you, and you only pay them when they make a sale.
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