I’ve been full-time online entrepreneur since way back 1996, so I’ve seen a few things come down the road. I remember back in those first few years when someone learned that I had a web site… they always asked “can you actually make money doing that?”
Well, times have changed. 🙂
But one thing that hasn’t changed is HOW you actually make money. Basically, there’s a lot of different ways to skin a cat, but there are really only two primary ways to make money online…
I’ve used just about every revenue system under the sun since I started out. I’ve sold all kinds of things – from continuity to ebooks to home-study courses to online courses to membership sites to physical products… to humidors. I’ve also sold advertising on my sites, in my ezines, and probably a few other places I can’t remember. And I’ve made hundreds of thousands of dollars with affiliate programs and Adsense.
And this is what I’ve learned about actually extracting money from your web site – there are basically TWO ways to make money online:
1. You can sell your stuff.
2. You can sell other people’s stuff.
That might sound overly simple, but it’s CRITICAL you understand this… and how these two relate (and WHY they should relate.)
First off, I’m a huge fan of selling my own stuff. This gives you big time control, positioning… and most importantly it gives you higher profit margins.
And higher margins aren’t just about you making more money, it’s about your business survival.
For example, if you’re selling a $97 widget that someone else is producing, you might only make $10 or $20 or $50 per widget you sell.
That might sound good, but if you’re competing against someone else who is manufacturing that widget (or a competing widget), and they are making $90 in profit per widget… then you aren’t going to be able to compete.
They have more money to spend to attract traffic. They can use affiliates, they can buy traffic, they can use that margin to hire out content creators, etc..
Bottom line, higher margins mean you have more money to spend to pull in more traffic.
That’s why it’s important for you to have your own high-margin high-value products. Maybe not when you first start out in your business, but it’s something you should quickly work towards.
Personally, I love information products for this purpose – they are relatively easy to create and they have high margins.
All that being said, you should also use the second revenue system – selling other people’s stuff.
1. Because it will balance out your cash flow
2. And you will never be able to create all the products that your prospects want.
Trust me on this – no matter what market you’re in, your prospects and customers will have a bigger demand than you can meet.
Some people think they can put a wall up around their customers, and keep them from straying to a competitor.
Well that’s pure fantasy… it’s not gonna happen, not when they can find ten competitive solutions in the time it takes to do a Google search.
So you might as well be the trusted source introducing them to other people’s stuff.
So let’s break this down – what exactly do I mean by “selling other people’s stuff”… well, this is where a lot of people will violently disagree with me… but it goes way beyond vending other people’s products off your site.
In fact, if you’re doing any affiliate marketing, marketing CPA offers, advertising, or even Adsense… then you’re selling other people’s stuff.
Nothing wrong with ANY of that. In fact it’s GOOD… for the reasons I outlined above. You just need to be really clear about these two revenue systems, and when it’s right to use each of them.
And one more time – I think you should do both.
I know that when I first started out, I didn’t have the knowledge or the confidence to create my own products, so I sold other people’s stuff…
Basically, I had two CPA offers (CPA stands for Cost Per Action) on my site… they were what we call “soft offers”, one for a magazine and one for a newspaper.
That means I generated leads – people would sign up for a free trial on my site, and I would get paid for each person that took the trial. The people didn’t have to buy, didn’t have to give a credit card… didn’t have to do anything other than request a free trial.
That CPA offer was the way I made my very first dollars online, and it went on to pay my mortgage every month for about eight years.
So back to those revenue systems – this is important stuff. It isn’t just some theoretical thought exercise.
You can start either place – with your own products, or by selling other people’s stuff.
But in the long run, almost everyone will want to do both…
You need your products or services for the revenue, the margin, the branding, and the control.
And you need to sell other people’s stuff to smooth out your cash flow, and to meet the needs of your clients and prospects. You do this through affiliate marketing, selling advertising, CPA, Adsense and similar programs, or directly selling other people’s stuff of your site.
Of course, there are exceptions to this rule… but they are pretty rare. For most businesses, you really want to go after both revenue systems.
So I’m curious… how and when did you make your first dollars online?