One of the first questions I asked Izak when we started out on this project was ‘How do you think we can make some extra money on the Internet?’
‘Build a website?’, ‘Post some videos on Youtube?’
Ok, that’s kind of a start… a little general, but it’s important to note that they are just delivery mechanisms… by themselves they don’t make any money..
I’m sure many of you think about it in those same vague kind of thoughts if you’re just starting out, so here’s a bit of a primer on the six major business models that you can use to make a bit of extra money online. You can do each of these a million different ways, but the point is, the mechanism for how and why people would pay you money is pretty consistent within that model… there’s no need to reinvent the whole commerce system that’s been going on for thousands of years, some pretty smart people figured these things out long ago!
If you’re just getting started and need to make some money quick… freelancing is the way to go… there is no reason why you can’t just race out there now and make yourself a small amount of money within the next 24 hours.
You don’t need a product, you don’t need a website. You are essentially trading your time and services for money (and probably not all that much to begin with), but if you work hard at it and build a reputation and a list of satisfied clients, it’s a totally viable way to make a living.
One of the main problems with freelancing is that it’s hard to scale – unless you set things up in a way where you’re managing a team of freelancers (and they are the ones providing the actual service), it’s always going to be limited by the amount of time you can put into it.
The type of freelance services you can offer are nearly endless… anything you can think of that someone would rather pay to have done, than to do it themselves is a viable candidate. Popular freelancing services revolve around writing articles, programming, graphics design etc. but there are plenty of bizarre freelancing offers that you could try your hand at (see Fiverr, below).
Some popular freelancing hubs where you can create an account and start offering your services include:
Fiverr – Covers just about anything. Every freelancing job on here costs $5 (or multiples of $5 for bigger services), which provides plenty of scope for whatever takes your fancy. Some of the current freelancing services being offered on Fiverr at the moment include:
Upwork (formerly Odesk/elance) – For projects that are starting to get a little bit more serious… plenty of solo work available here, but also plenty of teams doing freelance projects.
Affiliate marketing can also be fairly quick to get up and running, although it does rely on referring people to a product or service, so to get any kind of return you need to have traffic.
Now there are a few different ways that you can go about getting traffic.
By far the best way is to grow your audience and develop a strong community that likes you and trusts your opinion. That takes time, not only to attract an audience in the first place, but to establish trust and to foster passion within the community. That’s the approach I’m taking with Epic14Days.com and I’m confident that it will work because
- I don’t have a timeframe on when I want to achieve this by – I’m not putting pressure on myself to rush things;
- The focus is on documenting what I’m doing, adding one 14-day cycle after another, caring about my audience (that’s you!) and earning trust… I don’t have any focus on the site actually making money itself – I’m obviously hoping it will at some point, but that should happen organically if I only promote quality products that I use and trust myself.
- Pretty soon Izak and I will be putting up some other sites where we can have a slightly more aggressive strategy and eventually look to generate some non-affiliate income.
You can find links to the affiliate products I am promoting on my resources page. A key element of this working is to only promote products and services that you use, trust and believe in. I use every one of the services listed on the resource page in my business. I’m not going to refer you to something that I don’t have complete confidence in, or I’ve got no chance of gaining your trust.
Another option is to pay for traffic. You can buy ads on Google for instance, that show up at the top of search results when someone is looking for your chosen topic… as long as your advertising costs are lower than that the affiliate payments you receive, you make money (easier said than done when you’re just starting out).
There are a few in-between options… like funneling traffic directly through the affiliate link (you don’t actually need a website), or focusing on building an email list without really building a community, but it all essentially boils down to the same thing:
Earning money from affiliate marketing is where you refer someone to a product or service, and if they make a purchase, you get credited with the sale and earn a fee for that referral.
There are a number of different ways that you can find products or services to market as an affiliate. Most sites have an ‘affiliate’ or ‘partners’ link in the site footer if they offer an affiliate program, or you can search for products in an affiliate directory. Some popular affiliate directories are:
Amazon Associates – Everyone has heard of Amazon… refer your traffic to them and grab a small percentage of each sale.
CJ.com (formerly Commission Junction) – they have a very wide range of affiliate programs available for you to choose from. Many companies use CJ to power their affiliate program.
Clickbank – popular for digital information products (ebooks, online courses etc.)… if someone has written an ebook on a subject, there’s a good chance you’ll find a few of them on Clickbank that you can promote.
Advertising sales also rely on a lot of traffic before you make any kind of decent returns. There are two broad categories for you to look at.
The simplest is to install a service like Google Adsense. This lets you configure a set of ads that show on your blog – you have very little control on what is actually shown there (Google sort that bit out) and you get paid everytime someone clicks on one of those links (you get a percentage based on what the advertiser pays Google).
A similar deal happens with content on Youtube once you get past a certain threshold of viewers.
Directly negotiating advertising deals is your other option. You get total control over what companies you’ll allow to advertise to your audience, but it’s more work in that you need to find advertisers, communicate where the ad will be placed, negotiate a deal, arrange to receive payment etc. These ads are typically structured under a CPM deal (cost per 1000 impressions), so you also need a way of tracking how many times they are displayed and be able to report that back to the advertiser (you may be able to negotiate deals that are time based e.g. shown for a month) that approximate a certain number of displays but don’t commit you to an actual number.
Different industries will typically have different standards for what CPM rates to expect, so it’s a bit of trial and error as to what you can ask for… just keep in mind that advertisers need to make a return on their spend if they’re going to continue advertising with you, so they will be keeping a close eye on how much traffic flows through from your website and how effectively it converts into sales before making any decision to buy additional advertising space with you.
Lots of podcaster’s are currently making some really good monthly income from advertising on their podcasts. It’s a numbers game though, it all comes down to the amount of (quality) traffic you can generate… the more you get, the more you’ll make.
Business Services (web design etc.)
Providing services to businesses is quite a broad topic. On one hand, it could start as an extension of the Freelance model, but the differentiation here is really what happens afterwards. The Business Services model is all about maintaining a long-term relationship with your client and being paid over and over again as you provide an ongoing service.
One of the biggest trends at the moment is to provide Software as a Service (SaaS). It’s a great business model – you provide the tools and charge a monthly (or yearly) fee for people to use them. Some great examples of this are:
(note: the above links are my affiliate links – so I may earn a commission if you click through and purchase. It’s interesting to note that they are providing SaaS, and also offer an affiliate program. So they make money from one business model, and take advantage of another business model (which people like us can make money from) to source their customers).
There is quite a range within this business model – other than SaaS – for example, you can offer a membership site, provide a monthly service etc.
A great option here is to provide website services to local small businesses. You can easily provide a service where you develop a website (on the WordPress platform), take care of all the website hosting setup and costs and provide limited technical support… In fact, Izak and I have made money from this business model for the last 18 months… we do exactly this for a caravan park and charge them over $400 per year for maintaining a WordPress site, taking care of hosting and domain costs and providing limited technical support (they update all their own content).
A big component of this business model is that you need to provide all the customer support (unlike the affiliate model for example where you need to provide very little)… get some painful customers and I’m sure it would take all the fun out of it pretty quickly! It’s the main reason why Izak and I don’t actively seek out more clients like this, I’m not sure we want to get into the ‘customer support game’. But it is worth thinking about, and I haven’t totally ruled it out for myself… just one website pays all your monthly costs. You can then scale that up by adding one-two new business per week and in a couple of years you’ll have a pretty decent business on your hands.
Information Product Sales
A nice low-cost way to create and sell your own product is by selling digital information products.
The most common form is an ebook – package up relevant content that people want to buy and sell it to them as a downloadable book. You can keep this really simple by serving it up as a .pdf file direct from your website, or go a step further and make it available as a distinct ebook via Amazon, Google Play, or the iTunes Store.
…it doesn’t need to be a ‘book’ though. Audio files (perhaps an audio book), or video files, or a combination of text, audio and video – all make viable options.
If you’re selling a stand alone digital information product, you should have a look at Clickbank (see the Affiliate Marketing section above), or GumRoad. Sites like these handle the sales aspect for a small fee and in some cases (like Clickbank) provide a ready made affiliate network for you to tap into.
Perhaps the biggest trend in digital information products, are for online courses. If you think about it, the chapters of most books could easily relate to a separate segment of a structured online course… so the amount of information in each is usually fairly similar, but whereas most ebooks on the major distribution networks sell for less than $10 and you might find some affiliate driven ebooks selling for around $100, most online courses range from about $100, up to $1000 or maybe even more if you start including access to some personal coaching time as part of that package.
Online courses can either be sold directly from your website, or you can use a service like Udemy to handle all the e-commerce details and join a dedicated learning service.
Physical Product Sales
Do you have a physical product you can sell?
If you do, you’ve got plenty of options open to you. You can setup your own e-commerce site and sell direct to your customers, or setup and sell through existing networks such as Amazon, Etsy or eBay.
You have a few extra headaches to think about that digital information product owners don’t need to, like shipping (do you ship it directly yourself, or can you ‘drop ship’ it direct from the manufacturer?), production costs and maintaining stock levels, but at the end of the day, your customers get to touch and feel what you’re selling them, which is pretty awesome really.
An interesting option for those of you who want to sell a physical product – especially a creative product – but haven’t actually sorted out the final details yet, is crowd funding. Sites such as Kickstarter let you describe the vision for your product and match you with small investors who want to fund the creation of your product (usually for a set of rewards that contains at least one of your finished products).
This is a great way to fund your initial stock of product without risking your own money (you’re selling it before you make/order it), and it’s also a great way to validate your idea and see if people like it before you spend all that money developing it in the first place. If you’re creating a new product from scratch, crowd funding is definitely worth looking into.
So there you have it
That’s a look at the 6 main online business models that you will see in use… obviously we’ve only just scratched the surface here, each one of these business models have a considerable amount of depth to them.
Which one(s) are you going to use (or already use) in your online business? Are there any others that I’ve missed? Please leave a comment and let everyone know… I would love to hear your thoughts.