Friday, May 19, 2006

Make $10 of Profit on a Sale

A good product for the web makes at least $10 of profit for an average sale. This opens up more advertising opportunities including pay-per-click advertising. Yahoo and Google are the major pay-per-click engines. A minimum bid starts at $0.10 per click. A typical conversion rate is 1%. This means that it takes 100 people to click on an ad and charge you a fee before one of them buys from you. So, $0.10 for each click times 100 clicks is $10. This $10 is profit that is spent on advertising, but it is for a sale you would not otherwise have. The idea is to measure which ads are converting the best. Keep the high-conversion ads and drop the low-conversion ads.

A product can still be viable on the web if the product makes less than $10 per sale. Then you have to concentrate promotion on the free techniques and less on paid advertising.