How I Have Made Money Online - Part 1 - eBay, Garage Sales and Card Trading
It sounds wonderful — making money online — that’s why you are here isn’t it? You want to learn how to make money from the Internet. I’ve been doing it now since I first discovered the web in 1998. Yes in a way that makes me a late adopter of this technology. The commercial Internet has been available since around 1993. You see I was a console kid while growing up. I played Nintendo and Sega. I didn’t have a computer until late highschool and only in first year university was I granted the gift of online access.
I didn’t set out to make money online, but I did and still do. I did want to run a business, that is for sure, but during university I had no idea what sort of business. Fast forward to 2005 and I make the majority of my income from e-commerce and intend to continue down the Internet business path. I’m always curious about the ways other people make money online so no doubt you are too. So here in no particular order are the methods I have used to make money on the Internet.
EBay and Online Garage Sales
A lot of people have bought and sold on eBay and while the average user does not trade on eBay as a business that doesn’t mean they haven’t made money from it. One of the first ways I made money online was by selling items I no longer wanted on eBay or by setting up a basic web page, often just a text list, of second-hand goods. I posted a link to my list in local forum communities and newsgroups such as my university newsgroup - uq.forsale.
I didn’t make a lot of money doing this and I really didn’t intend to, I wanted to clear some old junk and make some spare change in the process. I sold things like old video games, movies, books, trading cards, cameras, mp3 players, CDs, discmans, gym equipment, sports gear, anything I had lying around the house.
For thousands of people around the world eBay trading is how they make a living. They might choose to buy wholesale or produce the goods themselves or even scout around local antique shops to find products. Generally the most successful eBay entrepreneurs own a niche market and have access to cheap products so they can maintain respectable margins.
When I was younger before the days of the Internet I used to love a newspaper called the tradingpost. It is a local classifieds paper where people sell second-hand goods. I used it mostly to buy and sell video games. I usually sold my old games and consoles to buy the latest gaming device. I was a wheeler and dealer and really enjoyed haggling with buyers trying to get the best price I could for my goods.
EBay is a natural evolution of this trading concept, taking commerce online and automating the haggling process. Nowadays even the tradingpost is online. I don’t trade second-hand goods online very much anymore because I’m out of things to sell, but whenever I find something of value I don’t need I always go online to sell it. It’s in these marketplaces that I got my basic training in online commerce.
Earnings: These amounts were random and of course depended on what I was selling. This was “spare change” income, a few hundred dollars now and then.
Trading Card Trading
After I grew bored of video games the next major hobby I had was the collectible card game Magic: the Gathering. As any good trading card game, Magic had it’s fair share of collectors and because cards were distributed in rarities — commons, uncommon and rares — it was a heavily traded commodity. As a regular player and tournament competitor I had amassed a reasonable collection of cards and I was a vehement trader in real life and online.
Magic cards are bought and sold on eBay every day, there are many trading sites and some huge trading forum communities dedicated to the game. Luckily for me I was the owner of the main Australian Magic community site which had the largest Aussie Magic trading forums so I had access to a large local marketplace. I bought and sold a lot of cards through this site and a few other sites often profiting by selling product I had won at tournaments. Throughout my late teens I did not have a job because I made enough spending cash from card sales. However I could only do this because I was a respectable competitive player and could stock myself with cards by placing well at tournaments. This was only a reliable revenue source as long as I kept playing the game.
Earnings: I made a reasonably stable income from card trading especially after a big win at a tournament. With a box of new cards (usually first or second place won a box) selling for about $100 and certain rare individual cards selling for between $5 - $20 I could bring in around $500 per month provided I kept winning and attending tournaments. Living at home meant this cash was pure spending money and often went straight back into Magic tournaments.
Yaro Starak
Web Entrepreneur
How I Have Made Money Online - Part 2 - Online Stores and Advertising
Continuing the three part series on how I have made money online today I look at operating an online shop and using advertising on a hobby website to generate an income. If you missed the first part of this series you can read it here - How I Have Made Money Online - Part 1 - eBay, Garage Sales and Card Trading
Online Store
My first online store was also focused on Magic: The Gathering and run through my Magic site. I had a captive targeted audience so it made sense to start a Magic store. I stocked my shop with product from my own collection but also started to buy cards from other sources such as players quitting the game and by buying in bulk from trading forums. I contacted wholesalers and started to sell new product which is called “sealed” product, which has not been opened yet and contains a random assortment of cards.
I never had a proper online shopping cart and instead maintained text lists on webpages. It was a hard slog maintaining the store and shipping products which had me making near-daily trips to the post office. Running the card store was my first taste of real online business — taking regular orders online including processing credit cards, buying at wholesale and selling at retail, customer support — and all the other functions that an owner-operator of a small Internet business must go through.
You can read more about my time running MTGParadise Mail Order and the events that eventually lead to its shut down in my business timeline - Part 2.
Earnings: My card store earnings were pretty good however I did not keep proper records. I considered it a hobby and the reality was that I never did take the business seriously. Unfortunately the margins for Magic product were pathetic and the labour certainly did not justify the rewards. I knew I would never make substantial income and I was already working a lot of hours to make marginal profit. The truth was I only made as much as I did because I was slowly selling my personal collection and I was “paid” in new product for my work as a reporter for Magic tournaments. If I did not have this “free” inventory my profit margins from wholesale product would not have justified running a store. Regardless of this I probably managed to sell about $200-$1000 per month in card sales, although my memory is hazy and I was also earning advertising revenue at the time.
Advertising on Websites
One of the most popular articles I have written is How to Make Money from Your Website Using Advertising. It’s popular because it’s practical and I talk about the exact steps I went through to generate a steady income from advertisements placed on one of my websites.
Advertising income is a great way to make money on the web. Finding advertisers and generating income is not the hard part of this strategy, it’s establishing a website with enough traffic to justify advertisers paying you that is difficult. I go into more detailed numbers in the above article but basically once you have a site that has a consistent 500+ unique visitors coming everyday you have the groundwork for a steady income from advertising. The best thing is that if your site is popular because it has a great community it is hard for you to lose that value. I was lucky enough to establish a geographically niched community focused on trading a commodity, Magic cards, which is a perfect recipe for a lively community and consequently an income from advertisers willing to pay to attract that audience.
If you build a popular site that doesn’t require much maintenance then advertising income can be quite passive. If you take this blog as an example I have to create new content on a regular basis to retain a readership and if I stopped updating for a long enough period of time this site would lose its popularity and consequently any income I might be making from advertising. Of course there are many ways around this which I won’t go into now but any smart business person will be thinking passive income as a long term strategy because one day they will tire of writing new content or performing whatever function they currently do to create value in their site.
My old Magic site is a good example of a formula to create almost passive income. The heart of the site was a community forum and in fact the forum received more direct hits than the actual index of the website. The forum was managed by a collection of volunteer moderators who chose to perform their function for free because they received some sort of intrinsic value - an increase in community status (moderators are “staff” and therefore in a leadership/power role within the community). New content was generated by the audience for free because they enjoyed writing about the game they played and talking about their achievements publicly. Free content and free forum maintenance left only site updates as my job, which was significant enough but took about an hour a day to maintain the status quo.
Earnings: When I first started off I brought in $30 per month from my first advertiser. I slowly added more and over about a 2 year period I generated a consistent $300 - $1000 per month through banner and email newsletter sponsorship.
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You can read the first and third parts of this three part series here -
Yaro Starak
Web Entrepreneur
How I Have Made Money Online - Part 3 - Online Services and Web Hosting
In this the final installment of my series on how I have made money online I take a look at running my most successful web business, BetterEdit.com, and one of the most popular online business, web site hosting. If you missed the early parts of this series you can read them by following these links:
A Services Web Based Business
That title sounds a bit vague but BetterEdit.com is an example of a services web based business. I’ve talked about BetterEdit.com a lot on this blog and through it and MTGParadise.com I’ve gained most of my Internet business skills.
BetterEdit provides editing and proofreading services to students and business, although presently we are moving towards focusing on only the student niche. BetterEdit is a perfect case study in creating and operating a profitable web based business. It’s too complex to discuss in detail in this article but no doubt if you subscribe to this blog and go through the archives you can get a good feel for how exactly I operate BetterEdit and have experimented with marketing to keep it growing.
A service based business often starts with the owner providing the service. I didn’t go this way although every now and then early on I was tempted since the margins are obviously a lot better when you complete the work yourself. Although I would have been doing my business a dis-service if I did do the editing since I’m not nearly good enough. I’m adequate, but compared to our current staff, not great. Consequently very shortly after starting the business I had a contract editor working for me. This format actually works great because the editor only needs to focus on what he or she does best, editing, and I can focus on client attraction and business management, certainly areas I prefer to work in.
The formula is really quite simple - find a need and satisfy it at a profit. Sure there are a lot of variables to control but when it comes down to it I found a need, hired the best people to satisfy that need and tested which marketing methods work best to find the target audience with that need. The rest is history, and ahh, the present too.
Earnings: I advertise that I make $2000 - $8000 per month from Internet business. It’s true. However note that is not gross profit, that is revenue. I have expenses and I choose to invest most of that money in growth so I don’t pocket the money myself at this stage. I can honestly say that I do generate at least $2000 in sales per month with the highest month so far peaking at just over $11000 (there is a Goods and Services Tax component, 10% to be exact). Things are growing and I’m starting to generate income from other sources, but that’s all the info you are going to get out of me for the moment.
Web Hosting
A quick (…or not so quick) note about web hosting. What an industry hosting is! Every kid is signing up to start a web hosting business, spending the $10 per month required for a reseller account and then promoting the crap out of their template designed hosting site. I was one of those kids not too many years ago.
Hosting is by far the most saturated industry online and yet I still wholeheartedly endorse anyone starting a web hosting business. Why you ask? Because you can niche your market locally and work your network contacts to get new clients. If you play your cards right and cull the not profitable pain-in-the-ass clients you have a nice income source. Most people build a website and let it sit there and for that you can collect a $50-$200 a year or more per client. Multiply that by 100 and you have a pretty good living. Plus you can market things like search engine optimisation, online marketing, domain names, PPC advertising (AdWords and Overture) and a whole host of additional services (pun not intended).
Remember too that despite the web hosting business being saturated the demand for websites is not going to stop. The Net is becoming one of the most important commerce and marketing tools around and more and more people are going to want to be a part of it. If you can service your 10 friends-of-friends word of mouth should keep you growing.
Ironically though I don’t think web hosting is a good business to market online unless you are the only player in your area. Yes nicheing your market can work, especially geographically or industry based (Brisbane’s best band hosting service for example if you are well entrenched in the music scene with contacts), but the thought of being another webhost in a sea of millions is not a prospect I liked and hence I stopped operating my business. I also hated that every client wanted a web site built for them too and that was certainly not a service I wanted to get into. However if you are a web designer then web hosting is definitely a service you should be offering for some nice recursive income.
To be successful at web hosting you must become that “reliable web hosting guy/girl” in your area that everyone refers to. Don’t expect to get random clients signing up online, that’s not an easy strategy to work since another million copycats are out there doing the same. I’m not saying it’s not possible, but you have your work cut out for you if online visitors can’t distinguish your hosting service from your competitors.
I still have a few clients from my web hosting days. Occasionally I send out an invoice and collect my cheque and every now and then I get a support email with a password request or similar. Web hosting is a great business if you love the web and love dealing with customers (which I think there are maybe like 5 people in the world that do). If you can handle the support and have the tech skills to keep things running then web hosting is a good first choice Internet business or part time occupation for some extra income. Heck I’m starting to convince myself now…
Earnings: Nowadays I bring in about $1000 per year from the handful of clients I still have but they are slowly leaving me. All of them came from friends or family referrals. A few years ago I had about 10 clients paying between $50-$250 per year and I was at one point planning on growing that to 50 clients as my main business. I stopped because I got sick of building websites and doing server migrations. If you have ever had to move 10 domains from one server to the a new one you know what a nightmare it is. I enjoyed other web projects more so I stopped proactively marketing myself as a web host and yet I still get one or two new $50/year clients coming in every now and then.
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That concludes my roundup of how I have made money on the Internet. I’m still experimenting now with other methods and no doubt I will start another crazy business website that may or may not go anywhere (writing articles like this always gets the idea juices flowing). Note that in every method mentioned in this article series where I have made significant money it’s been because of a lot of persistent, consistent work and I’ve been lucky starting the right project at the right time. The trick is to keep trying ideas you believe in by taking action and building something.
You can read the first and second parts of this three part series here -
Yaro Starak
Web Entrepreneur
Making money from newsletters without writing them yourself
I’m sure you have heard many online marketers touting the benefits of having a newsletter. I have used newsletters in the past for many sites. I’ve used them as a source of revenue by having advertisements embedded within the newsletter content. They are also effective as a means to keep a site sticky - to “anchor” clients and bring them back to the site. Newsletters can also be a great selling tool to provide free information, samples of your expertise or services, and as a taste of your full product/service. The lure of free content from newsletters can help you to turn casual surfers to potential customers and then finally paying customers.
I find the biggest problem for me personally is to consistently provide new content (which is strange since I have no problems writing a daily blog, go figure!). Consequently I have looked for methods to get around this problem.
Many of the sites I control I enjoy for the business management side of things and don’t actually provide the core services myself. For example at BetterEdit.com I don’t do any of the editing. I have professionals on staff that handle that aspect of the business. Consequently I have found it difficult to write newsletters that appeal to my target audience. Other times I’ve just grown bored of the subject matter and it becomes a chore to write a newsletter. If you don’t have enthusiasm your output is not going to be very good.
Over the years I’ve developed ways to make money from newsletters without writing them myself.
The first and most obvious way is to hire people to do it for you. I did it this way for a community site I built with over 1000 members. In this case it was quite easy to find people that had experience and enthusiasm for the subject matter, I posted a news announcement looking for newsletter writers. I hired two people and paid cash on a per newsletter basis though at one point my writers were happy to write for free, they just enjoyed contributing to the community (though I made sure to pay them whenever there was advertiser revenue). To make a profit I just made sure I had more revenue from advertisers than I had to pay my writers. A simple equation but one that takes time to balance since you need an audience, advertisers and writers. If you have a popular site (the audience) the other two variables should come easily. Alternatively you could try searching for a freelancer to write for you.
Another method that I’ve utilised is to put together a summary style newsletter that simply links to content online. You take the time to find the quality articles and links for your members but you don’t have to actually do any writing yourself. IncWire is a good example of a newsletter like this. It provides links to great entrepreneurship articles that have been drawn from all over the net. The newsletter is free and sponsored by advertisers. You can see a sample newsletter here.
You can also try an e-course style newsletter. This is a bit different to a tradtional newsletter. Your visitors sign up and then over a period of time intervals they get sent the course via email. You can use plain text emails (this is the best method in my opinion -keep it simple stupid - kiss!), or HTML email or Adobe PDFs. You can send them out once a day for the next seven days or once a month for a year. It’s up to you but generally the sooner the better because you want to continually build up interest over a short period of time. Will Swayne at Marketing-Results recommends a seven day e-course.
While initially you do have to write the content yourself once it’s written your done. You don’t have to constantly provide new content and your course can be sent out to unlimited subscribers. The benefits of an e-course is that you can really focus on what your speciality is. Your course acts as a showpiece for your core competency, your skills, and allows people to try before they buy. You can monetise the course by inserting affiliate links, advertisements or selling your own services/products (or all three!).
Newsletter software
You might be thinking this is all well and good, but how do I manage my newsletter. How do I handle an e-course being sent out every day for seven days to hundreds of different people without being blocked by SPAM blockers. What technology is available and what do I recommend.
Personally I use Marketer’s Choice to handle all email communications but if you just want a newsletter service it’s definitely way too expensive (it more of an all in one marketing tool - see Using autoresponders to grab clients for more details).
I’ve tried a few different newsletter software packages. Some you install on to your own server and then manage online, others that are externally hosted subscriber based services and one that functioned a lot like an email client that sits on your desktop and sends out emails through your mail server. All of these have pros and cons. Of course it depends on your budget, but as I have stated you often get what you pay for so be wary of the free packages out there.
I recommend you try my favourite script source, The PHP Resource Index, in particular the Mailing List category should be your first port of call. You can try good old Google search as well.
Anti-SPAM
Before you commit to any newsletter software make sure you check how they deal with SPAM. Do they have an official policy and description of how your newsletters will be received? Are they just mass broadcast? Your newsletter software should provide double-opt in protection which means your subscribers have to opt-in and confirm their subscription via email before they receive anything. This helps to keep you from being accused of spamming.
One of the main reasons I chose Marketer’s Choice was because they have a very good system to make sure your mail is delivered to your subscribers. They have an in-built SPAM checker which reviews email you send out and tells you the likelihood your mail will be blocked by anti-SPAM software. It has the capability to personalise every email that is sent out so it appears with “Dear clientname” rather than just a generic “hello”. This is an important feature both as a sales tool (people tend to read emails that start with their name) and it’s more likely that your mail won’t be classed as SPAM by anti-SPAM software, which flag non-personalised email as potential SPAM. It’s the extra benefits that professional services provide that make them worth the cost, but you do have to go out there and test to find what suits your needs.
Newsletters are ace
Really I can’t think of many reasons not to have some form of newsletter or e-course on your site. Yes it does take time to set things up but it’s worth the effort. I suggest you write it in your to-do list now if you don’t have a newsletter already!
Yaro Starak
Web Entrepreneur
Making money from a website - is advertising the only solution?
You have managed to get your website to that magical point where you have established popularity, traffic, loyalty and a community of fans. Your site contains a wealth of information, resources and services that you provide free because that’s just the kind of person you are. You may not have intended to make money from your site but now that you have an audience you realise that it’s possible, or perhaps you have to start thinking about generating income because your costs to manage the site have increased and it’s starting to hurt.
You have been diligent over the years to build up your community, but now you wonder how to go about making some revenue by leveraging this audience (as the marketers would say, you want to monetise your site). Maybe you have some big dreams and plan to one day generate advertising income from your new web project. This is a very common plan for online business given people tend to expect information and services to be free on the web. Advertising may be one of the only revenue generation strategies available to you.
How much traffic do I have to have to make money?
In my experience once you have about 500-1000 unique visitors per day to your site *at least* before you can start to make real money. You can make chimps change from day one from your 50 hits, but this article is targeted at those that have a larger audience, or perhaps are constructing a business plan (either real or in your head) and would like to know how to go about monetising your website. If you get more then 1000 unique visitors a day chances are you already make money from your site (if not you should be!) but my points are still relevant.
As per usual I will illustrate my article using real world examples from what I did to make money. Over about five years I managed a hobby site that started off as a very local site focusing on people in my area that played the game Magic: The Gathering. I wrote reports and did news coverage for the game. Later I expanded the site to Australia and eventually opened it to the world although it remained mostly Australian with a good chunk of Asians and New Zealanders.
Banner programs
At around the time I was getting 500 unique visitors a day I decided to start playing with advertising methods. This was before the advent of Google Adsense (more on this later) but there were many banner programs available that paid either on cost per click (CPC) or per impression basis. An impression is a banner being displayed to a user once, a click is someone clicking the banner and visiting the site being advertised.
These networks act as a middle man between business that want to advertise and people like me that have an audience and want to make some money by displaying banners. Unfortunately these programs display banners that often don’t match your audience. I tried a few but it was a short lived experiment that made me a few dollars if that.
I recommend you avoid any banner programs. If you are confused about what I am talking about regarding banner programs take a look at Burst Media to get a grasp of how they work. For small sites they just don’t make much money. For large sites there are much better ways to make money. I’m sure there are people out there that make good money from these programs (I’m sure the program owners do!) but in my experience a little effort to find the right type of advertising can yield much better results.
I decided the best way to make money was to really leverage the demographics of my audience. I had a fairly focused niche, card game playing young males. I started by emailing all the local and international card game shops and asked if they were interested in exposure to my market. Instantly I had responses but I had to come up with a pricing structure first.
How much should you charge?
By this time my site was getting close to 1000 unique visitors per day, with about 300,000 impressions per month. I had done my research and I knew that advertising on websites was usually via a standard 468×60 banner so I would start with that. I also knew that many companies charged by what is called CPM or cost per 1000 impressions. Back then this was by far the most commonly used scale for pricing of web advertising and you could expect to earn anywhere from $0.10 to $10.00 CPM. I never liked this method of advertising because it didn’t guarantee any visitors. Charging by click-throughs is a far better method, but didn’t become mainstream until later.
I decided that in order to keep my advertisers I had to offer value so I went for a blanket approach. I started charging a flat rate of $30 per month to have a banner on my site which offered as many impressions that my traffic could provide. I signed up my first few advertisers at this rate.
Banner management software
In order to “rotate” different banners across my site I needed some special software that would dynamically place banners. This allowed me to have more than one advertiser banner in a single location so I could optimise my adspace and make sure my audience didn’t get too bored from seeing the same banner over and over again.
Let me save you some time, phpAdsNew is the best banner management software out there. It’s under an open source license and has all the features you could ever wish for at a price you can’t beat, it’s free. If you don’t believe me and absolutely have to try searching elsewhere try this category at the PHP Resource Index.
There is a learning curve with phpAdsNew and you do have to install it on your own server. If you are like me and you do things like this yourself most of the time you shouldn’t have too much trouble. Otherwise you might try contacting your favourite ITGeek and get them to give you a hand.
Statistics are important
The best feature with phpAdsNew is that it allows you to provide a unique user login for your advertisers to check their banner statistics in real time. This means at any point in time they can learn how many impressions and clicks their banners are receiving from your site.
Before you start searching for advertisers you should be very familiar with the statistics of your site. Do you know how many unique visitors you get? How many hits you get? How many impressions? Do you even know what the differences are between these? Try this stats terminology primer on for size if you don’t.
Most web servers come with a statistics package. Ask your web host if you don’t know. The most common are Awstats (demo) and Webalizer (demo) which often are preinstalled on many hosting packages. Become familiar with these packages so you can accurately assess your site traffic.
Increasing ad revenue
I now had the foundations laid and was serving the ads of my first few advertisers. From the point onwards I went to work attracting more advertisers by directly emailing North American online card stores and other related sites. I kept an excel file to track which websites I had emailed and their responses so I could follow up in a timely manner.
I created new banner positions and started initiatives like a newsletter to generate more revenue. I created monthly packages that combined newsletter advertising and different banner positions and offered them at $500 per quarter. I increased the top prime banner position fee to $50 per month and started offering a tower banner position for $50 as well.
Eventually I had to limit the number of banners I could take in the prime positions to avoid dilution. I had a guarantee in place that offered at least 30,000 impressions per month (averaging 40,000-60,000) to advertisers so that they always received a good equivalent CPM rate. I even had some advertisers purchase the rights to “own” a position for a certain period to make sure no other advertisers banners would be displayed.
Eventually I reached a point where I was averaging $500 per month and peaked at $1000 in one month. Some advertisers came and went quickly but many stayed loyal and in fact still advertise today though I sold the site a long time ago. The niche for the site was so focused that it became the pre-eminent site for Australia in it’s marketplace and consequently some Australian advertisers simply stuck their banners up as a branding exercise. They knew that the exposure from the site would help to align their business as one of the pre-eminent retailers or event organisers for the game. Some advertisers stopped caring about click through stats and kept advertising purely for the branding exposure.
Google adsense
At some point Google Adsense popped up and I was in with other early adopters to try it out. My results were okay. The money wasn’t nearly as good as the established relationships with advertisers I had, however the ads being displayed were a lot more targeted than banner networks I had tested early on.
I eventually stopped using Adsense because I could better monetise the adspace with my traditional advertisers. However that was before Google went to work providing such a variety of banner sizes and display options. Nowadays Google Adsense is a viable income source for many websites so I definitely suggest you look into it as a possible option for generating revenue, but remember it’s not the only means and you can earn more if you get busy chasing targeted advertisers.
Ongoing maintenance
I wouldn’t call web advertising income passive, but it sure is close. The systems I had in place handled everything automatically. While I did have to manually create advertiser accounts, pursue advertisers and control billing, once the systems were in place, in particular phpAdsNew, I didn’t have to do much. Of course depending on your website often the maintenance of your community is were the labour is involved, but chances are if you started the site you either enjoy it or have plans in place to eventually remove yourself from the maintenance role.
In the end I sold my site but if it wasn’t for the advertiser revenue my asset would not have been valued nearly as highly as the final sale price. Investing in advertising is like investing in any asset, the time and labour you put in today will lead to benefits in the future.
Yaro StarakWeb Entrepreneur
