• Start-up Capital
  
• Product
  
• Profit Margin
  
• Competition

If you're just starting out with your own business and are doing this part-time, and you have a product with a low profit margin (about $20-$30 per sale) then you should probably start out very slowly. You don't want to blow through all your money too quickly. You want to test the waters a bit. Try a few different marketing strategies and find out which ones seem the most promising. You should also spend this time measuring the overall effectiveness of your website.

Give it your very best shot on your first test!

After all, you want to see if your product is even worth pursuing. That means making your website as best as you can within your budget. Carefully choose your target audience. If you're bidding on a keyword in a search engine, get right up there on top. Don't be down at the bottom. Chances are the people clicking those links aren't really people at all. They're probably robots or spiders coming to sell you something, regardless of what the search engine owners tell you.

Sure, it might cost you $2 a click and at first you probably won't make any money at all. But you'll find out real quick if there's any money to be made.

Then what do you do?

Put your phone number on your website and talk to every customer. This is very important. Find out what they liked about your site. Find out what they didn't like. For a little while you might not even want a shopping cart at all. Tell everyone to call in to place their order. Take the calls yourself and listen to your customers. It doesn't even matter if you don't have a toll-free number. In fact, people don't like toll-free numbers. People think when they call a toll-free number a pushy salesperson is going to answer the phone.

If you're selling Hair Growth Pills and you find out your customers have trouble with self-confidence, put real high up on your web page: "Improves Self-Confidence!" or some exciting phrase to that effect. If people are saying your price is too high, take that into consideration, but don't let your customers dictate the price for you. We'll get into pricing later. You want your promotion to be as effective as possible. Never miss a chance to improve your ad copy.

And while we're talking about ad copy, more is usually better. When you go to a car lot you're not just looking at the outside of the car are you? No way. You're feeling the leather interior. You're looking at your teeth in the shiny chrome steering wheel. You're taking that monster around the block to see how fast she can go. But we don't have that luxury with a web site so you have to be your customer's eyes, ears, and motivation. You have to tell them everything you possibly can about your product. Put the most important benefits right at the top. No, put the most "exciting" benefits right at the top. Find a catchy headline and test, test, test! Test 10-20 headlines before you find one that works best.

When people come to your website they decide whether they're going to stay or leave in fifteen seconds. Some people say it's more like five seconds. You have to tell the reader what they're going to get from you in Big Bold Text. If they came to your site looking for a cure for baldness, tell them right off that bat:

Finally, Scientists Have Created A Cure For Baldness!
Here's How It Works!!

Now don't be tempted to change everything at once if your product doesn't perform as well as you expected it to. You have to make changes very slowly. Test every change to see whether or not the change makes a difference. Change your headline and wait for a few hundred visitors. The more visitors the better if you can afford it. And by all means don't change your target audience or you're liable to screw up the whole test.

Make a small change, test your visitors/sales ratio, make a small change, test your visitors/sales ratio. Just like that!

Your closing ratio is Sales / Visitors. So 5 sales per 100 visitors is .05 or 5%. (5 / 100 = .05)

If your change was intended to produce a higher profit, then test for that instead. Take your total profit and divide it by the number of sales. If you made 5 sales and your total profit was $100, then you divide $100/5 and get $20 per customer. Make a small change and check your total profit/customer. Do that over and over again until you increase your profit to a satisfying level.

Okay, so now you have a web site that sells to people who are really looking for your product. But you can't find enough people who are looking for your product so now you've reached your glass ceiling, right? Boy, this stinks.

If you stop here you might make enough money to quit your job. But if you want to make a LOT of money then you have to appeal to a wider audience.

People who are looking for your product are always going to convert better. That's why it's important to make your website convert extremely well for your perfect target market. But we won't stop there. Next you're going to advertise in an eZine or create banner ads for other sites. Those aren't going to convert as well so you have to test those too. You want to make sure you're not losing money on any particular campaign. You always want to be making money (or at least breaking even).

Breaking even is fantastic if you're selling a product that people will buy over and over again. Never be afraid to break even. Those customers may come around every few months and buy from you again and this time they won't cost you a dime. Also, once you have them in your database, you can send them an e-mail from time to time and tell them about any specials you might have and motivate them to buy again.

Now let's talk about pricing.

Someone did a study once that people buy more often when the number 7 is in the price. Give it a shot. Try $39.97 instead of $39.95 and see what happens.

Now there are a few different price points worth trying, mostly in increments of $10. Start as low as possible. That's right! Start selling as low as you possibly can afford to sell your product and still make a reasonable profit. Why? Once again, we want to know if people even want to buy our product at all. If nobody buys it at $19.95 they probably won't buy it at $29.95 either and maybe you should begin looking for another product.

Now here's where it gets tricky. A lower price can actually make you more profit! Let's say it costs you $10 to get 100 visitors to your website. If you sold a product for $29.95 that brings you a $25 profit and if you got a 4% response then you'll bring in $100 gross on 100 visitors. You're making $90 profit on a $10 investment ($100 - $10 advertising = $90). That's pretty good, isn't it?

But let's say you sold the product for $39.95 and your profit is $35 and you got a 3% response. Now you'll bring in $105 and your profit is $95. That's even better, isn't it? Not much but it is better.

Now let's say you sold the product for $49.95 and your profit is $45 and you got a 2% response. Now your profit is $90.00. Uh-oh, what happened? You're making less now.

So now what, you drop the price? Maybe not. Maybe you raise it. A lot of people equate price and value to mean the same thing. It might work on perfume but probably won't on a new muffler. Sometimes it's true and sometimes it's not. But that's how people think! So maybe you'll raise your price and find out that your response goes up to 5%. But if it doesn't work, lower it back to the best price that made the most profit.

If your profit is the same on two different price levels, choose the one that will get you the most customers. More customers means more repeat business and also means more word-of-mouth advertising. You can't lose with more customers!

Here are prices worth testing, in this order:

$19.95
$29.95
$39.95
$59.95
$79.95
$99.95
$129.95
$159.95
$179.95
$199.95

The other ones in between are not even worthy trying no matter what product you sell when compared to the higher price. They don't seem to make a difference at all.

Now for the real question...

Where are you going to advertise?

The Internet offers a lot of opportunities in this area.

The greatest source of traffic comes from search engines. But it takes a long time to get indexed in free search engines. But when you do your profit will grow tremendously! There is no cost to get your site listed in search engines except the time it took to promote your website. Never miss a chance to work on improving your ranking in the search engines! Eventually they will be your best source of traffic.

Search engine marketing is a very in-depth topic requiring it's own section and articles. Please see our articles regarding Search Engine Marketing.

But meanwhile you want to start making money right now. So where to begin?

Check with your favorite search engine and see if they offer "pay-per-click" advertising. This is a great place to start. You can bid on any position you like and get as much traffic as you want. The only thing that determines how high in the listings you can be is how much you're willing to spend and how often people click on your advertisements!

Here's a trick. If you can't afford to be at the top of the first page, try to get at the top of the second page. You're less likely to be found by spiders and robots that way. (Spiders and robots are non-human entities that click on your links for whatever selfish reason their creators use them for.) Also you're always more likely to be seen "at the top of a page" than at the bottom of one. You might get more traffic being at the top of page two than at the bottom of page one.

Now we can't tell you our best pay-per-click secrets and we have a lot of them. Why? Because our own competitors are likely to be reading these pages too. But if you become a customer of RareHost.com for Web Hosting or Internet Marketing, we'll be happy to share what we've learned in our articles written specifically for our customers. You'll love the secrets we have to offer!

What are other great sources of traffic?

Advertisements in targeted e-zines.
E-zines are electronic magazines distributed by e-mail. They are available for just about any topic imaginable. Look around the Internet to find out what e-zines your customers might be reading and then contact the list owner to see if you can get an ad or article included in their next issue. If your article is good enough, they might run it for free!

You can find many great eZines at zenos.com.

Banner ads on web sites.
You usually pay "per impression" (CPM = cost per thousand) or "per month" for banner ads. Banner ads have not been performing well lately. That's because people are learning to ignore banner ads. The best thing you can do is to create the banner so it looks like just another article on the site. Give it an exciting headline. If you can make the banner look like it is part of the site you are advertising on, you will see your clickthroughs skyrocket! If you can find a good deal on banner advertising, it could be an excellent source of traffic.

AOL or CompuServe.
If you are a member of these services look for different sources of paid advertising on these networks. For some reason people on AOL and CompuServe are more willing to use their credit cards to spend money than the rest of the Internet public. I am unsure why this is exactly, but it seems to be true.

Create articles and ask other sites to publish them on their site.
Site owners love free content. As long as you are not a competitor you will likely find some webmasters willing to publish your articles. More content is good for their visitors and good for search engines too. Make sure when other sites publish your articles they do so with a link pointing back to your site. This is a great source of traffic. When people read your articles, if they're well-written, they'll already have developed confidence in you. People who follow the links in your articles and go to your site make great prospects for your products.

Banner Exchange Networks.
These are programs where you display random banner advertisements somewhere on your own website. In exchange, your banner will be shown on someone else's site too. You can find sites that have ratios of 2/1, 3/1 4/1, or 3/2, etc. In the first case, this means that for every two times you show someone else's banners (earning you two credits), your banner is showed once on someone else's site once (costing you two credits).This can be a good source of traffic, but it might make your page look ugly. Who knows what banners will be shown to your visitors? It could be porn or worse. It's still worth looking into if you have room on your website for advertisements. I suggest not using it at all on your homepage because it gives your visitors a reason to leave your site. Most banner exchange networks require the banner be displayed on a visible part of your homepage. The best sites will show your banner one time on someone else's site for every two times banners are displayed on your site. This means the owner of the banner exchange program is free to sell the other 50% of the banners displayed or he can use the impressions for his own advertisements.

Here are some sources of traffic to stay away from.

The only reason I feel confident in telling you that is because we've already lost thousands of dollars on the following sources of traffic. There might be good companies out there but we haven't found one yet.

"Buy Instant Traffic" Sites.
Sure, you can get 100,000 visitors for only $75. But sometimes they come from everywhere but the country you are doing business in. Even when you buy visitors from the U.S., sometimes they are not, and the ones that are from the U.S. are from colleges, schools, etc. Even when there's no logical explanation why this is bad traffic, this form of traffic just does not convert into sales. Think about it. If it was good traffic, do you think these companies would be selling it? Probably not. They most likely would be selling their own products.

I have a feeling I know exactly how a lot of these sites are generating their "unique visitors". I was able to figure it out by closely examining my server logs. But I feel a strong responsibility to the Internet public not to share this information. Someone might take advantage and use it to mislead or cheat innocent entrepreneurs like yourself. The only thing this sort of site might be good for would be if you signed up with "Banner Exchange" programs listed above and you wanted to earn credits fast.

"Own this Keyword" Sites
These sites almost always have the same gimmick. They promise that you will "own a keyword" and that all people have to do is type your keyword into their browser's address bar and they will automatically be taken to your site. What they don't tell you, or what you don't quite realize, is that people have to install a plug-in into their browser for this to happen. These companies will tell you something like "45 million people have our plugin." It might be true, but those 45 million people were probably tricked into downloading and installing their plug-ins and to this number is meaningless anyway because all 45 million people will not be looking for your product.

The people with the plug-ins generally don't want them and didn't ask for them to begin with! Most likely they came piggybacked on some other software. The bottom line is that we've "bought" these keywords before and they don't produce much traffic at all. They did when RealNames.com first started doing it, but that was Microsoft owned it and because the plug-in was automatically enabled in Microsoft Internet Explorer when you got it. We have yet to receive one sale from any of the traffic these new "own-this-keyword" guys have sent us. Don't waste your time.