At least once per week I get this question. It’s not an easy one to answer. If you are just starting out, getting visitors to your site is a BIG priority. Sometimes a little cash can really grease the wheels.
Here is how you can figure it out:
First, you have to have some idea of the value of a customer.
When your customer buys, you then have to pay for the wholesale cost of the product, the shipping and any other costs involved in the sale. What is left is often referred to as your gross profit.
Let me give you an example…let’s say that you are marketing novelty tooth brushes. Each tooth brush sells for $9.95 with $1.50 in shipping and handling. That means that your customers are parting with $11.45 of hard earned cash for each novelty brush they buy.
Now, you are getting the toothbrushes from a drop-shipper who charges you $2 per toothbrush plus $1.50 in shipping. That totals $3.50, leaving you with a GROSS PROFIT PER CUSTOMER of $7.95.
So, each customer is worth, in gross profit, $7.95.
Now, take a minute and figure out what a customer is worth at your site with your product.
Now, once you have that fully in mind, the next thing you need to know is how many visitors you will have to have to your site for each sale you make. This is a little harder, but let me give you some “rules of thumb”:
Targeted visitors will purchase at a rate of about 1:100
Targeted Newsletter subscribers WITH A PERSONAL RECOMMENDATION will buy at a rate of about .25% (25:10,000 subscribers)
NON-Targeted Newsletter Subscribers will buy at a rate of about .01% (1:10,000 subscribers)
Non-Target visitors will purchase at a rate of about 1:1000
Pop-behinds and banner impressions are NOT visitors
A good pop-behind ad will send 1:250 people to your site
A good banner ad will send 1:5000 people to your site
The third thing you need to decide is how much you want to make in NET PROFIT per customer (after your advertising costs). Using our example above, let’s say that we want to make about 50% or $3.95 per customer. That leaves us with $4 to spend to get people to our site and get them to buy.
In part II I will use this information to give you a clear picture of how much you can spend on advertising.
Kevin Bidwell is owner of
http://www.All-In-One-Business.com/cg-bin/at.cgi?a=274293
Kevin just finished a complete report on building a passive
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