[The previous post introduced that idea that you can protect your income by selling products or services on the Internet. After outlining a 13-step process for doing that, it ended with three questions:
- How would you execute each of the 13 steps?
- How much time and money would it take you to do so?
- How much money could you make?
This post addresses the third question.]
Assuming that you’re reading this because you’re interested in earning money rather than in achieving personal growth for its own sake, I’ll answer those questions in reverse order.
How Much Money Could You Make?
That’s a bit like asking “How long is a piece of string?”
The answer is, It depends. The amount of money you make is theoretically limitless, but it’s influenced by a lot of factors that are listed further down.
In the Absence of Studies, It’s a Guess
If anyone has done a credible study on the revenue potential of small, Internet-based businesses, I have yet to find it.
That leads me to speculate. After discounting for the hype of get-rich-quick scam artists, I’d make a wild guess that somewhere between two thousand and ten thousand people in the United States generate more than a $1 million a year in revenue through full-time involvement in businesses that sell mainly on the Internet.
The 80/20 Rule Prevails Once Again
If you apply the Pareto principle (or the “80/20 Rule”), then 10 percent to 20 percent of all the small businesses on the Internet earn 80 percent to 90 percent of the revenue generated by such businesses.
Perry Marshall, an honest Internet marketer I greatly respect, wrote this yesterday in response to my question on the topic:
The distribution of such things is described by a branch of math called ‘power laws,’ which essentially says that for every 1 site selling $10 million a year, there are 10 sites selling $1 million a year and 100 sites selling $100K per year and 1000 sites selling $10K per year and so on, all the way to the millions of guys who’re blogging for 12 cents an hour or for free.
A bell curve will reflect this but not in an obvious way. A bell curve will emphasize that the average commercial website makes $100 per month (that would be my own wild-ass guess by the way) but it doesn’t highlight where the action is – which is the few that generate the big results, at the very far right end of the curve.
Your Success on the Internet Will Be Driven by the Same Factors That Determine Your Success in Any Business
As you should expect, the amount you can earn will depend in part on these factors:
- How much time, energy and money you invest.
- The size of your target market.
- Your target market’s willingness and ability to spend money on the kinds of products or services you offer.
- The desirability of the specific product(s) or service(s) you offer.
- Your effectiveness at direct marketing in general and Internet marketing in particular.
- The gross margin you earn on the products you sell.
- Your total operating cost.
- The effectiveness of your business strategy.
- The quality of your execution.
- Your timing.
- The strength of your competition.
In the next post I’ll address how much time and money it might take to earn a reasonable amount of revenue from an Internet-based business.
Stay fresh.
–Scott Silverback