Great response and thoughts from Mark Bernstein on Trevor Cook’s Blogtalk Paper, here are just a few:
“-Viable, small businesses can (and often should) support a blogger, especially in a field where everyone needs to be able to write. One fundamental difficulty managing a small firm is that people are quantized and expensive. If you want to add staff, you usually have to add a whole person — and commit to that person for months or years. This means that small companies are either understaffed (and nobody has time to do anything) or overstaffed (and that usually means there’s no money for equipment that everyone needs). A weblog can convert a a fraction of a person to cash, simply by attracting visitors and making them interested in your products. (If you don’t need more visitors and more prospects, you don’t need more money. Please send it to me, ok?) Every bit helps. Plus, it’s great training, it helps build contacts in the industry, it’s got upside. Needed: For a retail business, 10K visits/month ought to translate to about $15-30K/year gross margin, which can make that extra staff position a bit more palatable.
Notice, too, that this is a revenue stream that clusters of small firms can mine much more efficiently than large firms. A small operation can pick up $10K lying on the table, but the overhead burden on a large company makes this a much more marginal proposition.
-Artists need a blog. If you are (or want to be) a professional artist, you need a channel — a path that leads from you to your patrons. Galleries used to be the channel for painters and sculptors, publishers and agents were the channel for novelists. Just about every artist has some unsold stuff, so you can always use a better channel. At minimum, it’s a place where your collectors and fans can see what you’re doing now and dream about acquiring a new piece or perhaps giving one to their cousin or their alma mater. You never know. Needed: a vocation, a style, and a short list of people who want to know what you’re making.”
“10K visits/month ought to translate to about $15-30K/year gross margin”
Where do these people get these numbers from? Tell me James, you’re a fairly high profile blogger, do you get 10K (unique – they’d need to be) visits a month? How does this transfer into $15K/year, or @$1200 per month? Are you getting this much additional revenue into IncSub, I surely hope you are.
Heh, I wish, but I’d hardly class myself as a small business (yet).
I haven’t checked my webstats for ages and it’s for the whole incsub.org domain… in April we got:
13939 uniques, 50219 visits & 270627 pages
If someone can tell me how to incorporate a Weblogs Inc style top bar to all my pages I might well make something!
Maybe this translates for me into future income?
Are you, perchance, a little cynical about these figures :o)
Remember that the context here — the underlying assumption — is that we’ve already got a viable, small, retail business in place.
I think, on the whole, that a sales target of somewhere between $0.05 and $1 per visitor is in line with the lots of retailer expectations. 10K visits/month at a quarter each, with a 50% gross margin, puts $15K/year on the bottom line.
Is that a reasonable sales target?
(a) Google AdWords seem to end up costing between $0.01 and $1 per click for a large range of words. Lots of Google Ad Words get sold; the price must make some sense to some people.
(b) People do buy banner ads. At $5 CPM and a 0.5% click-through ratio, they’re paying $1/visitor.
(c) If your conversion rate (ratio of visitors to buyers) is 0.1%, and your average ticket is $100, then 10K visitors will convert to $1000/month in gross sales or about $500/mo. Again, right ballpark. Obviously, conversion ratios and average tickets vary a lot, depending on what you’re selling.
(d) Average tickets and conversion rates vary a lot from one business to the next! Generally speaking, though, if their product is somewhere in this general vicinity. I’m making an order-of-magnitude calculation here — when I say “it should be $10-30K/year gross margin”, I mean “probably more than $1000, and likely less than $100,000″.
Thnaks Mark, I think I see where you’re coming from better now.
Oh sorry I dont agree at all…especially with these numbers:
“50% gross margin” – retail? Well the worst retail gross margin is in supermarket grocery, where it’s around 2% moving up scale to a really good margin of 30% for luxury goods. 50%? what are you selling I want some(to sell)?
“average ticket is $100″ – again what are you selling that the average ticket price is $100? Average retail prices on anything except luxury goods are no where near $100. So you’ve got a luxury business here, so 10K visits wont happen. These numbers are all wrong. Sorry.
Given a (generous) margin of 30% and average prices of say $25.00 (a book or CD)..these numbers decay into nothing…$75/month, nowhere near your $500/month.
50% gross margin: customary in gifts, stationery, lots of dry goods. Lots of stuff. Books are 40%, but return privileges and such reduce the carrying cost. Software companies can have large gross margins, of course, because their margin cost is low.
Average ticket of $100: Mail order buyers tend to purchase more than one thing. I think you’ll find the same to be true of online buyers, if they have the option. Shipping pushes this as well. (The first time I ran the average ticket for Eastgate, I was frankly surprised the number was as large as it was)
Again, I assumed that you already had a viable underlying business. If you’re doing $25 transactions and 30% gross margin, I think you’re going to want about 13,000 annual transactions per employee — and, yes, that’s going to be a very hard nut to help with a weblog.