1. This site uses cookies. By continuing to use this site, you are agreeing to our use of cookies. Learn More.

How do you calculate whether a new project / website will be profitable or not?

Discussion in 'Making Money' started by KingMonkey, Jul 9, 2012.

  1. KingMonkey

    KingMonkey Regular Member

    Joined:
    Apr 3, 2012
    Messages:
    397
    Likes Received:
    57
    Do you have a way of working out how much you estimate a new project / website will make? I mean how do you know whether a project is going to be worthwhile spending time and money on or do you not know until it's up and running and actually making money?

    Anyone got any advice on this. It's something I'm struggling with. I have various ideas for projects but I don't know how to estimate how much they might make, so I'm unsure what project to focus on.

    How do you make these decisions?
     
    • Thanks Thanks x 1
  2. dario111cro

    dario111cro Junior Member

    Joined:
    Feb 5, 2012
    Messages:
    180
    Likes Received:
    203
    Location:
    cloud
    If I am planning adsense MNS that will rank on #1, then you can calculate earnings this way:

    monthly searches * 0.4 * 0.05 * CPC = monthly earning

    This is based on assumption that being first on SERP will get you 40% of traffic and that 5% of visitors will click on ad (if you do everything well).

    For example, if there is 1000 local and global searches and CPC is $1, then site will earn $20 per month. I usually don't want to spend on SEO of MNS more then 2-4 times monthly earnings.
     
    • Thanks Thanks x 1
  3. Endire

    Endire Elite Member Premium Member

    Joined:
    Mar 27, 2012
    Messages:
    1,756
    Likes Received:
    1,061
    Gender:
    Male
    King,

    I think you definitely bring up a great question and something that I am sure many others consider.

    While I claim to be no expert, the way in which I determine if a product, site or project will be profitable looks like this:

    1. Determine the market, need and opportunity - You need to first identify if there is a need for your site, product or service you are creating. You can do this with so simple google searching regarding what you want to do. Additionally, if you have a mailing list that targets the same market you are starting a new project, simply ask those people what they want. Asking is the easiest way, but you also don't want to disclose everything around what you are doing... obviously people poach ideas all the time!

    2. Determine costs associated in the building and maintaining of the product, site or project you are starting. Everything has a cost to produce and you should generally understand what all the different pieces are. Some of these can include, development costs, website design, content, marketing / advertising, staff, taxes and legal fees.

    3. Determine the risks in the field you are going into. Is it a down market, up market or stagnant? What are the internal and external factors that will impact your business. You should not be afraid to look at risks, as they can also help you determine the likelihood of your succeeding or not.

    4. Do some competitive analysis. This will help you to define what your angle should be, where others are doing well, where they have gaps, where you can make a difference. Additionally, it will help you look at pricing your products, sites or projects competitively.

    5. Determine prices, products and descriptions. Basically you need to make sure you know what you are selling, for how much and who will help you get there. With a site it is no different, you need to determine the angle and way in which you want to monetize, if that way makes $en$e and if that will be easy for you to follow and build on.

    6. Clearly outline a plan of action so that you launch your product, site or service.

    I am sure there are many more steps, but hopefully this was what you were looking for and find it helpful!

    Let me know!

    Shawn
     
  4. KingMonkey

    KingMonkey Regular Member

    Joined:
    Apr 3, 2012
    Messages:
    397
    Likes Received:
    57
    Some good information. Would be good if a more experienced internet entrepreneur could write a guide / post on this on all the different things to consider before launching a new project.
     
  5. KingMonkey

    KingMonkey Regular Member

    Joined:
    Apr 3, 2012
    Messages:
    397
    Likes Received:
    57
    When using that calculation do you use local or global monthly searches or both added together? In this instance global is 27,000 and local 14.800. CPC is 0.71.
     
  6. StartupBros

    StartupBros Regular Member

    Joined:
    May 16, 2009
    Messages:
    237
    Likes Received:
    124
    Occupation:
    Founder of StartupBros
    Location:
    Tampa, FL
    Home Page:
    Hey I hope this is considered spam or anything, especially since I have been a contributing member for so long, but I JUST wrote a blog post that would be PERFECT for this.

    I use this method to test, validate, and split test business ideas against each other to measure how successful and profitable each one will be compared to the others.

    Hope this helps!

    http://www.willmitchell.com/3-steps-to-validate-your-business-idea-for-free/
     
  7. smitha

    smitha Registered Member

    Joined:
    Oct 13, 2009
    Messages:
    61
    Likes Received:
    39
    Home Page:
    the formula needs correction as google adsense gives only about 60% of CPC so the formula will be

    monthly searches * 0.4 * 0.05 * CPC * 0.6 = monthly earning
     
  8. dennisyu

    dennisyu Power Member

    Joined:
    Jan 9, 2010
    Messages:
    552
    Likes Received:
    170
    If there is any competition there's a good chance it makes money. But to really find out if it's worth your time, finish the project and pay for traffic. See if people are converting.


    Time is money. The faster you fail, the quicker you will succeed. You can take the slow, retarded route which is SEO -- or you can buy a ticket and take the faster route. It all depends on how you value your time.