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Dreaming Big and Calculating Profits for Your Online Business

Dreaming Big and Calculating Profits for Your Online Business

One of the aspects that I love about running a business, is dreaming big and making income projections.  I'm sure that many of you are the same.  After all, what can be more exciting than getting struck with inspiration of a business idea and then quickly calculating potential profits and losses?

Pulling up an excel spreadsheet to quickly calculate whether a business idea is feasible is something that I've long enjoyed, (and perhaps have wasted a lot of time doing as well!).  However, I do think its an important exercise to go through when starting any type of new venture. In fact, a simple spreadsheet may be all you ever need before getting started, as opposed to a full-blown business plan (like I was always taught while getting my MBA).

The Business Model for Niche Sites

Whether you want to build micro niche sites or large niche sites, the overall model is essentially the same.  What I mean by this is that you have the same inputs and outputs.  Essentially you will be paying for a domain, hosting, content, link building, and a theme or graphics.  The amount you spend on a few of these items could just be larger or smaller depending on the type of site and how many sites you build.

Overall, the basic model for niche sites is to create content targeting specific keywords and to rank at the top of Google for those keywords.  This is done in hopes of generating revenue through Google Adsense, Amazon Associates, your own product, or other affiliate programs.

This is the business model that eHow.com and About.com have implemented with great success on their web properties.  However, as most of us are “solo” entrepreneurs, we aren't likely to build something quite as big as those websites, but our model is essentially the same.  As long as a new piece of content is bringing in more money than it costs, its profitable.

Costs of Building a Small Niche Site

So, lets walk through an example of the potential income and expenses of a smaller niche website.  First, I'm going to list out what it would cost to outsource everything (this is what I do). Here's are some of the standard expenses (obviously some of these may be more or less depending on your own strategy):

  • Domain – $10
  • Hosting – $6/mth
  • Content – $180 (15 articles at $12 each)
  • Theme or Logo – $40
  • Virtual Assistant – $50 (to install plugins, add articles with hyperlinks, or other basic tasks).
  • Link Building – $250 (I usually hire various services, but this is more than enough).
  • Total Cost – $530 one-time, plus $6/month for hosting.

Now the hosting cost is a bit deceiving, because if you build 10 sites its NOT $6/mth for each new site.  They can all share the same hosting account, so its still just $6/mth for all your sites combined.  In addition, depending on what you do for link building, you can hire services or buy tools for MUCH less (or much more).

So, in order to break even in one year your site would need to make $602 ($530 to $72 for annual hosting).  This means your site would need to make $50.17 per month or just $1.67 per day.  This is a very small site, and getting a site to $50 a month is really not that big a deal.

As I've shown, I have quickly gotten my public niche site (bestsurvivalknifeguide.com) to over $350/mth already after about 3 months.  This site is going to be highly profitable, which will allow me to invest in additional sites.

Do-it-Yourself Sites

Now if you were to write the content yourself and do the link building yourself, yours costs would be significantly less.  Here's what your expenses would look like:

  • Domain – $10
  • Hosting – $6/mth
  • Content – $0 (15 articles written by you)
  • Theme or Logo – $0 (Not required if you use free themes)
  • Virtual Assistant – $0 (you can do these tasks on your own).
  • Link Building – $0 (you can do your own link building).
  • Total Cost – $10 one-time, plus $6/month for hosting.

If you do everything yourself, you can have a niche site up and running for $10 plus just $6/mth!  So, as you can see depending on how much you do yourself, or if you decide to get help with link building, etc – you can spend anywhere from $10 to $530 to create a niche site.

Potential Profits for Niche Sites

As mentioned, my niche site that I've shared on this blog is bringing in around $350/mth, but the potential profits are MUCH bigger.  In fact, I have had a number of small niche sites making over $1,500/mth each.  My largest niche site was bringing in over $3,000 per month at its peak, and it was only about 20 pages of content.

So, you can see that the potential return on investment is HUGE.

And what's even better, is that in the SECOND year of existence, these sites only have expenses of about $82/year (domain renewal plus hosting).  And even the hosting is negligible because again its shared with other sites.  So, really the cost is only about $10 to keep a site around.  And if its earning $350/mth, that's an annual profit of $4,290 with almost no work.  (Most of my sites require NO ongoing articles or work in their second year…they are passive).

Then of course the idea is to build 20 or 30 of these sites to increase the overall income.  Then you start looking at revenue numbers of $80k to $120k a year.

Obviously some sites will do better than others, so it won't all be pure profit (because you might have to build more sites to find successful ones).  But hopefully this gives you an idea of the potential.

This is exactly what I did to quit my job 2 years ago.  I was making more each month from my niche websites than from my day job…so I quit!

My Spreadsheet that I Use

I've used a number of different spreadsheet to “have fun” with my own niche site projections, and I want you to get in on the action (if you haven't already started your own spreadsheet).  So, below you will find a link to my Excel spreadsheet that you can download and use.  Here's a quick screenshot:

nichewebsiteprojections
Click to Enlarge

In this example, I put in costs that were fairly high for each site…over $700 each. (The domains are $7.50 because you can often get them for this price through discounts, etc).  You can also see that the number of sites is adjustable…in this example I'm projecting to build 20.  So, building 20 sites would cost me a total of $21,494 if I basically outsource everything besides keyword research.  This includes a near full-time Virtual Assistant at $600 per month to help with some of the manual tasks of setting up sites, etc.

Now, for the fun part.  Below is an image of the potential INCOME based on those cost projections of building 20 niche websites:

potentialincome
Click to Enlarge

As you can see in the “Annual Profit” column, each site will need to make between $80 to $100 per month on average to break even with this projection.  However, you can also see that if all 20 sites are as successful as my survival knife site, my annual profit is closer to $65k per year.

And then of course, if they each earn $500/month, the Annual revenue get to $120k per year…not bad!

Again, these projections are based on investing over $700 per site, which my guess is that most of you are not spending that much.  If you are writing your own articles and doing your own link building, the break even point is going to be much less.

However, I'll let you determine your own costs and potential profits.

Download the Niche Website Projections Spreadsheet Right Here!

And yes, I know the spreadsheet is ugly and could likely be even more accurate (for the sticklers out there).  However, projections are just that…projections.  So this spreadsheet is more than sufficient to help you dream big and also stay realistic when it comes to the niche website business model.

And oh yeah, you can also project MUCH bigger projects using this spreadsheet as well.  Want to build the next eHow.com?  This spreadsheet can help you calculate the costs and profits…

Your Thoughts

I would love to hear your thoughts on my overall analysis of the niche website business model and the spreadsheet that I've shared with you.  Do you have any questions or comments that you would like to add?  What has your experience been with projecting your own profits and losses.  I would love to hear it.

132 Comments for this Post

  1. Bradley (Domain Spoon)

    Bradley (Domain Spoon)

    Excellent post, Spencer. I love my spreadsheets, and I guess I sometimes take it for granted that everyone uses spreadsheets to plan a project. Every single project that I work on has it’s own separate spreadsheet that is updated at least once per month (usually more often). It’s important to keep track of your P&L so that you know if a project is truly profitable or not, because only looking at income can get you into trouble.

    • Spencer Haws

      Spencer Haws

      Thanks Brad…it can be a lot of fun projecting profits, but also a very important step as well as you mentioned.

      • Bradley (Domain Spoon)

        Bradley (Domain Spoon)

        Yes, looking at how much money you MIGHT make is way more fun than tracking your actual income and expenses, therefore most people don’t do it and end up losing money and wasting time on the “nonprofit” projects.

    • Iain

      Iain

      I rock the spreadsheet every now and again. It isn’t something that I do for everything, but for some things.

      I use it for backlinking mostly. As a way of keeping track.

      Although I have discovered that I really don’t like doing backlinking, but I am too cheap to hire someone at this point.

      I know the service that Spencer has used is pretty solid, but the smallest package is a couple hundred.

      I suppose you have to spend money to make money.

      Spencer,

      Thanks for breaking down the costs of a niche site. I was curious as to how much you were dishing out.

      I like the idea of outsourcing everything, but as you say if you choose the wrong keyword, it can all be for naught.

      Thanks again.

  2. corey

    corey

    hello spencer i have a website and i am getting for now 500 unique visitors per day all of them come from google
    but the problem is that earnings are less than 1$ per day i would really like to contact you if you can give me some tips

    • Spencer Haws

      Spencer Haws

      Perhaps try a different ad placement, or a different way of monetizing your site altogether. Of course it all could depend on how commercial your keyword is…

    • Bradley (Domain Spoon)

      Bradley (Domain Spoon)

      Corey, I have a site very much like this in the acne niche. Lots of traffic but the Adsense revenue is horrible (very low CTR) regardless of ad placement, size or color. I am considering creating my own info product, like a video e-course or something. Every site is different, though, so that may not work for you… Much of success is testing, and you can’t test without change, so change it up!

      • Antony

        Antony

        Hey Bred did you try clickbank product “Acne no more”
        I’m seeing decent results on Spanish speaking market.

      • Tung Tran

        Tung Tran

        You can make lots of money in the acne niche.. Try to promote these products:
        http://www.exposedskincare.com
        acne no more

      • Barry (UGLYwallpaper.com)

        Barry (UGLYwallpaper.com)

        Think about who searches for acne in Google. Kids, from 11 to around 18. Most have no money and likely don’t click on ads. I think you’d be better off to re-structure away from an Adsense site and gear it toward a free quiz (ViralQuizBuilder) to draw the visitors in, then offer one of a few different completely free newsletters based off of the quiz answers. Within those email newsletters, you can elaborate on parental, financial help to aid the kids in buying a ClickBank product. BTW, I picked up to awesome Quiz tip from Tung!

    • Darren

      Darren

      Hey Corey,

      Are you collecting email addresses at the minute? With 500 visits a day I recommend you start collecting opt-ins (if you aren’t already)…this way you can start testing out offers through your follow-ups and even through the thank-you page.

      You’ll end up with a second traffic source that you control as well as valuable market research on the offers that are working.

      As a side note, most acne sufferers are looking for some kind of cream / and or treatment – ebooks can be a hard sell to this crowd – especially since many may be teenagers. Not saying they won’t buy a book, just that acne sufferers want a quick fix.

      Giving away a free report like “10 tips to cleanse and instantly improve your complexion” or something like that might be a good way to get some interest in your opt-in form, then lead them on to specific cleansing treatments and creams.

      Just a quick search on google has turned up these products and programs:

      ClearSkinMAX – moreniche.com/offers/clearskinmax

      Acne.org Regime – amazon.com/The-Regimen-Complete-Acne-org-Treatment/dp/B0016836RY

      It also depends on what kind of search terms folks are coming to your site on and what stage of the buying process they’re at

      Hope that helps

      Darren

  3. Drew Curtis

    Drew Curtis

    Thank you for sharing! Every time I read any of your posts I get really motivated and inspired to work even harder on my sites. Keep up the great work!

  4. Nick LeRoy

    Nick LeRoy

    Nice post. I always find myself playing with the calculator on my phone calculating “if a site makes $X a day times 30 is $X a month”. Fun stuff.

    On another note, I’ve found that I have a process down for building sites pretty easily but the link building is always a hurdle. Though, of course this is probably the same hassle everyone goes though. 🙂

  5. Sibo

    Sibo

    I love numbers because they make sense than “big words”. Thank you, Spencer. This article is very detailed. I just started my first Niche Site about a week ago by following through your posts. Literally I spent over 25 hours on your site in a week. I like all the details you provided.

    Keep up the great work, bro.

    Cheers,

    Sibo

    • Spencer Haws

      Spencer Haws

      Thanks Sibo…love to hear that you are getting so much value out of my content!

  6. Enda McLarnon

    Enda McLarnon

    My costs are $72 for hosting and I have 10 sites so domains of $70 and my costs are $142 a year as I write my own stuff. I don’t know a business in the world that you could set up for that type of money. I just don’t do back links and won’t with Penguin 2 on its way.

    One lens is making $50 a month so in profit after 3 months. (10 articles)
    2nd one is making $15 a month after 6 weeks (8 articles)
    3rd one is the same (6 articles)
    4th one is up a month and has made $10 so far (4 articles)
    6 to build and 6 to go

    I had been trying for 3 years to find something. Then I heard Spencer’s webcast, got longtail pro lite, got the niche pursuits training and at last…money and profit.

    I think you have to invest in training and a couple of tools and that was less than $100 to learn.

    I bought over stuff that was poor crap.

    Thanks Spencer for restoring my faith in decent people and great teachers.

    I will let you know when all 10 have been built and what sort of numbers I am seeing. What a great feeling that is as I used to build and build with nothing.

    Now I am building with purpose and yes I have a spreadsheet per site which is my blueprint.

    • Spencer Haws

      Spencer Haws

      Wow, thank you Enda for the kind words! Glad you like the training and software…and a big Congrats on all the success you are seeing.

      You are absolutely right, that you don’t have to invest very much money to find success.

  7. Jon Haver

    Jon Haver

    Definitely agree its a lot of fun to play with projections…I have found the process to be fun and useful but the results terribly inaccurate!

    My only feedback is projecting $100.00/month for a small site and 1 time outsourced back links is aggressive. There will always be stars and ones that suck but I think a $20-$30/month average would be more accurate. If you looked at all the sites you have built and their average income what are you experiencing?

    • Spencer Haws

      Spencer Haws

      Jon: Most of my sites before this year were indeed averaging closer to $30 to $40/mth. But I was not investing very much in each site, so they were HIGHLY profitable (still earning). But I’m going after bigger sites now, and my last few sites are indeed AVERAGING just over $200/mth. So, its very feasible. I’ve never done anything more than a one-time link building plan.

      • Jon Haver

        Jon Haver

        Thanks for sharing! Impressive average for a 1 time back linking process. Whenever I went down that road I had limited success.

  8. Greg Savage

    Greg Savage

    Do you have a link to the resources you use for outsourcing?

  9. Darnell Jackson

    Darnell Jackson

    Thanks for sharing this Spencer,

    This is why i recommend new bloggers invest in their “blogger” skills.

    You can save yourself a TON of headache and money by learning how to use Photoshop or other graphics programs.

    This is also a good way to see if you’re built for blogging you will have to learn stuff so you may as well learn something that will save you money.

    A penny saved IS a penny earned.

  10. Chris @ Stumble Forward

    Chris @ Stumble Forward

    The spreadsheet looks awesome Spencer, I’ve been blogging for almost 5 years now and I’m just getting started with building niche sites. It’ll be fun to calculate my potential earnings and to give me a sense of where I could take my business.

  11. Josh Garrod

    Josh Garrod

    Hi Spencer,

    Love the spreadsheet! When I am lacking inspiration and motivation I open my spreadsheet and look at what I could be earning if I just got on with.

    Would you be prepared to share who or what services you use to outsource link building? This for me is the most time consuming and the thing I enjoy least, I can handle content writing and graphics.

    Thanks,

    Josh

    • Spencer Haws

      Spencer Haws

      Thanks Josh. I’ve used tons of different link building services. My past few sites I’ve used LayeredLinks.com; but I may be using someone different in a few weeks.

  12. Brett

    Brett

    Great post Spencer! I get excited calculating profits too, especially when I know I’ve found a great keyword. Just a quick question: you mentioned you pay $250 for various link building services…. I know you’ve mentioned layeredlinks.com, what other services have you tried and which is the best if you had to pick just one?

    • Spencer Haws

      Spencer Haws

      I’ve used several people I’ve found on the Warrior Forum. But for now, I’m happiest with LayeredLinks. There are likely services just as good for possibly even cheaper out there.

  13. Tommy

    Tommy

    Hi Spencer,

    Thanks as always for all the great information.I just picked up LTP from Pat Flynn’s SPI blog. Oh yeah, I included you in one of the posts on my website yesterday if you want to check it out.
    Thanks again,
    Tommy

  14. corey

    corey

    hey i have found i niche that i am willing to get into but
    the region of the visitors are not all from UK or USA
    mostly Italy and France also
    i am confused what language should i use in my blog

  15. Dave Irwin

    Dave Irwin

    I’ve driven my wife crazy over the years with the number of spreadsheet projections I’ve done for this or that project. It’s great fun and can help motivate you… unless you fall into the trap of projecting all the time and never taking action. And I have to say I’ve been guilty of that a few times. Thanks Spencer!

  16. Lazy American

    Lazy American

    One of the issues I have with this projection is the possibility for ranking problems. You are very good at choosing niches but if you chose wrong and can’t rank the site you’re out $700.

    If Google decides to change their algorithm you may take a huge hit across all your sites if you outsource SEO to the same person and there particular method trips a penalty. That would crush your business.

    Then there is the possibility of the site losing traffic over time. Two years is a while to be ranking for a term. I know some pages can go much longer but many start to lose steam after a year or two, so keeping those earnings up might not be possible. Not making you unprofitable but cutting into your margins.

    I guess it comes down to kicking ass at building links yourself or finding someone trustworthy to do it for you. 90% of link building packages and such tend not to work so well.

    • Spencer Haws

      Spencer Haws

      I disagree with you that link building is so critical. Finding low competition keywords is more important. Also, you can also run the same business with MUCH less expenses. I just show what I’m doing as I want a little bit bigger sites. But many people spend $100 to $200 or less on a site and do just fine. All businesses have risk and yes not all sites will earn $200+/mth. But some sites WILL earn over $1000/mth and this more than makes up for lots of poor sites. The 80/20 rule applies.

      • Michael Steinberg

        Michael Steinberg

        Spencer,

        Are most of your $200/mo sites through Amazon, or others?

        • Spencer Haws

          Spencer Haws

          No. Most are through Adsense. I do very little with Amazon (just my survival knife site basically).

  17. Stephen Malan

    Stephen Malan

    Thanks Spencer for a detailed on niche sites. I am going to try your plan for the niche sites and see how they do. Will report back once I have results.

    Thanks again for a great motivating post!

  18. Mike

    Mike

    Spencer,

    Once again a home run post! Thanks for all the valuable and usable information you provide. Even after learning all I’ve learned from your free information, I’m pretty sure I’m going to subscribe to longtailclassroom.com this week. I’m sure there’s even more good instruction to come. Question: With Google changing the rules all the time, how do you stay in front of the curve? I mean, how did you come to find and choose layeredlinks out of all the services out there? Can you recommend any blogs that you subscribe to that keep you current?

  19. Nick LeRoy

    Nick LeRoy

    Spencer, just out of curiosity, have you tried The HOTH linking package? Thoughts?

    • Spencer Haws

      Spencer Haws

      No, I haven’t, but perhaps I will…

    • Fran

      Fran

      I tried it Nick. I wasn’t impressed at all to be honest. Low quality articles on pretty low quality sites. you can get the same much cheaper elsewhere but I’d focus on finding higher quality guests posts if that’s the kind of links your looking for.

  20. Tung Tran

    Tung Tran

    Thank you Spencer for the spreadsheet. I have never thought about this.

    Do you think $700 is too much for a small site?

    Because we have one potential loss from Google : Animal Updates

    Have u experienced any effect lately?

    Actually I dont really care about them and I just focus on making my high quality sites so hopefully they will be ok.

    I’d like to seperate the investment in 2 phases:

    Phase 1: The goal is to find out the winner
    – Domain: $8
    – Hosting: Just a little..
    – Content: 5 articles – $24 ( I found out that 5 page sites are still ranking very well)
    – First month SEO: $30
    Total: $62 for every new site.

    And then I will wait for one month. The sites which 1)rank and 2) make money will be moved to phase 2 and the losers will be weed out immediately.

    Phase 2: The goal is to expand and increase profit.

    – I will use various SEO services and spilit testing the winners with Visual Website Optimizer to improve the earning.
    – I will build more sites target the same keywords of the winners to take advantage of traffic from lower positions. I want to dominate the niche 😀

    That’s my business plan for now. Do you have any advice?

    Regarding my 1st niche site for amazon:

    I invested total $284.17 and the revenue after 1.5 month is $356.02 so I have positive ROI now and it allows me to invest in other projects.

    You’re always my biggest inspiration 😉

    What do you think about my plan?

    • Spencer Haws

      Spencer Haws

      Yep, your 2 phase plan sounds about like what I used to always do. So, its very feasible to invest only $100 or less per site. However, I have more funds to invest, and I’m more confident in my keyword research skills. So, in reality when I say “$400” for content…I might spend less than half that until I start to see results.

    • Ray

      Ray

      Hi Tung,

      I really found your comment re your process of weeding out unprofitable sites interesting. Specifically, you mention creating 5-page sites and spending $30 for the “first month SEO.” May I ask how you’re spending this $30? Do you have a VA or a backlinking service you would recommend. Any help would be much obliged! Thanks!

  21. Tim O'Rourke

    Tim O'Rourke

    Hi Spencer,

    Great article! Thank you for the inspiration.

  22. Winston

    Winston

    Spencer,

    Sorry if I missed it earlier, when you said your older sites average $30 to $40 /month and these were smaller and the newer ones you’re building, which are bigger make $200/month.

    How many pages does a small site, and a big site make, and also aside from that are there any differences (ie. longer content, etc.)?

    Thanks, and great post as always.

    • Spencer Haws

      Spencer Haws

      I used to build 5 pages sites; now its 15 to 20 pages.

  23. James

    James

    Another incredible post again not to exagerate, Spencer!

    I’m yet to create my first niche site project. While I’m learning, I also inspred alot from you. I wish I could take action on my first niche site project during this 3 months.

    I’ve sketched my expenses as yours below:

    – Domain Name: $3 (1st Year Promotion)
    – Web Hosting: $7/month
    – Content: ~$300 (20 Articles)
    – Virtual Assistant: $0
    – Graphic Design: $0
    – Theme & Plugin: $0
    – Link Building: ~$340
    + Total: ~$650 One Time + $7/Month

    I need some of your recommendation:

    – Where would I outsource for good articles that needless for me to edit or hire others to proof-read because I’m poor at English so that I don’t know that the article is good or bad?
    That’s why I need the already qualified article producers
    – Do you think my expense is suitbable for the 20 articles niche site?

    It’s really hard for me to get my hands dirty now because I need to save money to launch as I can’t write content myself as well as link building.

    It’s really inspirational to see your profit (I’m currently working my arms and legs for a salary of $80/Month in my country). I need to save all of my salary about 9 Month in order to launch a small nich sites.

    But, if my dream comes true that I’d earned at least $100/Month from my nich site as I followed you, my life will be better as $100/Month, I could more easily with my country.

    Thanks!

    James

    • Norm

      Norm

      HI James,

      If you are starting out. Fiverr is a great resource for cheap inexpensive articles.

      Before hiring them, Send them questions like
      – do they have examples they can show you.
      – how many words
      – can they write for an audience, not just throwing bunch of dot points etc. i.e. feature / benefit

      Email 10-20 writers with good ratings.

      Some tips.

      1. Look for US speakers
      2. Only hire ones that have good ratings. Read the comments left by other users, great indicator on what to expect.
      3. Delivery times also. Some are really quick, some are really slow and some just keep making excuses.

      Again you can also goto Odesk or Freelancer, but for me this is a longer process and if you in a hurry and want to get going I recommend Fiverr.

      Norm

    • Spencer Haws

      Spencer Haws

      You can outsource articles on Textbroker.com or Elance.com

      • Chris in the UK

        Chris in the UK

        Iwriter.com is also good for cheap articles if you’re prepared to spend a bit of time editing. Having said that, you could use these articles for your Web 2.0 ‘layer 2’ sites if doing your own link building. Having this original content is a much safer alternative to spinning articles to use for link building.

        Thanks again Spencer for another motivational post, since finding your site a few months ago I’ve already got around 10 sites out there and slowly sliding up the rankings, with one site earning about $450pm. All of the others haven’t really taken off yet, but fingers crossed they start to get some decent traffic as well. It would help if I wasn’t so impatient for results 😉

        Anyway thanks again Spencer!

  24. Norm

    Norm

    Hi Spencer,

    I am a big fan of Excel sheets as well. The projection is a great idea, never thought of putting it in a spreadsheet.

    I have a similar spreadsheet but mind is for actuals.

    I track all my sites and load them into a pivot table which allows me to mix it up bit with daily income, monthly income and all kinds of fun statistics for each of my websites.

    Norm

  25. alam

    alam

    Good plan. If you don’t mind please share how you create content (where do you outsource and which aspects that really matter) according to your standard.
    Thanks

  26. Tom

    Tom

    Hmm, good comments by all. I should probably change some of the ad placements on my first blog since the click rate is kinda low.

  27. Richard

    Richard

    Hi Spencer,

    What are the differences between your current niche pusuits public project and your new video training series.

    Are their new “tips and tricks” in the video training that is not covered in the public project. I guess so as its a paid product.

    Cheers

    Richard

  28. Norman Holden

    Norman Holden

    G’day Spencer ,

    You say “But I’m going after bigger sites now, and my last few sites are indeed AVERAGING just over $200/mth.”

    Can you elaborate on what you qualify as “bigger sites”

    Thanks ,

    • Spencer Haws

      Spencer Haws

      15 to 20 articles as opposed to the 5 pages sites I was doing before.

  29. Victoria

    Victoria

    What makes the true distinction in whether or not something is profitable is calculating in your labor costs also. Your time is worth something and when running a business unless you work for free your labor should be one of the expenses. Allocate an hourly cost for your time and then look at it again.

    • Spencer Haws

      Spencer Haws

      Sure, I agree. But for year 2, my time is 0 hours…all profit usually. And because I’m outsourcing, my time per site is very little…but I agree this is important as well.

  30. Victoria

    Victoria

    I am not clear on something. Do you set each site up as an independent and distinct site with its own URL or are your calculations based upon using WPMU?

    • Spencer Haws

      Spencer Haws

      Yes, each site is on its own domain. None of this has anything to do with WPMU.

  31. Chetan

    Chetan

    Hi Spencer- once again, a fabulous post. thanks for the excel sheet… hope I don’t turn into a day dreamer!

  32. Sita Gabriel

    Sita Gabriel

    Hi,

    My costs per month is only $15, for the host. I keep it really low because I want to do everything for my sites, and not let other persons mess things up, I hired a VA and he only did wrong things to my blogs.
    Thanks for the nice post.

  33. Bas

    Bas

    Hi nice post again. I was wondering I wanted to hire someone for linkbuilding but most people on odesk (and other freelance sites) are speaking English. I am running a dutch website at the moment so I was wondering, does it matter if the site linking to me is in another language or not?

    So it’s better to link dutch -> dutch site or is it more important the link comes from a related website?

    I really have trouble ranking my sites and I think it might have to do with my linkbuilding strategy. I mostly do link exchange and put links on website where everyone can add them. Not something special but don’t really know how to get those really good links. Hope you have some thoughts about this 🙂

    • Spencer Haws

      Spencer Haws

      Its better if its a dutch link. But if its related, that’s probably more important.

  34. Chris

    Chris

    Really nice post Spencer, I always do some kind of dreaming and calculating about how my future website will earn. It’s never becoming so well 🙂 but maybe now… since I got lots of helpful information from your blog it will.

    All the best!

  35. Viv

    Viv

    Spencer must be a Goldman Sachs Alumni…no doubt…

  36. Adam

    Adam

    Excellent post as usual Spencer.

    Thanks again for the interview yesterday, always great content!
    Adam

  37. Chris

    Chris

    I looked at your bestsurvivalknifeguide website and it looks great. I am not a website programmer. How can I make a similar website that looks and functions as well as yours? Thank you for your posts, they are wonderful!

  38. joe

    joe

    “My largest niche site was bringing in over $3,000 per month at its peak”

    Before Panda or after?

  39. Melody

    Melody

    Great post. I think this is my favourite post of yours in a while. 🙂

    I’ll never be as successful as you, but you inspire me all the same. Keep it up, just wanted to say I think this an impressive post.

  40. Matthew

    Matthew

    Excellent post, Spencer! As always, information that truly helps your readers.

    For those out there wanting to save a little bit of money on design, I use Paint.NET to make my own header art. It’s a free program, and it’s not very difficult to use. It’s actually one of the parts of the building process that I enjoy the most.

    Hope that helps. And thanks again, Spencer!

  41. John Shea

    John Shea

    Hey Spencer, thanks for sharing this spreadsheet. I have been meaning to start paying closer attention to spending habits, I will probably track my costs for my first niche site and report them back on my blog throughout my journey.

  42. Curtis

    Curtis

    Excellent post! I do something very similar. It’s nice to see the potential numbers. If this post doesn’t motivate you I don’t know what will.

  43. random guy

    random guy

    Spencer, after you revealing your niche, I guess that this would be common sense so here it goes. If I was in your shoes, I’d want someone to let me know about this as well..

    Check again the policy for some of the newer niche sites, that is if you’d like to keep them hidden from prying eyes. 🙂

    You forgot to remove the knife url and some appear in the search results if you know where/how to look. Hint: Dart

    You can delete/not approve this post once you see it so that other blackhatters don’t exploit this. I don’t know if it passes akismet or not.

    cheers and best of luck!

    P.S. Cool “health TECH you.know.what” domain. For a couple of seconds there, I thought that you just grabbed one of my COM domains that are now expiring LOL 🙂 Mine’s pretty much the same but hyphenated just before the tech part.

    • Mark

      Mark

      There are a bunch of sites made by copycats that look like Spencers (XrayTechSalary, RoomDarkeningShades, DigitalPianoReviews, CompoundCrossbow, ….etc). In many of them they didn’t remove the survival knife URL from the Privacy policy. Still, none of these sites are any good and Spencer is not that sloppy 🙂

      • Spencer Haws

        Spencer Haws

        Nope, none are mine. People need to be more careful…

    • Spencer Haws

      Spencer Haws

      None of those are my sites. Some other people copying my privacy policy…thanks random guy…but its not me!

  44. Rafael Marquez

    Rafael Marquez

    Hi Spencer,

    I was a believer, then I was a skeptic, and now I’m starting to believe again. I purchased Long Tail Pro based on Pat Flynn’s recommendation. I plan to build out 5 niche sites. I’m going to blog about the process on my site, and do a sort of public study on the whole thing.

    I’ll be happy to make more than $20 per month, per site, but of course the more the better. I hope to get good results!

    Cheers,

    Rafael

  45. Russ

    Russ

    Hi Spencer, what are your thoughts on building non-English Niche sites?

  46. Aaron

    Aaron

    Spencer- Enjoying the articles you write here. I really appreciate the information you provide.

    For the expenses you accumulate for your websites, what do you do when it comes to tax time? Do you track and write-off those expenses each year? What do you do?

    • Spencer Haws

      Spencer Haws

      I have an LLC, so everything is tracked in quickbooks, and I most certainly right off expenses.

  47. Winston

    Winston

    Spencer,

    I have a question. I have a site that was ranking on page 1 for its keyword. Thinking it was ok at the time, I added about 5 pages over the past few weeks on a related keyword.

    The result was the ranking fell for the original keyword, now to #25. And because the main keyword had more searches, the total visits I’m seeing is now lower than it was a couple weeks ago before I added the extra posts.

    What’s your take on this.

    Also, does this mean that it isn’t wise to add related keywords/products because it could cannibalize the main keyword?

    And what do you think is the best move going forward to get this back up.

    Thanks.

    • Spencer Haws

      Spencer Haws

      Probably a coincidence. But you can always remove the content if you are unsure. I always add related secondary keywords (but not the same). For example, “best survival knife” is main keyword – “Ka-Bar Becker BK2 Knife Review” is a related secondary keyword.

  48. Don Shelton

    Don Shelton

    Always a good basic exercise to run the numbers; compared to other projects I’ve done spreadsheets on (real estate investments), niche site projections are simple enough to do mentally in most cases, but still want to know those numbers. Outsourcing sounds good, but saves less in time than it may at first appear. I’ve done everything myself, and I’ve hired out to compare. Content creation is one of the biggest disappointments in outsourcing; the best one I’ve tried is Textbroker. Level 4 articles are seldom much better than level 3 (especially for the cost difference), and level 2 are often unusable. Even on level 3, I found I was spending between 40% and 120% of the time it took just to write the article myself to order and edit (or often nearly re-write) the outsourced articles – which often contained incorrect information and I had to re-research (and this would be after rejecting the article one or more times). So the really interesting spreadsheets come when I try to figure true costs of outsourcing vs. opportunity costs of my time, and how much time is actually saved 🙂

  49. Mark

    Mark

    Hi again Spencer!

    Thanks for another well conceived article. I have another hypothetical for you if I may 🙂

    Say you wanted to go for for a certain keyword, which isn’t very competitive, but also definitely isn’t something you’re going to get to spot #25 in google without at least some backlinks. Let’s say it’s Pirate Costumes For Women or whatever (just an example).

    Which of the following two solutions do you think is better:

    1. Going for a brand new domain, which includes the keyword but isn’t an EMD. Perhaps something like BestPirateCostumesForWomen.com. And then building your way up just like you would with any other new website. Or…

    2. Going for an expired domain, which was online for 6-7 years, has a Domain Authority of close to 50, around 5.2 MozTrust and over 150 backlinks. HOWEVER, this domain doesn’t mention the keyword at all, and neither does it have any backlinks from websites related to this keyword. Let’s say it’s something like BeatTheOdds.com (again just an example).

    Assuming that after purchasing these two domains you were to put in the exact same amount of SEO work into both, and have the exact same content on both (let’s disregard duplicate content for a moment 🙂 – which of the two do you think would rank better, faster, for the keyword?

    Thanks!

    • Mark

      Mark

      When I said over 150 backlinks above, I meant over 150 linking domains.

    • Spencer Haws

      Spencer Haws

      I still like #1 because the domain is relevant; but I wouldn’t be surprised if #2 ranked faster. I personally still just register new domains – that’s my preference.

      • Mark

        Mark

        Thanks for your opinion.

        I’m thinking of trying out a used domain like I have described above and going for a somewhat more competitive keyword; still not a super competitive though – say one where most in top 10 have a page authority of ~50 and usually between 20-40 linking domains and an average MozTrust below 5.5 (I use SEOMoz for analysis as you’ve probably figured out :).

        I’m thinkin that when keywords like these are concerned, going for a domain with a good “history” will allow me to quicker explore the potential benefits of such a keyword.

        I was inspired by the podcast you have on your website and made a PHP script which, in connection with Xenu’s, finds dead domains then checks if they are available for registration and finally uses the SEOMoz API to filter out the spam and only return those with a decent PA / Moztrust / linking domains, so it’s likely I’ll do this somewhat more often.

        Thanks for all the valuable info so far Spencer.

  50. Johnson

    Johnson

    I love those sites that only have a handful of posts but continually make $600+ for months and months without being touched.

    I’d be interested in hearing the % of your niche sites that turn out to be duds vs the % that turn out to be profitable.

  51. How to calculate the Profit potential for an Empire of Niche Sites | bdhire.com

    How to calculate the Profit potential for an Empire of Niche Sites | bdhire.com

    […] If you’re at all interested in the process of creating niche sites and want an idea of the potential profits, I recommend you check out the full article here. […]

  52. Nancy

    Nancy

    I’d love to see a task calendar overlay for the spreadsheet, especially with timing for each type of link and posting of content…or even, just a task list for starting a new niche site. I know its all there on a high level but would love a checklist of sorts, if you care to share!

    Thanks!

  53. Kaven

    Kaven

    Hi there Spencer!

    I was wondering, what’s your take on Google Authorship on niche sites? I understand authorship can raise click rates by a significant number with the little profile image and all, the pages stand out… But i also understand Google could find it weird to see an author claiming to be the expert in survival knifes, blue roller blades, beaver insurance and 15 other fictional niche sites.

    What do you think, is authorship a good or a bad idea for niche sites?

    • Spencer Haws

      Spencer Haws

      I haven’t done any google authorship for niche sites. Mainly for the reason you bring up, its a bit odd to be an “expert” in so many various niches.

  54. Rina

    Rina

    I should have made ​​a calculation of the gains and losses of the blog that I created to be more effective and can find out which blogs are giving fortune for me and who did not
    very valuable article, I always get a lot of knowledge from your articles
    thank you

  55. Ibrahim

    Ibrahim

    Nice calculation and projection. I have my own for my sites, if people wants i can share it. But overall this is going to help everyone who loves to create niche sites.

  56. Mark

    Mark

    Spencer,

    May I ask what your conversion rate for the Best Survival Knife site is, according to the Amazon Associates reporting page?

    • Spencer Haws

      Spencer Haws

      Its around 1.7% I think right now.

      • Mark

        Mark

        Thanks a lot.

      • Mark

        Mark

        One other question, if you don’t mind.

        Does the bulk of your sales for the best survival knife (or any other sites that use Amazon for monetization) come from the main keyword you target? Or do you get just as many sales (percentage wise) from all the other long tail keywords that drive traffic to your site?

        • Spencer Haws

          Spencer Haws

          Its hard to track what keyword brings in the sales. I can just see where my traffic comes from and how much of that traffic converts into a sale, but not what the original keyword is that people typed in. But most of the traffic to my site comes from other long tail keywords (not just best survival knife).

        • Mark

          Mark

          Thanks Spencer.

          The reason I’m asking is that I have my own niche site (my first), which I built a few weeks ago. I did it following your exact blueprint, the one you used for the best survival knife project. It’s obviously a different keyword, but it is pretty closely related (as in an outdoors thing), it follows the exact same structure as your keyword (best xxx xxx [name of the product]). I built the site with Amazon in mind and basically followed exactly what you did do the T when it comes to site layout, quality of content, content presentation etc. (I even did a comparison chart just like yours, took quite some time to assemble).

          The keyword doesn’t have anywhere near the number of monthly hits yours has (just 800 local, i wanted to start really small), but I’m already ranking #6 on average for the main keyword (barely any SEO work done), and getting around 35 unique visitors from Google from closely related keywords. Amazon Associates shows that I’m getting around 20-25 affiliate link clicks per day (this can be misleading because if one member clicks 5 of my links, then it will count it as 5 and not as 1).

          So far I’ve hard around 150 clicks in total but haven’t sold a single product related to my niche. I did sell two other somewhat cheap products (~$40 each), which aren’t related to my niche. Think having someone click your survival knife affiliate link and then buying pants – that kind of thing.

          I’m going to take a guess that 150 clicks is far too small of a sample size for me to draw any meaningful conclusions, but just in case I’ll ask: would you, at this point, begin to try and figure out what’s wrong, or would you just wait until you would rank higher and get more clicks?

          The site is really well targeted for the keyword(s) I’m going for, and the products I’m advertising are mostly in the $100-$200 range, so kind of similar to your survival knives.

          Thanks for taking the time to respond to all the questions by the way, I appreciate it more than you know.

        • Spencer Haws

          Spencer Haws

          I think your sample size it too small right now. I would wait until you have a couple thousand clicks before you start trying to predict any trends. So, just be patient…you may start getting sales soon.

        • Mark

          Mark

          Thanks, actually just got a first niche-related sale today 🙂

  57. Benjamin Aries

    Benjamin Aries

    Hi Spencer and readers:

    I’ve been following NichePursuits for a while, and recently started building niche sites as a side venture. I’m a self-taught programmer and web designer, so a lot of the technical part fits naturally.

    One of my new niche sites is doing well, making close to $200 / month. BUT — one I recently launched is kind of a mystery.

    The AdWords Keyword Tool says that the target phrase gets 3,200 EXACT match traffic per month, with $5 CPC. Not too shabby, I thought….

    Here’s the mystery: The site is now ranked #4 (first page) on Google for the exact search phrase. Title and description are optimized, BUT — it gets very very low traffic.

    Does anybody have any ideas what could cause a keyword that “on paper” should have decent traffic to receive none? Is the AdWords Keyword Tool sometimes not correct? Other ideas?

    Thanks all —

    -Benjamin Aries

    • Mark

      Mark

      Hi Ben,

      I’ll ask the obvious, but — are you sure you checked “Exact” in Google Adwords? I know you know you need to check it, but I actually made the mistake and forgot to check it once and almost bought a domain for a keyword that looked super-sweet, but then I realized I had “Broad” checked and my optimism quickly dissipated 🙂

      Also, where/how are you checking your current ranking spot in Google for that page?

      • Benjamin Aries

        Benjamin Aries

        Mark –

        Yes, that is for EXACT, Local, U.S. traffic.

        Google rank is checked using SmallSEOTools dot com rank checker, as well as manually through a U.S. proxy on a “fresh” instance of Google.

        I’d give the keyword, but since it’s an AdSense site I want to avoid shenanigans.

        It’s very frustrating, since it’s a (in my opinion!) nice site with good content, that SHOULD be getting decent traffic, and ranking toward the top of Google — just very strange.

        • Mark

          Mark

          Have you been ranking #4 for a long time? Perhaps you’re still jumping between page 1 and 2.

          Also, when you say “gets very low traffic,” how low exactly do you mean?

        • Spencer Haws

          Spencer Haws

          Okay, I was just going to say makes sure its LOCAL – US; but you said it is. Not sure what’s going on. If you want to privately email me keyword/site, I can take a look. Up to you.

        • Benjamin Aries

          Benjamin Aries

          Sending an e-mail now, Spencer.

          Mark, it gets around 30 visits a day, according to Analytics.

          Again, that’s for a site that is ranking around #4 on Google for three related phrases, which have a total local volume of 3000 – 4000 searches monthly, according to the AdWords Tool.

          That just seems really low and odd to me. In comparison, I have another niche site that has around 2000 monthly exact volume, and gets 100+ real visits daily and makes $200 a month.

          It would make some sense if it just wasn’t ranking well on Google, but it *is.* So maybe the first two rank positions are getting all the clicks?

        • Mark

          Mark

          Well you sent the link to Spencer already, so he’ll give you far better suggestions than I ever could 🙂 Good luck with it bro!

  58. Dot

    Dot

    Hi Spencer – Really love the spreadsheet. I have worked out most of the formulas to get the same figures, but I’m having troublefiguring out how you arrived at the totals for the 2nd year column. For example, at the $20/mo level, how did you get from -16K to -2K on 4800 rev for the second year and 7300 costs, and also how did you arrive at the total monthly costs to build sites?

    • Spencer Haws

      Spencer Haws

      Oh my goodness! I just realized the spreadsheet I uploaded didn’t have the formulas! That was not on purpose…I’m fixing the spreadsheet and uploading now with all the formulas (must have happened when I copied into a new spreadsheet and I didn’t catch it).

  59. Emmanuel Cudjoe

    Emmanuel Cudjoe

    Building a successful passive income obviously ought to be understood that it takes a lot of hardwork and perseverance in order to succeed.
    It’s isn’t as easy as you intend to portray it.

  60. Gav

    Gav

    Hi Spencer,

    Enjoyed listening to your appearance one SPI, have heard your name mentioned a few times, but this is the first time I have visited your site.

    Can I ask who you used to create the sortable table on the homepage of your survival knife site?

    Thanks,
    Gav.

    • Spencer Haws

      Spencer Haws

      TablePress plugin. Its a free plugin for wordpress.

  61. Ado

    Ado

    Spencer,

    I am starting my small web empire and I’m looking for a VA. Any tips/suggestions when it comes to hiring one?

    Thanks,
    Ado

    • Mark

      Mark

      Just had a guy go through my Amazon affiliate link and purchasing 24 different items, 5 of which were related to my niche 🙂 what I particularly like about this is that now I have ideas for many new niche sites (by just looking at the things he bought).

    • Spencer Haws

      Spencer Haws

      Just do your best to find someone reliable. I should probably do a post on this – as its a more in depth question that I can’t answer well in a comment.

      • Ado

        Ado

        A post would be great.

        Thanks!

  62. rahat

    rahat

    I am greatful to you for your suggestive posts

  63. Green Tea Lover

    Green Tea Lover

    Hi Spencer,
    Looks very interesting to see the projections and of course the excel. Thanks for sharing the template

    Just few quick questions
    1. Do you use ad sense on all of these sites or amazon?
    2. Where do you outsource content creation?(odesk/fiverr/textbroker)

    • Spencer Haws

      Spencer Haws

      1. Almost all adsense
      2. textbroker.com and elance.com

  64. Mark

    Mark

    Hi Spencer,

    In your experience, if a backlink does not appear in Google Webmaster Tools, does this mean that the link was not “picked up” and does not contribute towards my websites ranking? I have a few links from Web 2.0 properties for which I built a decent amount of tier 2 links (they should have definitely been noticed by Google by now), but they still don’t appear in the “Links to your site” section of GWM.

    Any experience with this?

    Mark

    • Spencer Haws

      Spencer Haws

      Not all links are shown in webmaster tools. Google accounts for them all – but does not always show them all.

      • Mark

        Mark

        Thanks

  65. Jan Koch

    Jan Koch

    Hi Spencer,

    thank you very much for sharing this spreadsheet!
    I’m glad that your NSP site is growing that fast.
    You and Pat Flynn got me to engage myself in niche sites 🙂

    A passion of mine is IT security, but I never found a way to monetize it.
    For the target keyword I chose there are enough monthly searches, but the advertiser competition is fairly low (40 – 60). Is it a good idea to target that keyword anyway?
    There could be a second monetizing strategy via Amazon Affiliates, since there are a lot of IT sec books available.
    Also I can imagine to create a video course for ethical hackers, which could also earn me some money.

    What do you think?

    Best regards,
    Jan

    • Spencer Haws

      Spencer Haws

      40 to 60 is still okay for ad competition. I think you would be fine.

  66. Catherine Mills

    Catherine Mills

    Glad to see successful people doing this as well. I used to do this in brick and mortar businesses I owned long ago…not as much fun!! And I use this method to plan just about any investment. It helps me set a goal….how many sites….average profit….do I want to focus on profit per site or quantity of sites…

    Oh, AND it’s fun!

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