With all the money making methods online there are 2 of them that stands out as being frequently used.
That is affiliate marketing and owning a product.
The beauty of both of them is that they are completely different and yet they complete each other, you can think of it as a tree with owning a product the parent node and affiliate marketing as a child node.
The reason why I paint to you this picture is because I want to compare them to you in such a way that, you will see the profit potential from each one vs. the amount of work, time and money you need to invest in each.
This is a very good way to decide how to use your skills and gifts to start making money online.
You have to remember that it is not written in stone that affiliate marketing is easier than owning a product (and vice versa). It all depends on which one of them you are more comfortable with and can excel at.
To understand the flow of the article, I am going to start with affiliate marketing and then owning a product.
I will demonstrate many angles for each method and it is up to you to conclude the weakness and the strength of method and thus decide which path to take to make money online.
In This Post:
Affiliate marketing is the process of selling a product you don’t own (via referral) for a commission that is set by the owner of the product.
Affiliate marketing is certainly a more popular choice among internet marketers (more popular than owning a product).
The reason for this is because it is easier to become an affiliate than to own a product (in terms of setting up).
This is what you need in order to get started in affiliate marketing:
- Website (Optional)
- Affiliate Network Account (Required)
To become an affiliate you don’t necessary have to own a website, but it can be a big plus for you to have one.
Owning a website as an affiliate helps you build a name for yourself and increase the trust for that name, while at the same time building a list of leads.
This list of leads you collect from your site (blog..etc) can help you sell any product any time you want.
It also gives you more control on your long-term success as you will be able to nurture this list and develop trust with your subscribers.
If decided you don’t want to open a website (perhaps to cut down the costs) then it is still possible to become an affiliate.
This basically will mean that you going to depend totally on paid advertising campaigns, and calculate your ROI (return of investment).
For example, you can invest $100 in an ad campaign for a certain product that you promote as an affiliate.
If you make $140 profits from your original $100 then you made a $40 profits you then keep repeating and improving your ad campaigns to boost your conversion rates and thus increase your ROI.
Affiliate Network Account
As an affiliate, the first thing you need to do is create an affiliate account.
Where to create that account depends 100% on the product you want to promote.
For example, if I want to promote an Amazon product then I will create an affiliate account on Amazon because the product I am promoting is listed on Amazon (the affiliate network in this case).
If I want to promote a product that is listed on Clickbank’s marketplace then I will have to create an affiliate account on Clickbank.
And so on…
To know which affiliate network your product is listed on, you will have to contact the product owner.
Or usually check their affiliate page and there they will tell you where to create your affiliate account.
The costs of getting started in affiliate marketing is usually marketing costs rather than setting up costs.
If you decide to create a website as a base of your affiliate marketing activities then it can cost:
Web hosting $60/year
If you want to collect leads from your website (which is a must to become successful affiliate) then it costs:
Auto responder service $15/month
Plus some design costs for your website:
You can buy a theme around $40-$150
Or you can hire a web designer for around $500
Creating an affiliate network account is for free in the majority of cases.
The costs I mentioned are approximate and can be more or less (depending on the service provider).
You will find that after you get your website and affiliate account setup, all the work and time you are going to put is mostly for marketing your affiliate products.
You can work 4 hours a day (3 days a week) and still accomplish a lot, some tasks you may need to do include:
- Writing content for your blog’s visitors (if you own affiliate website)
- Managing people you outsource work to (i.e. seo)
- Doing SEO yourself
- Building relationship with fellow affiliates, and interacting on social networks.
- Launching PPC ad campaigns
The beauty of affiliate marketing is that you can promote multiple products at the same time making it huge money making potential.
Your profits can depend on few things:
If you have good budget and know how to do PPC advertising then your profits can easily be 4 digits i.e. $9,000 a month (modest estimation)
If you have build a list of buyers then 1 product launch can comfortable gets you to 5 digits profiles i.e. $90,000 a month.
It all really depends on how skilled you are with PPC, or how many people you have in your list and what kind of trust you developed with them.
There are affiliates who make as much as $176,000 per month and others who make $500 a month, which one of those you going to be is totally up to your dedication and the hard work you put.
Owning a Product
Owning a product is very much like owning a cloth store, many clients come and go. Some of them just browse around and others buy.
As a product owner you can set your own price and control the quality of the product which is something you don’t control with affiliate marketing.
Owning a product is something you should take very seriously as you will be responsible for taking care of every aspect of the business.
And those aspects are diverse and vast (from managing people working for you, to being aware of everything about your business technical or non-technical).
To explain better, take a look at the below diagram as it shows you who is involved in the process of creating a product.
The non-technical kind of product you can make yourself is an ebook or course (or any text/video content product), as it only depends on your knowledge.
Another type of product is software or service, this requires a technical knowledge of a programmer, so if you are a programmer yourself then you might think of something cool and start developing it.
To sum up, the entry barrier for owning a product is:
- In-depth knowledge to create a product (requires years of experience in the niche)
- Technical knowledge and moderate niche knowledge at least.
The cost of creating a product is much higher than starting in affiliate marketing.
Let me break down the necessary costs:
- Web Hosting costs $60 a year give or take
- Domain name usually $10 a year
- Website design costs usually starts at $300 if you are designing a simple sales copy and can go up to $1000s if your site is more complicated like online store or paid monthly service.
- You will also need the services of a credit cards processing company so that you can accept payments on your website. That’s average of $50
- Programmers that develop your product start at $1000 for decent product from skilled programmer (Optional)
- Copywriter, if your product is ebook for example, you will need the service of copywriter (if you are not writing it yourself). They can cost roughly $1000
As you can see the costs of starting a product is much higher but the benefits are huge since you will be the owner and in control of every aspect of the business, even its future growth.
Your budget will reflect what kind of work you will be doing yourself and what kind of work you hired other people to do.
So let’s say you have budget just enough for web designer and for advertising, this will mean that you have to put on not less than 6 hours a day (7 days a week).
Because even for the tasks you hired people to do, you still have to manage them on semi-daily or daily bases.
The work load will be much more intense in the pre-launch phase, as you will have to worry about many things like how the website design is going, the content of the site, the product itself and anything else that pops in your way.
After you launch your product, the rest is easy, and the work load can drop to just 2 hours a day (and maybe even take a day off once in a while).
All I can say is that the profits from a product you own is much more than promoting affiliate product.
Many successful internet marketers make over $1,000,000 yes 1M in a single launch (that’s a day), by recruiting affiliates to promote their product.
Yes it can get that crazy.
But to be real, usually you will get around $800 a month if you did your advertising well (that includes SEO).
Say you have 200 unique visitors a day (which is possible after 1 month SEO or another advertising method).
Now say your product converts at 1% so out of 200 visitors you will get 2 sales.
If you net profit from your product at say $20, this means you can earn a $40 a day or $1200 a month.
Not just that, you can even flip your website for 6 month profits. So if your product earns you $800 a month then you can sell it on Flippa for $800×6 or $4800 (and that would be your asset).
For myself I prefer owning a product, as it allows me to strategize my growth plan and the profits are much more. I don’t mind the work I have to put.
And if you decide to give affiliate marketing a try, then you will find many affiliate marketing courses to teach how and get you started like this course.
Well, that’s basically my humble comparison of my favorite 2 ways to make money online.