When it comes to working online and making money on the internet, most discussions tend to look at specific tactics.
How do you set up a mailing list? How can you get a merchant account? And so on.
The answers to these questions may be useful, but you can learn about them elsewhere, and I thought it would be helpful to take a step back and look at something higher-level.
Fundamentally, how do you make money on the internet?
I’ve been making my living online for more than a decade now. The specific projects I work on have changed over the years (and may change again), but I can’t imagine not doing something that pays the bills through online work.
There are essentially two broad approaches to working online: you can either profit from an inefficiency in the marketplace, providing a solution to a problem someone else should have fixed, or you can make something valuable and share it with the world.
For the first 5+ years of earning all of my income through online projects, I focused on profiting from inefficiencies in the marketplace. In my case, this meant things like selling on eBay during its early days, when it was a seller’s market and high profit margins were normal. (Things changed later on.) Then it was playing an arbitrage game with Google Adwords and Adsense, profiting a small amount, many times over, from the split between the two. (Again, things changed later on.)
There was nothing wrong with these projects, but they also weren’t very exciting. I didn’t go to sleep at night thinking about how my business would help people the next day. For a while, that was OK, because I was involved in plenty of other things that were at least somewhat helpful. But as time went by, I felt challenged to contribute in a greater way, so I began to shift to the second approach: making something valuable and sharing it with the world.
I’m writing my next book all about unconventional entrepreneurs, and the topic of value has been coming up in many of the interviews. Value is something that is frequently mentioned, but rarely analyzed. What is value, actually? Your definition may vary, but I think of it like this:
Value means helping people.
With this definition in mind, you can easily find the most important principle of making money online: be incredibly helpful. Be useful. Provide something valuable, and people will be eager to support your work.
In any kind of business, the marketplace—i.e., your customers—decides what is valuable and what isn’t. You may think you are offering something highly valuable, but if it doesn’t get the response you hope for, you’ve probably got the value part wrong somewhere. (This can be different for non-commercial art, since you can make valuable work that may not be recognized commercially. But in business, the market decides what value is and how it should be rewarded.)
If you keep the focus on helping people, regardless of what kind of project it is, you’re off to a good start. There’s just one more important thing to keep front and center before we go on to more details:
To make money on the internet, you just need something to sell, someone who wants to buy it, and a way to get paid.
This short list is really all you need. Don’t get hung up on anything else! I share this concept frequently, because it’s very easy to get overwhelmed with all kinds of other questions, ideas, and concerns that are completely irrelevant. You don’t need to borrow money, you don’t need write a 60-page business plan that no one will ever read, and you certainly don’t need to wait until everything’s perfect before you get started.
Again, you just need:
a. Something to sell (a product or a service)
b. Someone who wants to buy it (your target market, which is hopefully more than one person)
c. A way to get paid (you can solve this problem in two minutes by opening a PayPal account from almost any country in the world)
In addition to these two core concepts, here are some additional principles that may be helpful to you.
Figure out what people want, and find a way to give it to them. You can sometimes do this through surveys, directly asking your prospects or existing customers what they want, then making it for them. It also helps to relate your offer to core emotional needs. Most of us want more love, money, acceptance, freedom, and purpose. Similarly, we want less stress, worry, and hassle. Give people more of what they really want or take away something they don’t want, and you’re halfway there.
Instead of selling, issue invitations. Most of us like to buy, but we don’t like to be sold. Therefore, treat your customers with respect, and don’t try to sell them all the time. One of the easiest, most helpful things you can do is make it clear who your product or service is NOT for. This kind of filtering helps you as much as anyone else, because it’s never good in the long-run to sell the wrong thing to the wrong person. Be clear about the benefit you provide, and make a good offer, but don’t push.
Language has consequences, so carefully consider your words. Be deliberate about how you describe your offer—the words you use matter. For example, I always advise information publishers to avoid words like “ebook.” When you say you have an ebook, you automatically create the impression of low perceived value. Don’t sell ebooks! Sell guides, manuals, blueprints, strategy plans, or whatever you want to call them… but if you sell an ebook, be prepared for a lot of consumer resistance.
That’s an example of what not to do. It’s also important to clearly communicate a vision for your project, and how the project will benefit customers. In my work I try to communicate a sense of scale, community, and meaningful independence. That’s why I have a small army of remarkable people. That’s why we talk about empire building and world domination. Not everyone likes these phrases, which is a good sign—as Bill Cosby put it, “I don’t know the secret to success, but the secret to failure is trying to please everyone.”
Maintain a balance of free and paid work. Since beginning AONC, I’ve maintained a balance of doing at least 80% of my work for free, with only 20% or less for sale. (I am actually way over the balance on the free side lately, but that’s OK. I’m having fun and I’ll get back to “business stuff” soon enough.) Your ratio may not be that high, but there are almost certainly things you can do in your business to help people that you don’t need to be paid for. How can you help people without being directly compensated? Megan in Omaha recently described her business plan to me as “strategic giving”—I liked that a lot.
Whenever possible, make it fun. You don’t have to make it fun, but it’s a lot better when you do. If you make it fun, you’ll generate interest and trust, not only from those who purchase from you, but also from people who just enjoy following along. The best example of this from my own business was the first Empire Building Kit launch, where I traveled across the U.S. on the Empire Builder train for a time-limited launch. It was an exhausting-but-fun experience where I built up a lot of attention and respect for the Unconventional Guides business. (Naturally, I’m working on something just as fun for the near future…)
Base your price on value, NOT time cost or materials cost. Unless you are selling a commodity (which you shouldn’t, because why would you want to compete with Wal-Mart?), you should think about pricing based on the value you provide to the customer, NOT what it costs you to create the product. The time or materials cost is irrelevant; what matters is how people benefit from what you make. This is yet another reason why “be incredibly helpful” is the most important lesson in making money online.
Side note: once in a while, someone will complain that something I sell is “too expensive.” I always reply that it may indeed be too expensive for them, and I’d never try to persuade them otherwise—but only the marketplace will decide if it’s too expensive overall. If large numbers of other customers are happy buyers, it’s NOT too expensive.
Try to get paid more than once. Getting paid once is nice, but if you can get paid over and over for something, it’s much better. You can do this either by creating something that people need to buy in multiple, frequent units, or by creating a subscription service where access is provided over time in exchange for regular payment.
It took me a while to switch to this model, but I finally did so earlier this year with the launch of the popular Travel Hacking Cartel, where members pay for access to a series of Deal Alerts each month. This much-needed transition has caused a big shift for my whole operation, as it requires a less launch-intensive approach elsewhere. I haven’t done much business development work lately (writing a book and hosting a 500-person summit takes its time), but as I get back to things later this summer, I plan to produce much of my commercial work in a subscription model going forward.
If you want to consult, just start consulting. There is no “consulting school”—if you want to be a coach or consultant, get a $10 domain, set up a one-page site with WordPress, describe what you do, and get the word out wherever you can. It will help you greatly if you can be highly specific about the kind of service you provide. The more generic, the less valuable. Also, make it easy for people to pay you—if you require people to contact you for a quote, you’re missing out on a lot of business.
Advertising is like sex. I like this quote from a Fast Company magazine article: “In the future, advertising will be like sex: only the losers pay for it.” For the most part, I think the future is already here. I recently conducted a “$10,000 vs. 10 hours” experiment, where I compared the results of a targeted advertising campaign to an amount of time I spent working on free publicity. I’ll share the whole story in the book I’m writing, but the short version is… the 10 hours of “free” work easily beat $10,000 of advertising.
Don’t be afraid to ask for help. As long as you’re being helpful and doing work that matters, you’ll be building trust with people (customers, colleagues, blog readers, Twitter followers, etc.) over time. These people will help when you ask them. Always remember that there are many ways people can help you, and giving you money in exchange for something is only one of them.
This longer-than-usual overview could be greatly expanded, but of everything mentioned above, the most important is… be incredibly helpful. More than making money, think about how you can make something valuable and share it with the world.
What has been your experience with making money online?