Commonly the price received for a product is broken down
into parts. And selling price less overhead and costs is net
profit. No matter how you choose to do the math, the profit on
each sale made early in the month can be considered as a step
toward covering costs for the whole of it.
Sales made once all costs have been covered, are clearly the
sales you want. For the profit per sale can now be considered
net. And excepting taxes, these are bucks you can tuck into
your pocket come the end of the month.
Where The Real Bucks Are Made
Sales totals, net, and so forth, are a continuum in the
real world. That is, as volume rises over a given interval,
net increases. And conversely.
But to make a point, assume you are selling wigits in an
offline shop at $100 that cost you $50. Also assume your
overhead is $47 per wigit, provided you sell 100 each day.
Your net is $3. per wigit.
On a day you sell 110 wigits while holding expenses
constant, the extra ten sold cost you only $50 each, your
wholesale cost. And your net is now $50 instead of $3.
These additional ten sales put an extra $500 into your pocket.
Again, this example in unrealistic, for there are no such
clearly defined points. But hopefully it is clear that with
fixed costs, there is a point above which sales cost you only
that of the inventory itself. And it is these sales that
generate the most significant profits.
Volume Also Dictates Profits Online
The same holds online. You have fixed costs such as
hosting. Phone costs vary month to month, but tend to hover
within a range. If you are buying products, you have inventory
costs. As in the example above, the more targeted traffic you
can draw over a month, the better your chance of covering
overhead and reaching the high profit zone where only the
cost of inventory needs to be covered.
Targeted Traffic Is Precious
A CR (Conversion Ratio) of 2% is considered good by many.
That is, if 1 in 50 visitors buy, you're doing fine. However,
such models must be used only as guidelines. A gross check on
how you are doing month to month.
Such thinking can be misleading. For one, such numbers can
not tell you anything about the potential value of a particular
visitor. Even if another 50 hits brings an additional sale,
there is no way to determine whether it will come from the first
of these visitors, from one in the middle, or from the last one.
Further any set of 50 may produce 10 sales, while the next
950 produce none. The CR remains 2%. There is absolutely no
way to determine which visitor will be a buyer. The best
approach is to place a high value on each and every visitor.
And assume each and every one will buy.
Closing Doors In The Face Of Your Visitors
Suppose that in the hypothetical offline shop described
above, the doors had been closed an hour early and the extra ten
sales were lost as a consequence. It would mean in that example
an opportunity was missed to pocket an extra $500.
Splash screens are closed doors to many. They often drive
customers away in droves. (A home page generally crowded with
slow loading graphics with an Enter link buried somewhere within
it.) Since this is so easy to measure, it puzzles me that so
many such pages remain in use. Simply count the hits on the
home page and compare them to those on the page it links to.
You'll see you are slamming the door in the faces of many
visitors, often as many as 50% of them.
Consider again the example above. Consider the $500 lost
in closing early. Can you really afford to do this? And even
if you can, why would you?
Follow The Rules
Most webmasters do try to get things right. They want to
maximize sales, first to cover costs, then to grab real profits.
They know better than to offend potential customers. And they
know that in tossing aside even a single visitor, they may have
tossed a sale.
Targeted traffic is tough to generate. Many hours and
dollars disappear in this task. It only makes sense to treat
every visitor you can draw as a valued and honored guest.
Here They Are
Here are the "rules," or better, "practices," your visitor
expects to find in place. If you have erred in any of the
following, fixes are needed immediately. Nothing I know of is
quite as effective in evicting visitors quickly as a splash
page. But some of the following can toss 10% in an awful hurry.
And in doing so, you are quite likely tossing those who might
have shoved you into the high profit zone.
Set table width at 600 pixels to prevent horizontal scroll.
Limit line lengths to 65 characters for good readability.
Use Arial or Verdana; never New Times Roman.
Stick to black text on a white background.
Use an intuitive navigation system; simple and
straightforward.
Minimize the use of graphics for fast loading pages.
Hold to complimentary colors with minimal shades of each.
Be friendly to Netscape users; some now ignore them.
Forget Flash or sound.
Maximize the impact of the first screen on each page.
Begin each page with a powerful emotion-grabbing headline.
Provide strong sales presentations.
Include pages of great content valuable to your visitors.
Go For The Big Bucks
The objective of your site is to maximize profits which
draws the focus to sales beyond those that cover costs. It
makes sense to seek to meet the needs and preferences of each
and every visitor to your site. Why turn away even one with
some dumb bust in site design or performance?
You can't please everybody. But the more you please, the
more sales you'll make. And it's in those last sales made each
month, that the potential for significant profits lie. Be sure
you have done all possible with your site to assure you make
those profitable sales.
About the Author
Bob McElwain, author of "Your Path To Success."
How to build ANY business you want, just the
way you want it, with only pocket money.
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