008 Pros and cons of common online business revenue streams

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Transcript:

Hey ladies! Thanks so much for joining me for episode #008 today!

So what we're going to talk about today is I want to share with you some of the pros and cons of some common online business revenue streams. There are many many ways to make money online and some are more beneficial than others!

What you choose depends on a few things…one of which being how you want to live your life! So I hope that going through the pros and cons of some of these common revenue streams today helps you choose a revenue stream which is really well suited to your lifestyle!

I have divided revenue streams into three main “buckets” for the purpose of this podcast episode: The first bucket is services, the second bucket is products – that includes both physical and digital products – and then our third bucket is advertising.

I'm going to go through the pros and cons of those general buckets. I'm also going to go into some specific options and offerings within those buckets, like different service offerings or product offerings. Then I'm going to give you specific examples, along with sort of the pros and cons about each that you should know.

I've done many of these myself, and I've had experience monetizing an online presence for quite a few years now! I'm going to share some of my first-hand experience, and the lessons that I've learned with a few of these different options with YOU!

Some of these options are going to fit your life and business better than others. So, I hope that by the end of this you'll have a solid idea of which option feels like the best fit for you!

I should also mention that you don't just need to pick one and marry it forever! I would encourage you to overtime have multiple streams of revenue in your business!

+ full transcript

Did you know that the average millionaire has seven streams of income? So having multiple streams of income is less risky and also leads to more income! Aiming to have many of them in your business over time is definitely something that I would highly recommend! It is something I'm consistently thinking about myself: How can I diversify the types of revenue coming into my business?

I hope that this is something that you think about over time as well, but for now, let's just figure out the first revenue stream option that you want to find!

First off. Let's talk about our bucket of services…

Some pros of offering services is that you can get a service up and running ASAP! You literally just need an idea, a sales page, and a way to take payments!

If you have those three things you can start offering your services right away. So this is truly one of the fastest options in terms of making money online. Now, the other good thing about services is that they tend to be higher price!

So this is someone literally like buying time individually with you generally, and it means that you only need to book one or two clients, depending on the procedure or service in order to fund your life.

When I was doing Web Design Services booking a client for one month would sustain me for a month or two. You can command a higher price because the person is individually working with you! So if your goal is to quit your job, you can do so fairly quickly once you get your services business up and running!

Some cons to services are that you're basically tying your hours to $$.

If you take on one client and it takes you a day to build them a logo or a week or two to build them a website, you're tying your hours to dollars. It’s not as scalable as something like a digital product.

With a digital product, you can sell unlimited quantity, and it really makes no difference to how much time you're working! When you offer services, the number of clients that you have or the number of people you're helping is tied very directly to the number of hours that you're working. So just know that it's a great place to start, but it's not a super scalable offering.

The other con about services (it's a pro and con to be honest) is the higher price point of services. The con when it comes to higher price services…there's two main things I would say!

One thing with higher prices is that you put your services out of the budget of some people who need your help.

When I started doing website designs for a few thousand dollars a website, I was just just finished College. There's no way that I could have actually hired someone to do that for . myself. So, your your services will be out of the price range of a number of people. So that's unfortunate!

The other thing is that when someone pays you a few thousand dollars to do something for them, there is alot of pressure for you to perform exceptionally! You need to do a really fabulous job, if someone dropped $9,000 on doing a brand, website, and e-commerce shop. I knew that that person worked hard for those nine thousand dollars and I put a lot of stress on myself to make them extremely happy and do everything that they wanted because they really invested a hefty chunk of change with me!

It led to a lot of stress in my life, to be honest!

The other con to services is time zones if your service involves some sort of consultation calls, or weekly meetings with your clients! It depends on how different the time zone… if you're in California and they are in New York, it’s not a huge deal! But if you want to be doing the digital nomad thing and be living halfway across the world, then time zones are going to be annoying and you're going to need to be doing phone calls at very weird hours!

The other con of services is that client work can get exhausting! Working with clients means working together with other people, getting content from your clients or getting directions or inspiration from your clients, giving them homework, and setting deadlines (and then missing deadlines)! You’re working ALOT.

Let's move on to our second bucket –products! I want to talk to you about digital products, and then we're going to talk about physical products. So when it comes to digital products, you have unlimited selling potential and basically exponential revenue options.

If you sell an e-book once or you sell an e-book 50,000 times, it literally makes no difference to you in terms doing the work with the exception of you might have more refund requests (if you offer refunds)! The amount of customer service might slightly increase but for the most part selling one ebook or selling 50,000 ebooks doesn't make a huge difference in terms of the amount of time that you're spending.

The other great thing about digital products, or a digital product business, is you have crazy low overhead cost! So the if you think about traditional brick-and-mortar businesses, you needed to rent a space, buy furniture, get a like a computer/cash register and all of your products and everything…then hire staff to be in the store all the time! That's a lot of upfront investment!

When it comes to selling digital products, you're upfront investment is almost nothing compared to most businesses.

So, for digital products, you need a website, an email marketing system, and some way to deliver the digital product. If you're using Squarespace, as I use for my website, you could literally just sell it through Squarespace! So those are the things that you really need. And a laptop, of course, but I'm assuming you already have one!

The other thing about digital products is that once they're built and they're selling, it really takes almost no time to keep them up. You can focus your time and energy on a ton of other things. You can either decide to go build more revenue streams, grow your audience, or go take a vacation! Once you get those digital products created and selling, it really is a pretty hands-off process, which is really fabulous!

There are definitely some cons to digital products, so let's talk about some of those things too! (I don’t just want to just paint you a perfect picture!)

Some of the issues when it comes to digital products is that scarcity is super vital for making pretty much any sales, and it's hard to create scarcity with a digital product! With a physical product you can say: “We have three t-shirts left!” and that makes sense…you only have three teachers left!

With a digital product, you can sell an unlimited amount but if you want to create scarcity, you have to do it in a different way.

For example, Disney does the thing where it's like, “This video is going back in the Disney Vault!”

I've seen people who do stock photos or website templates, and they will say, “We're only selling 20 of this so that you and everyone else don't have the same website!” (Or the same photos, or whatever it is).

The problem with that is that you forever creating your website template, you say only 20 available, then once those 20 are sold, you can’t sell it anymore so you have to go create a new product!

The other con of digital products is that you really need to build an audience to sell to in advance, and this takes time. So it's going to be slower to make your first sale. If you have no one to sell it to, it's going to be tough to make your for sale, so you really need to spend a lot of time building an audience before you can hope to be selling any number of digital products.

The other thing is that because it tends to be cheaper than services, you really need to sell volume. If your goal is to leave your 9 to 5, it's 100% possible, but you've got to spend a lot of time building that audience first in order to have enough people to sell your digital product to where you are able to fund your life!

Another con with digital products is that digital products are very time-intensive to build. For example, when creating my first online course, I took three months completely off from doing one-on-one services with clients and just built my course! That meant that I made literally zero dollars for, like, three months. So just know that you need to maybe have some savings in place before you start!

Some of the pros of physical products is that you can have legitimate scarcity, which makes making sales easier! I'm sure you've seen it on booking.com where they say, “Only one room left at this price!” So that is legit…they only have so much room in their hotel.

It’s the same idea if you’re selling a physical product – say –selfie sticks! “Only XX number left till we get our like next order a month from now..” It's legitimate scarcity, and that definitely does drive sales very easily.

One of the cons for physical products is that you have figure out the logistics of creating whatever the physical product is, maybe customizing, if you're doing custom options, and then actually shipping and fulfilling orders. You might need storage to hold all of your products, and you're making the upfront investment of maybe purchasing a batch order of your product!

One solution is Printful! When I was at a co-working space in Bali, I was talking to a guy who did poster sales and he told me about it! They have all these physical products, and you just upload design and when someone makes a purchase, it automatically gets sent over to Printful, they create the product, and they mail it off for you too! (Of course, you have to pay for their services.)

If you do custom work when it comes to your physical product, maybe customizing it with their name, you are tying your hours back to dollars, which is again something very hard to scale!

Let’s move on to our third bucket! Advertising.

So when I'm talking about advertising, I mean things like ads on your YouTube channel, or blog – sponsored content for other companies where you're promoting their products or services – or affiliate marketing, which is linking to a product or service that another company offers and getting a percentage of that sale.

Some of the pros when it comes to the advertising bucket would be that it's the quickest way, truly (I think) of all the options to make money online. You literally don't need to create anything yourself. When it comes to advertising, if you have some sort of a website, or an Instagram and a following on it, you can start monetizing, like, literally tomorrow!

The other this about advertising is that it's genuinely useful! I know people might think advertising is so annoying, but honestly, I scroll through Instagram and think, “Oh that girl has cutest shoes. Where did she get them?” Or, people are constantly asking me, “What do you use for your email list?What do you use for your website?”etc. So when you are explaining how you use a product, or linking to a product you’ve purchased that is genuinely valuable for your audience, it’s very useful information for them! It’s something where you can authentically (that's one of the issues people kind of take on sponsored content where they're not authentically using the product or service.That’s a little bit sketchy…) But if you are genuinely using something and people are asking you questions, you just get to be genuinely helpful in way that's valuable for them and valuable for you and also helpful for the company. So it's a win-win-win situation if done correctly! (And you're not just advertising things that you literally have never used before now!)

The cons to advertising is that, again, you need that audience to make any money from this and you need a fairly big audience to make any really good money. A company is not just paying someone for fun because they just love throwing advertising dollars at bloggers! They want to get their product or service in front of their ideal customers, which is likely your audience! So they've gone through and they've determined, “Okay Jenny has a fabulous blog on sewing, and we sell sewing needles. Her audience would be the perfect people that we want to get our sewing needles in front of!”

There is literally no purpose for a company to pay you any amount of dollars (even three cents!) if you don't have that solid audience in a specific niche! So you really need a solid, engaged audience to be of value to a company and for them to actually work with you on something like ads, sponsored content, or affiliate marketing!

The other con of advertising is that unless you've built a following-and-a-half, this type of income generally isn't enough to quit your day job with!

I know a lot of you are looking to leave the 9-5 (and I'm happy to help you get there!) but just know that if you want to make really great money with this, your following is going to be pretty massive! I would make the argument that you could definitely make more, more quickly, if you were to sell your own products or your own services… a lot faster than if you're going to be doing advertising work for other companies.

The other con of this advertising bucket is that you're really at the mercy of whatever the company it is that you're working with. I've seen it happen where companies stopped their affiliate programs, or they change the price you earn for a thousand ad impressions, or the amount that they pay you for sponsored content, and you're pretty much at their mercy! You can't force them to start their advertising program again, or argue! (I mean you can argue til you're blue in the face… but if they decided that this is the amount that we're paying for a thousand ad impressions you don't really have a lot of sway in that whole situation.)

So those are the three main buckets!

I want to go into some pros and cons of specific types of services and products. So let's start off with Services: We're going to talk about two different ways you can offer services! One is, if you offer retainer services, and the other is if you offer one time services.

Let’s start with retainer Services first. A Facebook ads manager is a good example of this! You work with them month, after month, after month, and you are on some sort of a contract where you say “I'm going to pay you XX amount of dollars to run my Facebook ads for the next six months.” Or a graphic designer –maybe they originally do a one-time service, where they create your logo, mood board, and color palette, the in the future, they're just there for you to create, like, ebooks, opt-in gifts, and Pinterest images, or any other graphics that you need on a retainer basis where you're locked in for so many hours of their time.

The good thing about this is that you have predictable income month to month. Unless a client is breaking their contract, you know with fairly good certainty that you're going to have that income over that time.

The other pro of retainer services is that if you loved working with a client, you have the option of working with them on a retainer basis in the future! You can keep on the clients who you absolutely adore working with, which is pretty sweet!

One con of retainer services is (and this is one of the reasons I personally didn't love it and made a conscious decision not to do it) is that you’re basically always on call for clients. It's hard to take time off and I like to go take a vacation for a week or two and not be worried about someone needing me! Once you sign someone on retainer, it's basically expected that you are there for them to serve them when they need you!

The other con is that if you don't plan an organized schedule, some of your client projects will be overlapping and you will have clients all asking for something at the same time! You're going to be working like a mad woman! So you've really got to think about how you do things with your retainer clients so that you don't work on all of their stuff at the exact same time or that it doesn’t all pile up at once! So that just means you're going to have to be organized about that!

Now the let's talk about one time services! The massive benefit is the freedom… straight up! If that's your goal, then one-time services are for you! It's one of the reasons that I chose it for my web design services. So I would take on one client at a time. I would do their website in a two-week period, and then I taught how to maintain their site, instead of keeping them on retainer. I recorded a video lesson, and sent them on their merry way! That allowed me to plan the rest of my year and and any holidays because I didn't worry that a client was going to need me!

Cons of one time services: There's no guarantee about your next job, unlike retainer services. You don't know that you're having another $500 come in next month! So you've really got to hustle to find those clients! If you're really killing it with the marketing, you could definitely be booking your clients in advance, which sort of gives you that same piece of mind financially!

Let's move over to digital products! I want to talk about some of the pros and cons of common digital products because I did a survey of my email list just a couple months ago and they were very interested in this! So let me talk about some of the pros and cons of the common ones.

So the big, fancy, sexy digital product right now is online courses, and I do have lots of experience with it! Let me start off with the pros of online courses. The pros of online courses is a lot of freedom! I can be laying on the beach and someone is going through my course content and is learning how to do something in square space, which is amazing!

The other thing is (and I honestly joke about this all the time) people are like, “What do you sell? How do you make money?” I kind of joke, “I sell the drugs of the internet!” People looooove learning and they just love online courses these days! I love taking them! Other people love taking them! It really is so so fabulous!

I took a podcasting course before I went to a launch this podcast! I took Pat Flynn’s (from Smart passive Income) I took his Power-up Podcasting course, and it was so fabulous! In my city there is no expert in podcasting who's been at it for ten years who's built a massive podcast, but I could take Pat’s online course! He's helping me from multiple times zones away in California! How fabulous is that?! So they're just practical from a consumers perspective, they're fabulous to offer as a business owner, and you can learn things you might not learn in school!

The other good thing about courses is that you can do self-paced courses. So again, you're serving your audience while you're off living your life! The other good thing about courses is that they tend to have a higher price point than most other digital products, which means more revenue! You can also choose to sell your courses on Evergreen which means they're for sale all the time, or you can do open and close launches. You can choose which of those feels like it fits your life best and then go from there!

Cons for online courses: You definitely need an audience! Specifically, you need an email list. (I've written a blog post on that!! How big does my email list need to be before launching an online course?) But here's the thing… if you sell your courses on something like Udemy or Skillshare, you're going to make peanuts. If you sell it to your own audience, the revenue is significantly better! The other thing is that when I say you need an audience, you don't just need YouTube subscribers or Instagram followers or whatever. You really really really need an email list for this to work! So the con is you've got to build that thing first before you can really hope to successfully launch and sell an online course.

The other thing about online courses is they are time-intensive to built! It took me three months to build and launch each one my online courses, so definitely not a quick and easy simplistic process. I mean, it's not so complicated. It's just time intensive!

I guess you would say the other thing is that if you have a course on tech type things (like my course Square Secrets – it teaches how build a really fabulous Squarespace website) the slight problem with that is that Squarespace is always changing where the buttons are or changing the look of the back end. Every time they do it, I just go “noooooo” because then I have to go back and rerecord course videos! So if you have a tech course, you're probably going to need to re-record those videos every few months or years or so, which is not so fabulous!

The other thing with courses is that because the price point does tend to be higher, it is fairly normal to offer payment plans for courses. This is not so usual with any other type of digital product, but with courses it tends to be normal to offer payment plans, but that means that sometimes people just ghost on you and don't finish their payments, which is super unenjoyable as a coarse creater!

Something else to mention is that you will need to get some sort of course hosting platform, another software other than your website. People have asked me many times, “Can you host an online course on Squarespace?” and you can but there's honestly so many cons for it that I would not suggest you do it!

I personally use teachable to host my courses. So that's where I am storing my courses, and I would definitely suggest that you get some sort of a course specific hosting platform for that.

Another digital product that I want to talk about with you is templates! So examples of template… what I mean by this is you could do marketing templates, or website templates, or brand templates, or logo templates –that's what I'm talking about, here.

So let's talk about some of the pros of templates. If you are tired of working with clients, templates are a really good way to basically take your services and then wrap them all up into a digital product. It's a really great segue item from your services to your product!

If you've built up any sort of an audience, which is how you're getting your clients for your one-on-one services, then it's likely that you have some people who are following you who just can't afford your service price, so you give them a template! I'‘ll use the example of website templates. It is a really great way for them to still get your work and your style and everything, but to get it at a more affordable price point.

The other thing is that the tech for selling this type of templates is super super simple. You don't need a separate software for it like you would for a course, and you can a hundred percent just use the Squarespace e-commerce system! Just go to click “sell a digital product” and you can use the same software that you use for your website! It is a super efficient and fabulous option for hosting your online store of whatever the templates are that you're selling.

FYI, you can use my the code PAIGE10 to get 10% off your Squarespace plan if you use it to do a website or an e-commerce store! Whatever plan you want, it will get you 10% off your first year. So I hope that's helpful for you!

Also, one templates Pro is that you could sell these things easily on something like Etsy! If you have no audience at the moment, and you want to make a sale of your whatever your template is, you could go on Etsy because they have the audience who is looking for these type of custom things!

The one thing which, of course, is the slight issue with that is that:

  1. You can't build an email list from it.

  2. They take percentage of your sale! So that's not great either.

Another con of some of the templates is that they do tend to have a lower price point, which means again, it's great and that you can help people who couldn't otherwise afford your services, but you really gotta sell volume of this if you want to make a living off of it!

Let’s move on to what I’m calling “lower priced digital products.” I'm talking about things like guides, ebooks, scripts, trackers, printables, or checklist etc.

These are their super quick to create compared to other digital products. They are going to take you a heck of a lot less time to create then something like creating an online course or creating templates! The other thing about this is that I always just automatically assumed (because these things can be very cheap) that you couldn't make a lot off of it, but I've actually been proven wrong when I've talked to a few people who do sell some of these lower price digital products. I was listening to a podcast episode, and there was a woman literally making a living for her family of seven off of her e-book sales. Obviously That takes a pretty massive audience to be able to do that, but it is actually very possible to generate a pretty hefty amount of income from a fairly low price product because it's such a simple decision for people so you can make quite a lot of sales of these things. And the tech to sell these is just like templates. It's very simple. You could use Squarespace e-commerce.

So if you're a blogger right now and you have an audience and you want to sell your first digital product, this would be a really good starter option for you.

That is all that I have for you on the pros and cons of these revenue streams! I would be very curious to know if there is one which you feel like is a really good option for you! You could definitely come find me on Instagram and send me a DM, or leave me a comment on one of my most recent IG posts. I would love to hear what revenue stream feels like a good option for you and what you're going to be selling!

Remember, if you are going to be building a Squarespace website or selling some digital products through it, use the code PAIGE 10 to get 10% off of your first year of Squarespace! I hope you enjoy that little discount!

Thanks so much for hanging out with us for this episode of the online business besties podcast! If you love the show, be sure to leave a rating and review where ever you listen to podcasts. And of course, check out the show notes for this episode and all past episodes at PaigeBrunton.com.

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