6 Tips to Make Money with Low Profit Margin Products or Services
August 13, 2007 by Gaman
In one of my previous posts, I’ve recommended that it’s easier to make money from affiliate programs by selling products with good profit margins
When you are operating a lower profit margin business, it limits how much you can afford to spend on advertising. The lack of promotion ensures fewer potential customers arrive at your website, hence limits how much money you can make.
Any little hiccup that may occurs along the way could cost your business dearly. In the end, this vicious cycle becomes a self-fulfilling prophecy as there’s no way avoiding the impending failure.
The good news is, operating a business with low profit margins isn’t all gloom and doom, provided that you use a different approach in your promotion effort than that in a high margin business.
There are many affiliates who have successfully promoted low profit margin products such as those from Amazon.com. It’s not unheard of how some Amazon.com top affiliates are pulling five figure monthly profits from the affiliate program.
Here’s how to make money promoting low margin products or services.
- Concentrate on Getting Organic Traffic
Instead of spending money on pay per click advertising; learn how to optimize your website to attract organic traffic. Organic traffic is traffic that comes from search engines, links from other websites, URL placed on your business cards WITHOUT being driven there by specific marketing campaigns.
Basically it’s the free traffic that arrives at your site naturally. So it doesn’t matter if you are paid $0.50 per conversion as long as the user arrives there organically, it’s still 100% profit.
While there are fixed operating costs to consider such as web hosting, chances are, it’s easier to become profitable when you have enough volume.
- Create More Door Way Pages
Doorway pages are pages that are optimized for particular phrases to attract organic search engine traffic. Just be careful to avoid doing things that the search engines consider as spamming.
If you want to sell the Nokia NSeries mobile phones for example, you’ll target the phrase “nokia nseries” by creating a page optimized for that single phrase. This improves the chance of driving users into your Nokia NSeries affiliate program. One way to do this is to emphasis that phrase in your on-page search engine optimization effort.
Keep creating new doorway pages. Over time, the numbers will add up and it’s not hard to imagine how having thousands of them will likely make you more money.
- Target the Long Tail Keywords
With the long tail keywords strategy, instead of focusing on the top 10 or 20 keywords; you try to target traffic from the hundreds to thousands of keywords that your site can be found for.
While the top 20 keywords may generate a lot of traffic, they are not as much as the total terms after the top 10 or 20 most popular. This is especially true if you have a content intensive site.
Long tail keywords may not be popular but they speak volume when considered collectively. Your strategy is to identify niches filled with underexploited keyword terms and then create affiliate sites based on those niches.
One example of a good long tail keyword is “vista discount Malaysia ”. While not very popular, it can be potentially profitable because of the quality of the users searching using such phrase. Someone searching for such discount is likely in the buying mindset and may be converted into sale easily.
- Optimize Your Pay per Click Campaigns
Promoting a low margin product doesn’t mean you have to avoid spending money on pay per click search engines. It just that you have to learn how to use good optimization techniques to improve your conversion rates with whatever budget you’ve set aside.
Currently I am promoting several low margin products. I managed to generate five dollars net profit for every dollar I spent on AdWords because I have been testing the AdWords campaigns to a tee to help me identify what works and what doesn’t.
Check out my AdWords category for tips on AdWords optimization.
- Use Low Margin Products to Draw Higher Margin Business
Using a cheaper entry product can be a powerful way to attract customers to your higher margin products or services. Use the low margin products to build up the trust and brand awareness to help you sell more expensive products.
- Give It Some Time
Unless you know how to use the pay per click search engines to your advantage, you would have to wait for your organic traffic to reach a certain level before you can see any significant profits from selling low margin products.
So give it some time while continue producing new content that provides more pathways to your affiliate programs.
It’s a Numbers Game
Like everything else on the Internet, making money from affiliate program is a numbers game, even more so when you are promoting a low margin products or services where you can’t afford to make any mistakes.
If you are selling a widget that gives you a profit of $5 per widget, you can make a thousand dollar per month selling seven widgets per day. You’ll be able to do that if the widget is in high demand, but belongs to non competitive niche. Or you have a unique selling preposition (USP) that differentiates your offerings from that of your competitiors.
Once that’s done, create another website in another niche.
Basically you just have to do all the strategies above and then replicate, rinse, and repeat all steps that make you successful.