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I’ve been getting lots of emails lately about which type of website is the best or most profitable to start. Seems like everyone has their own ideas for what the “perfect” business is, so in this post I’m going to lay it all out there and you can decide for yourself based on these proven facts.

My personal favorite type of web business is a membership website. I’ll go over why that is when I discuss membership sites below. But first, let’s take an in depth look at ALL the options available to you as an internet entrepreneur…

1) Build A Content Website

This is one of the most common strategies people go with for some reason. The idea behind it is you just start writing as much as you can about a topic, hoping to create a following. The more content you publish, the better your search engine rankings become, the more of a following you get. Eventually if you have enough traffic to your site, you can start monetizing the traffic by selling ad space or promoting products as an affiliate.

- Positives: You can start a content website for little to no money. You can have your first piece of content up within hours and be “in business” almost instantly.

- Negatives: It takes a LONG TIME to build the traffic, content and a following necessary to start making any decent money. Because it takes such a long term commitment (12+ months), most people give up out of frustration due to the lack of money coming in to justify the effort.

Most blogs fall into this category of web business. These types of businesses CAN be very profitable once you get over the initial startup hump that keep most people down.

- Earning potential: A solid content site with 10,000 visitors per month in a moderately competitive niche market should be making approximately $1,000 - $2,500 per month. Rarely will a content site exceed $7,000 per month (possibly 1 out of 10,000 can exceed that amount). Sadly most content based websites fail to make more than $100 per month.

2) E-commerce Store With Dropshipped Merchandise

This type of business is one of the “dreams” you hear about on infomercials. A website where you can sell real products on your website, take the money, turn around and place the order with a supplier and they ship it directly to your customer for you. This is called a dropshipper supplier.

It sounds like a great idea in theory. You don’t have to carry any physical inventory, and you don’t have to ship anything out, sounds perfect right?

Wrong! This type of business is an absolute nightmare for many reasons…

First, the margins you get with dropshippers are very low. A dropshipper supplier is nothing more than a middleman. The chain of command is basically the manufacturer, the distributor/wholesaler, a dropshipper, then you, the retailer. Each company down the line takes their piece of the profits.

I’ll talk about buying wholesale in a different business altogether, but the basic rule of wholesale pricing is 50% below the MSRP price (also known as key pricing or keystone pricing). This is how “most” brick and mortar retail stores operate. When you use a dropshipper, you typically get pricing in the 25% below retail MSRP pricing (Manufacturer’s Suggested Retail Price). The reason for this is because the dropshipper has to make a profit for doing all the work and maintaining inventory, so in theory they make 25%, you make 25% and the manufacturer makes 50%. Sounds fair I guess.

The key thing to remember here is Retail MSRP. This means, if you were able to sell your products at FULL retail price, you would be making a 25% profit on each item.

Well, this is the internet folks, and people don’t pay full price for anything online. That’s the main reason WHY people shop online usually, just to save money. If they wanted to pay full price, they would go to their local store instead.

So, to stay competitive for the products you are selling, you’ll have to mark down the items at least 20% below their retail price. This means you are down to about a 5% profit per sale.

Ok, 5% profit is still not bad considering you don’t have to really do any work to ship the products.

Well, take off another 2.5% of the sale to cover credit card processing fees and you are left with a 2.5% profit per sale. If you are selling $50 items and using a dropshipper, you are making a whopping $1.25 profit per sale.

For that $1.25 in earnings, you have to

- do customer service
- track packages for your customers
- place the orders with the dropshipper supplier
- deal with returns when your dropshipper sends the wrong product out
- have to explain to the customer that the item they ordered isn’t available because your dropshipper ran out before you placed the order with them
- deal with chargebacks from customers who don’t recognize your company from their credit card bill.
- and heaven forbid you have to spend time marketing your website or perhaps buy PPC ads!

If the pricing issue isn’t bad enough, you also have to deal with selling garbage products with most dropshippers (things like knickknacks and other crap that won’t sell online).

If you are lucky enough to find a dropshipper who carries decent products, you have to make sure they are reputable. For some reason, dropship wholesalers tend to go out of business unexpectedly or stop carrying certain products due to back orders or discontinued items. This is bad news for you if you are selling products on your website and all of the sudden have no way to fulfill orders.

Don’t let this summary distract you if you still want to try a dropship based e-commerce store. Just know what you are getting into in advance.

3) E-commerce Store With Merchandise Purchased At Wholesale

This is very similar to the dropship example above, but instead of a dropshipper maintaining inventory and shipping products out, you buy the merchandise up front, store it and ship it when it sells.

There are pros and cons to this type of business just like anything else.

The pros are, you get to enjoy higher markups. You will basically be able to buy products for 50% below the retail price in most cases. (not all products are available at 50% off - Ipods for example have a wholesale price of about 15% below retail, and that’s if you can meet Apple’s $100,000 annual minimum purchase).

Because you are buying at better prices, you have more flexibility in your pricing so you can be more competitive. Even if you sell at the same 20% below retail price as the dropshipping example above, you would now be making a 27.5% profit per sale after credit card fees, which is pretty good. You do however have to do a bit more work for that money this time.

The cons are, you typically have to purchase your inventory up front and sometimes in bulk. If the products you buy do not sell well online, you are stuck with all that inventory and you may not be able to recover the price you paid for it. Also, when an items sells, you have to put it in a box, print up the packing slip, print the shipping label and ship it out. That’s a bit more work than you had with the dropshipping example.

(side note - to buy products at wholesale pricing, you will have to get a resale tax id number from your State’s Dept of Revenue office, but it’s pretty easy to do).

This is the type of business we sold most recently for mid six figures. We took a slightly different spin on it because we “repackaged” regular products before selling them. That allowed us to differentiate our products from our competitors. It’s important to have unique products when selling online, and you can do this with everyday products and just repackage them.

In other words, if you are selling digital cameras online, don’t just sell the $300 digital camera like everyone else. Instead, sell a “College Student Camera Kit” that is made up of a digital camera, a camera case with the student’s school logo on it, an extra battery and extra memory card for $330.

By making this one little change, you can take a product that thousands of other people are selling, and make it something unique that only you sell.

I’ll spend more time on unique products in the next couple of reviews…

Seems like everyone is looking for the fastest and easiest way to make money on the internet.

Over the last 5 years or so, I’ve tried literally every technique there is. Here are 3 quick and easy ways to make *some* money online.

Side note - because these are fast and easy methods, it means the amount of money to be made is somewhat limited. The most money you can make online will be from long term efforts requiring hard work (but who wants to do that?)

The following list is in no particular order as far as ease or money making potential

1) Write website articles and content.

I don’t mean just start a blog and write content that floats around the net like the billions of other websites. By writing content, I mean to get paid for writing content for others.

One thing website owners lack is time. Time to write good, entertaining, educational, and grammatically correct content for their websites. If you have decent writing skills, you can write for many different types of companies and individual website owners (ie - your clients).

A mistake I see a lot of writers make is choosing the WRONG clients. When you decide to become a paid content writer, pick your customers, don’t have them pick you. Don’t go to those freelance sites and beg for work bid for work. You’ll end up getting paid much less than you are worth and have annoying clients that expect you to work for peanuts from that point on.

Instead, contact existing websites that you want to write for. There is a trick to this however, if you want to be successful. Don’t have your first contact be an email asking if they will buy your articles or asking how much they will pay for your content. Those kinds of emails are viewed as spam and will get you nowhere.

Instead, take the higher road and sacrifice your early profits. First, read what their website or blog is about. Try to get a feel for their style of communication. Then, write the most amazing article you could possibly imagine that would blow away their readers. Finally, GIVE THE ARTICLE TO THE WEBSITE OWNER FOR FREE.

What? You mean go above and beyond what the other 75,000 freelance writers will do to get work?

Absolutely! Let the website use your article or blog post on their website WITHOUT giving you credit for it. When you submit the article to them, be sure you tell them it’s a completely original article that is exclusive for their website. Tell them you are a freelance writer looking for a couple extra clients, and this article was to demonstrate your skills which will hopefully lead to more articles for them. They will be amazed by your generosity, and that’s when reciprocity comes in. They’ll WANT TO HELP YOU because you helped them first.

Once they post your content to their website, you can follow up with them to see what they thought about your work. That’s when you can pitch your services to them. Do you see how this technique will get you much better results that shooting an email saying “I write website content, $25 per 800 words. Would you like to buy some articles?” (You laugh but I get emails like this everyday!)

Be sure to pick websites that a) have money to spend on content, and b) will need lots of fresh content to stay competitive in their market. If you do this simple technique, you can easily make $1,000 per month writing for one single website. (based on 40 articles per month at $25/article)

2) Be An Offline Affiliate Partner.

Affiliate marketing is a great way to earn a part time income. The problem is, internet marketing as an affiliate is pretty competitive since there are so many people doing it.

Instead, try promoting affiliate programs offline. Here’s how you do it…

Search online for an affiliate program you want to be promoting. You’ll want to pick something that your local city/town would be interested in. For example, you can go to clickbank.com and search all the various products your can promote from their Marketplace.

Let’s pick weight loss for this example. In clickbank, you can open up their “Health & Fitness” category and see all the programs you can promote. They are sorted by popularity, so typically the first 10 products listed in each category are the best sellers.

This makes your job easy as an affiliate, because you won’t have to guess which products are best and easiest to sell.

Let’s say we decide to promote the first one, Fat Loss For Idiots. Clickbank says we will earn about $30 for each sale of this product as an affiliate. Not bad.

To promote this product offline, it’s pretty simple. All you do is go to godaddy.com and purchase a domain name. Preferably something short and easy to remember since we will be promoting this link offline and people will have to type it in.

Once you purchase the $8 domain name, you need to get your affiliate link. If you are using clickbank, you’ll need to sign up for an account with them and then click the “create hoplink” link to get your affiliate referral link.

Now that you have your affiliate link, you take that affiliate URL and go back into your godaddy account to find the domain name you bought. There will be an option there to do a “redirect”. Choose that option, and it will ask you which URL you would like people to be redirected to when they type in your domain name. Here, you simply enter your affiliate link.

That’s all there is to it. Now that you are officially an affiliate partner, you can begin promoting “your” new website.

You can print up a flier or business cards with your URL on them, and post them on those corkboard message boards in your local gyms or grocery stores, stick them in fitness magazines in your local bookstore, anywhere you think people who are interested in weight loss will find them.

You can place classified ads in you local paper or pay a flier distribution service to put fliers on people’s mailboxes.

Your income will depend on how many people find your marketing materials and how many of those people actually go to the website to learn more. There’s no reason why you couldn’t get 2-3 sales per week from this technique. So, 10 sales per month @ $30 each would put $300/month in your pocket and you can be up and running in about 3 hours from now.

3) Implement The Latest Internet Marketing Tricks For Others.

If you are like most people in the internet marketing niche, you have a hard drive full of ebooks teaching all the latest “tricks” to make money online. Many of these tricks actually do work, even if it’s for a short period of time. The problem is, a lot of these techniques require you to already have an existing website setup or have an existing email subscriber list, etc.

If you don’t have these previous requirements, it can be frustrating for you because you know you can use these tricks if you just had the existing website or just had a subscriber list to start with.

Well, I’ll be the first to tell you that I hardly ever get caught up in the latest tricks and fads of internet marketing. Not because I don’t think they work, but instead because I don’t have time to learn them and put them into use. I’m too busy running my businesses (like most website owners) to get sidetracked by these new ideas.

That’s where you step in. Let’s say you just bought an ebook teaching you how to use Youtube to generate lots of traffic to a website. You’ve read this ebook 2 or 3 times and know this stuff inside out. Guess what? Now, YOU’RE CONSIDERED AN EXPERT.

Becoming an expert is pretty easy. In fact, if you know more than someone else about a certain topic, you are an expert compared to that other person. So, you being the expert on a specialized topic such as generating traffic from Youtube, can come to me as a website owner and propose an offer.

You can word is something like this…

Hi website owner,

My name is Tom and I specialize in generating traffic to websites from Youtube. I think I can generate a substantial amount of traffic to your website from Youtube if you are interested in letting me try.

I don’t charge any upfront fees or anything like that. If I’m not able to send you traffic, you don’t pay me a dime. If I do send new traffic to your site from Youtube, then I’d only charge $0.05 per visitor (about 1/4 what you would pay for pay per click traffic).

Let me know if you are interested in trying this cutting edge marketing strategy for your business.

- Tom

In this case, everyone wins. You get to earn money by implementing your new skills, and the website owner gets cheap traffic without doing any work.

If you can get just 10 clients to agree to your terms, and you send each client 500 visitors per month from Youtube, you’ll make $250/month.

So there you have it. Three simple ways of making some money from the net…