Profit in websites?

[Cautious]

I've been thinking about starting up a freebie site of my own, I am not a web designer so was thinking of renting a site and signing up to affiliate programs.
It seems to me that there is no profit in this though, there are a number of gambling sites that will pay between £20 and £40 for referals but most sites only offer a commission on sales created by these refs. - which clearly wouldn't work as all of us know (we sign up and then disappear as soon as we are green).
If you assume that you can find enough offers that average say £30, you would need to offer, for example, an Ipod nano 4Gb (costs £175) for 5 refs (to be competitive) which means a cost to you of £35 per ref. If you offer it for 7 refs. you could make £5 per item profit but how many people would bother to sign up when they can join Freepay for 5 refs? and what if they all join the site that pays £20 commission?
The other costs involved are the cost to run the site, the time taken to run the site (you have to factor in your time as a figure that you would expect to earn per hour) and the fact that the busier this business gets, the less the end companies will pay for offer completions (they will only ever pay what they need to).
Am I getting something wrong here? Is it worth investing in a site?

[Morphius04]

liek we've said its not worth investing in unless you have a good backing first, it costs loads to set up a site

[GingerTez]

In answer to your question - "Is it worth investing in a site?" I would say the answer is definitely "YES"! (That's why I'm doing it).

However, the initial investment is relatively high and there are no guarantees you'll get your money back unless your site becomes popular. The factor that you've missed out on is the "uncompleted users" factor. How many users do you think do their offer but never get the 5 referrals to sign up? Each of those users is 'free' money for the site. Many users on here complain that there aren't enough 'decent' offers on these sites - one of the reasons is that it's then harder to get all your friends to complete if the offers are rubbish = another reason is that often advertiser XYZ will pay £20 per customer if you send 1-10 their way... and then £30 per customer of you send 11-50 their way... and then £40 per customer if you send over 50 their way. If a site has less offers then it can guarantee more traffic for each of the advertisers it has - thus getting more money towards the items and lowering the refs.

I've currently got over 40 advertisers signed up to my upcoming site and don't expect to get out of the lower band for any of them and that is why I have a credit system rather than a straight referral number - I want to give the users some choice but don't want to have to pay out of my own pocket for everyone that completes. I also expect over 95% of users to complete my site because of the choice of offers and the fact that they can do a 2nd offer instead of trying for that last elusive green.

If my site's system ends up popular I may convert my script into a fully fledged template system so that I can sell it to non-techy people. IMHO competition is good for business and for the end consumer.

Apologies for the long post - I did research into all this before deciding to pen my own script and I'm happy to share the conclusions I came to where appropriate. And if anyone's interested... it's taken me about 80 hours of working on the script to get to the point where I'm happy to go live with it from the user point of view... the admin side will be there in a rough form (functional but not pretty) with another 10 hours work and then I expect to continuously tweak it until my time doing admin is reduced to a minimum.

Cheers,
Tez.

[DjRicta]

Originally Posted by Cautious

I've been thinking about starting up a freebie site of my own, I am not a web designer so was thinking of renting a site and signing up to affiliate programs.
It seems to me that there is no profit in this though, there are a number of gambling sites that will pay between £20 and £40 for referals but most sites only offer a commission on sales created by these refs. - which clearly wouldn't work as all of us know (we sign up and then disappear as soon as we are green).
If you assume that you can find enough offers that average say £30, you would need to offer, for example, an Ipod nano 4Gb (costs £175) for 5 refs (to be competitive) which means a cost to you of £35 per ref. If you offer it for 7 refs. you could make £5 per item profit but how many people would bother to sign up when they can join Freepay for 5 refs? and what if they all join the site that pays £20 commission?
The other costs involved are the cost to run the site, the time taken to run the site (you have to factor in your time as a figure that you would expect to earn per hour) and the fact that the busier this business gets, the less the end companies will pay for offer completions (they will only ever pay what they need to).
Am I getting something wrong here? Is it worth investing in a site?

Bingo liner pays £40 per affiliate.

[Cautious]

Terry,
Thanks for those details, I had considered the users that sign up but do not get any referalls but I was thinking about a straight offer completion system (similar to freetech4me) so that wouldn't come into it.
I can rent a really top-of-the-range website with points award system and full E-commerce (including UPS and Paypal support) for about £25 per month - which seemed like a good deal to me?

Djricta,
I saw that but most of them offer £20 - £30, the idea I had would require at least 10 gambling sites and to ask a user to invest £20 to get points worth £20 makes no sense.

Thanks for the feedback though.

[GingerTez]

Also, a couple of the advertisers have told me that they would normally offer £30 per sign up but because I'm a reward site they expect to receive lower 'quality' traffic and will therefore only pay £15 per sign-up OR have as a condition that the user needs to deposit and spend a larger amount of money.

I can see exactly where they're coming from... I signed up to a Bingo site and did the minimum requirements not because I was interested in bingo but because it would get me a referral credit... there was little chance that I'd become a bingo convert so I'd be counted as 'low quality' traffic. Of course there was always the chance I could get addicted to watching numbers pop up on a screen while my PC automatically tracked them and let me know if I won or lost - but it was a very small chance

Cheers,
Tez.

[GingerTez]

Originally Posted by Cautious

I can rent a really top-of-the-range website with points award system and full E-commerce (including UPS and Paypal support) for about £25 per month - which seemed like a good deal to me?

It sounds kind of reasonable... I'm paying about £15 a quarter for a high bandwidth and high disk space hosting package (with PHP and MySQL support). It's not fully e-commerced up - my suppliers will generally post direct to my users and a personal PayPal account with one of the emails from my site domain will be just as easy to use and maintain as one from an e-commerce hosted site. Of course, I didn't need a pre-scripted package so I could cut some costly corners.

It sounds like your margins are going to be very tight... IMO you should look at basing your site in the US for US users because the advertisers appear to pay more over there - especially if you're doing a straight points reward with no referrals complications.

Cheers,
Tez.

[holybatman]

Hey Gingertez,

Could you tell me more about your hosting package, it sounds like a lot better deal than what I am getting now !!

[mrplow]

Originally Posted by holybatman

Hey Gingertez,

Could you tell me more about your hosting package, it sounds like a lot better deal than what I am getting now !!

I put him onto the hosting.

It's 3dpixelnet - www.3dpixelnet.com/?refer=gingertez

They're excellent, I've been with them for 2 or 3 years now (I forget when I signed up)

[GingerTez]

Originally Posted by mrplow

I put him onto the hosting.

It's 3dpixelnet - www.3dpixelnet.com/?refer=gingertez

They're excellent, I've been with them for 2 or 3 years now (I forget when I signed up)

That's not my referral link! Thanks for the plug mrplow but I didn't sign up as "GingerTez" to the hosting (or at least that's not what I'm logging in as )

Holybatman - If you do decide to go for it and are kind enough to remember my referral link then please PM me and I'll send you the proper one.

And they ARE excellent... I've submitted 5 support calls so far and every one of them has had a proper helpful answer within 20 minutes (ok, they were about setup sepcifc to 3dpixelnet but 20 minutes is still fantastic imo)

Cheers,
Tez.

[Amanda]

I think the most profit is made when people sign up, get one or two refs and then give up on the site!

[mrplow]

Originally Posted by GingerTez

That's not my referral link! Thanks for the plug mrplow but I didn't sign up as "GingerTez" to the hosting (or at least that's not what I'm logging in as )

Alan will figure it out, he's a clever lad.
(Actually he'd probably ask me if it was me messing about)

Originally Posted by Amanda

I think the most profit is made when people sign up, get one or two refs and then give up on the site!

*massive slap on wrists*
What a terrible thing to suggest (even sarcastically)!