Is Website Flipping Worth Your Time? Calculate Your Net Profits
Fri, Aug 29, 2008
Guess What!? You Just Sold Your First Website Flip For $1000!
Congratulations! Now, let’s do some calculations to see how much money you made!
“But, wait! Didn’t you just say that I made One Thousand Dollars!?”
I said that your site SOLD for a cool thousand, but now we have to deduct the costs that you endured in order to make that sale happen.
If you’re considering flipping websites, or any other online venture for that matter, then you have to be prepared to spend time calculating how much net profit you’re earning and also how much time it takes you to generate that income.
While that may seem like common sense, you may be surprised how much work it is to implement those calculations into your regular work schedule when you’re first starting out.
In the beginning, it’s easy to get caught up in the adreniline rush of making sales and then realize later that you actually didn’t make as much money as you thought you did.
So, the idea is to break down the cost, profit, and the average hourly wage. You might not care about what the hourly wage is if you’re just starting out and spending a lot of extra time on your first website flip, because you can chalk it up as learning experience. However, part of that learning experience should still include figuring out exactly how much money you’re making per hour.
Once you know all the details, you can decide if it’s worth your time to continue doing things the same way or if you need to make some adjustments in your flippin’ game plan.
What are all these costs you’re talking about?
There a few different ways to flip websites and many factors that can come into play, depending on your exerience, skills, etc. So, for this example, let’s call it a 30 day flip that you created from scratch and keep it simple.
Take a look at some of the costs that might have been involved in your $1000 website flip:
Hosting - $4.95
For this example, let’s say the cost was the minimum Hostgator account of $4.95 which allows you one domain. (However if you plan on flipping websites, at least get the Baby account for $7.95 which offers way more)
Domain Name - $6.99
To be honest, I usually pay more, but I don’t watch for sales and deals enough. I just buy them when I want them. So, averaged out, $6.99 is a good ballpark figure for an example.
Theme - $0
(Let’s say it’s built on Wordpress) Even though you know that a premium theme will often add a bit of value, you decided to spend time tweaking a free one to save yourself some money in that area.
Content - $90
Since the site will be fairly new when it’s sold, the more unique articles you have on a 30 day flip, the more value you will add. 30 is a good number as that’s at least and average of one a day. In this case, I’m assuming you don’t like to write and were lucky enough to find a decent writer that only charges $3 per article (Please send me their name and email).
PayPal/Escrow Fees - $32.50
These two are pretty close with Escrow.com coming in a little over. But, let’s say you used them because you thought it was safer after reading Suite J’s post on avoiding fraudulent buyers.
SitePoint/Auction Fees - $25
This site is going to be 30 days old so you’re going to list it under “Established Sites For Sale” on SitePoint. It’s $20 to list + $5 to highlight the listing because you think that helps your headline stick out of the crowd.
Traffic - $50
Let’s say you purchased two ads for $25 each just to get things started. You are still going to spend time building traffic yourself throughout the 30 days by using social networking sites, adding the URL to directories, commenting on blogs, etc.
Taxes - $100
Huh? Oh, you forgot about the taxman? You didn’t think he was going to let you flip websites for free, did you? Obviously this could vary a great deal depending on so many things (where you live, how much you make, how good your accountant is, etc.), so let’s just make it an easy round number and say it’s $100 for this example.
Total Sales Price: $1,000
Total Costs: 309.44
Net Profit : $690.56
Again, these are just examples of costs, and it will vary with everyone, depending on how you do things. However, I thought it would be good to list a breakdown of the numbers that maybe you hadn’t thought of. Sometimes it’s an eye opener when you have it laid out in front of you.
How Many Hours Did You Spend Working On The Site?
For this example, let’s say you spent one hour a day on average from start to finish. That’s including everything from keyword research, the set up, tweakng the theme, adding the content, getting traffic, writing out the sales page, transferring the site, and anything else in between (monetizing, etc.).
$690.56 / 30 hours (1 hour per day) = $23.02 per hour
Cutting that time in half and selling two sites simultaneously will double the pleasure. Outsourcing 80-90% of the work might allow you to sell 10x the amount of sites. The possibilities are really up to you. This is why it’s important to break it all down and keep track of your time. You can then look at everything in detail and find ways to save time, create better sites faster, and make more money.
A Couple Tips On Tracking Time And Money For Your Website Flips
Plan And Budget
It’s extremely beneficial to set a schedule and then track the time and money you’re spending on each project as you go, as opposed to figuring it out afterwards. Also, set a budget for everything you’re going to pay for and don’t go over it. Set a targeted sales price! Plan out your website flips!
Use A Time Tracker Program
This is a recent addition to my work efficiency arsenal, and it’s been a great help.
I was tracking my time before but it was always an estimation because I often pause to chat, high five my daughter, take the dog for a walk, and even sleep sometimes.
The time tracker software allows me to set up tasks within projects and start/stop whenever I want, giving me an exact result on how much time I’ve spent on every project. It’s very simple to use.
This is the one I use for Mac (I like the simplicity)
I recently saw this one for Windows/Linux/Mac
Website Flipping Is A Business
Although people are often glamorizing the idea of website flipping, it’s still a business. It’s still a serious transaction between two people and I think it’s important to treat it as such. I t seems as though some people view it as winning the lottery or spinning the big wheel on The Price Is Right. Yes, you can make high profit margins in small amounts of time, but there’s always at least some work and know-how involved. Knowledge and experience is the key to success in anything you do, including website flipping. As I continue to learn, and add more successful sales to my record, I hope to keep discussing it with you guys and helping each other out with website flipping and other internet marketing opportunites.
Let me know if there’s any info you want to see covered on Flippin’ Fridays!
Don’t forget to subscribe to the rss feed or via email!
Cheers!
Jay
Tags: time management, website flipping
August 29th, 2008 at 9:09 am
I don’t know Jay…why am I always first to comment? Do I win a prize?
Another lengthy post so I can only assume that you are back on the caffeine and have been up all night.It is good to see this laid out for all to see. There is, as we know, a lot of hype surrounding blog flipping right now and you dont seem to see much advice that manages peoples expectations. Time tracker was a good one and I will check that out! How much time does it take to track time?
I know you are covering a lot of blog flipping tips at present and one I would like to see is the after sale. Which are the best ways to transfer your sites and how best to get them back up and running if you are on the receiving end. Having recently gone through a transaction it took more of my time (to be factored into the per hour equation) explaining what the guy needed to do and if someone were to put a detailed article up I could just direct future customers here to read it!!
Where is Missy?
Happy Friday!
August 29th, 2008 at 2:05 pm
Awesome post…
I have been doing a lot of design work recently where I quote a price and stick to it… Sadly some jobs just are not worth the time but others are more than worth it.
Hopefully after this flip comp I can find the time to start some planned and well timed flips.
Forests last blog post..10 Ways to be Unethically Frugal
August 29th, 2008 at 2:07 pm
I think this is one of the most comprehensive on the subject of blog flipping which is popping up everywhere around the blogosphere. Hmmm, will the supply exceed the demand?
I’m keeping this little manual for future reference just in case I’m flipping thoushallblog and start yanshallblog.
@Neal: Good to see you, buddy..
PS: where do we get decent writer that only charges $3 per article?
Yan Shall Blogs last blog post..15 SEO Tips for Beginners
August 29th, 2008 at 2:19 pm
@Neal: A prize? Well, you win my friendship…lol….and there’s a Sunday Morning Sacrifice, but not sure what that will be. I never am. You have to show up Sunday Morning to find out.
I’ll hook you up with some good transfer info.
@Forest: Yeah, it’s important to have a solid schedule/plan and stick to it, that’s for sure. Who’s team are you on for the flip?
@Yan: Ya, I was thinking the same thing. Maybe too many people will start selling sites and saturate the market. However, I don’t think enough people actually take action on selling a LOT of sites regulalry after they find out it’s not a lottery and there’s a lot of work involved to get started. lol Plus, there’ll always be demand for “good sites”.
LOL@ “flipping thoughshallblog and starting yanshallblog”
Cheers guys!
Jay
Jays last blog post..Is Website Flipping Worth Your Time? Calculate Your Net Profits
August 29th, 2008 at 2:34 pm
I’m with a group run by Girish… know nothing about anyone there but thought…. why not
Forests last blog post..10 Ways to be Unethically Frugal
August 29th, 2008 at 3:58 pm
Nice post here Jay. Hopefully my first blog flip won’t cost as much (but sell for a lot). I’m working on my first site flip, and I’m looking to reach around $400+ for this one. I’ve already spent $9 on hosting, and $14 on content. When I’m ready to sell, I’ll have to spend another $25. All I’m hoping for is a good ROI.
August 29th, 2008 at 4:06 pm
@Sly: Thanks! Yeah, it’s what we’re all looking for (a good ROI). It’s good to keep the costs as low as possible while still providing a decent site for your buyers. You won’t be as disappointed then if you come in at a little under your goal. Also, if the site is good, then your buyer will be more likely to buy from you later.
We’ll be going head to head in a flip contest soon, won’t we?
Cheers!
Jay
Jays last blog post..Is Website Flipping Worth Your Time? Calculate Your Net Profits
August 29th, 2008 at 4:50 pm
Good article. Things can add up pretty quick when you are not keeping track. It is a good idea to keep treating it like a business if the goal is indeed to make money.
Coach Kips last blog post..Success from the East.
August 30th, 2008 at 3:29 am
This is the best description I have found on blog flipping. Since I will be participating in my first blog flip ever, this info was amazing!
Work At Home Mom Taras last blog post..New Look Blog Contest
August 30th, 2008 at 4:44 am
Yeah, decent article.
Personally, I look at the idea that if I pay more for something now, it’ll cover itself over the course of my online stuff. Like premium themes, for example - if you look at them up front (for a dev license), you’ll think it’s a heck of a lot of money… but your first flip if done well will cover it. Likewise, people going with shared hosting instead of a Reseller account at Hostgator, which pays for itself if you use it to flip even a small website ($30~).
Personally, I spend less than 5-6 hours on a $1,000 flip, which works out fairly well if you take an hourly rate. Mainly because every single thing is outsourced, the themes, the content, the customization, even the listing if I’m feeling lazy.
@ all - you can get cheap as heck writers on places like Digital Point. I have 2-3 top class, English pros churning out unique content for me at $3/500 words, with bulk discounts. What I’d advise is start a thread in their Content Creation section, and have each writer give you a sample (which you’ll pay for) - if good, continue, if not ditch the writer. Good luck!
Jasons last blog post..How I Got 1,000 Subscribers In Less Than A Year
August 30th, 2008 at 7:30 pm
@ Suite J - Ya I’m looking forward to this competition. Good luck!
Sly from SlyVisions dot Coms last blog post..Blog Flipping Gone Wild
August 30th, 2008 at 9:28 pm
@Coach: Where you been? Taiwan???
@Tara: Thanks for coming by and also for the kind words! I’m glad you liked it. There’ll be more every Flippin’ Friday!
@Jason: You’re absolutley right! I look at money spent on “trial and error” the same way.
Outsourcing is a must (imo) if you want to flip websites regularly to make good money on a consistent basis.
How many do you order to get $3/500 words? I’ve found writers that will do them for that price, but not “good ones”. You must be holding them all hostage over there!?
Although, I have a few solid freelancers lined up now in different areas of expertise. Just takes time to find the right ones.
@Sly: Ok, U2!
Cheers Guys!
Jay
August 31st, 2008 at 3:51 pm
On the subject of time tracking, check out our web-based time tracking app Intervals. The timers and detailed reports will let you know exactly how much that flip is costing you. And you can input related expenses for a truly accurate cost. Good luck to all with the flipping!
September 1st, 2008 at 7:29 am
Great post Jay. I personally believe that if you don’t make more than 50% of your capital it’s not worth it.
Lucass last blog post..Marketing Your Site Through the SitePoint Marketplace
September 3rd, 2008 at 1:25 pm
Great post. Gave me a good perspective I didn’t think of before. I’d like to see more post on outsourcing. Giving me the least amount as work as possible but then can do more sales to still make a good profit
September 3rd, 2008 at 7:48 pm
At AP: Where’s Missy? LoL. I don’t know. Where the heck is she? When you find her, let me know.
Good article, Jay. Site flipping is a business, and one must do revenues - expenses = profit.
I try to keep it simple, but yeah one mus keep diligence on expenses, to come out ahead. So far, i’m doing phenomenal.
Where is Missy?
Missys last blog post..Google Chrome, New Web Browser From Big G
September 4th, 2008 at 4:12 am
@John: Thanks for stopping by. Will check out your software.
@Lucas: Yup 50% is a good target.
@Justin. Thanks for dropping by, glad you liked it. Outsourcing is pretty much necessary to pump out volume, unless you absolutely never sleep.
@Missy: Yeah, you have to treat everything you do like a biz, except commenting on my site. You can be casual.
Cheers guys!
Jay
September 10th, 2008 at 2:51 am
Great idea. But I think the selling part is the hardest thing.
Husseins last blog post..How To Spam Blog Comments Using Smiley
November 2nd, 2008 at 7:52 am
So i went and bought up some domains.. i didn’t know “website flipping” was an actual idea until i found this site. I am sitting on some pretty good names, but i believe in order to make money in it you have to be creative and unique. A lot of programs are out there now so you don’t have to be a total comp geek to get it up and running… does take time/ and some money, but business using the internet is one of the lowest start up costs and everyone uses the internet so it is popular.
My guess is if you were going to buy a site probibly going to want to get into .tv since it is fairly new and it hasn’t been totally tapped out of names yet. .tv extensions are growing with popularity, a little slow but in years to come will prolly be primarily recognized with along with .com
Your thoughts?
November 5th, 2008 at 7:39 pm
I just picked up a course by Max Davis at buyingandsellingwebsites.com that was pretty good. More of a long term approach than this 30 day flip tho…
November 8th, 2008 at 7:33 am
Nice post Jay, even though I’m quite into website flipping.. I still don’t take all the little expenses out of it. I guess I better start soon as I plan to continue this for a long time… so I better make sure I cover all my expenses by the end of the month lol