Willful Web Design

Are you choosing keywords that meet your goals? When you decided to start your own business you most likely working a regular 9-5 job. What was ,and still is, your goal? Was it to replace your employment income? Perhaps you also wanted to be able to work closer to family.

So you want to spend more time with family. To achieve that you are going to have to leave your job. Before you can do that you need to replace the income you would be losing. Now the average income in the US for people over the age of 25 is around $32k per year.

Now you want to replace that $32k a year income so you can leave that job. That means you need to build a business capable of making $32k a year profit. Lets break it down into monthly profit. $32k / 12 = $2666.67 a month.

The next question is what volume of sales do you need to make that income. This comes down to the market and the margins available to that market. If you only have a 10% gross margin than you will need to have sales of at $26,667 per month.

The Math
Desired profit(DP): $2666.67
Margin: 0.10 (10% in decimal format)
Formula:Revenue = (DP / (margin * 100)) * 100
Revenue = ($2666.67 / (0.10 * 100)) * 100
Revenue = ($2666.67 / 10) * 100
Revenue = $266.67 * 100
Revenue = $26667

The next element you need to workout is what is the average order size. Lets say you want to aim to get an average order of $50($5 profit). To get $26667 revenue you need to get 534($26667/$50 rounded up) sales a month, 18 sales a day.

How much traffic do you need to get 18 sales a day? This will depend on the conversion rate that you achieve. This varies from niche to niche. The average is reportedly 1.5% of visitors convert. Now if you do a similar calculation to the one above you can find the traffic required to achieve 18 sales a day.

Desired Sales(DS): 18
Conversion Rate(CR): 0.015 (1.5% in decimal)
Formula: Traffic = (DS / (CR * 100)) * 100
Traffic = (18 / (0.015 * 100)) * 100
Traffic = (18 / 1.5) * 100
Traffic = 12 * 100
Traffic = 1200 Visitors per day
Traffic = 36,000 Visitors(based on 30 day month)

You need to find the keyword(s) that will generate you the traffic you require. Now based on leaked click through rates from AOL you know that first place spot will get 42% of the search traffic, assuming just a single listing. If your target is to get one keyword that will generate all your sales you can reverse calculate like the previous calculations.

Desired Traffic(DT): 36,000
Click Thru Rate(CTR): 0.42 (42% as a decimal)
Formula: Search Volume = (DT / (CTR * 100)) * 100
Search Volume = (36,000 / (0.42 * 100)) * 100
Search Volume = (36,000 / 42) * 100
Search Volume = 857 * 100
Search Volume = 85,700 per month

Now that is a lot of searches for a single keyword but if you can find 20 keywords that each had 4285 searches a month you would get the same effect. Now when you are looking into different markets you are going to find markets with higher margins 20-50% range which will reduce required amount of searches a month. If you find a market where average order is $100 you will require half as much search traffic assuming you can keep all other elements the same.

UPDATE
To Make it easier for you guys. I created a simple calculator so you don’t have to worry about the maths. Try to understand what I am doing however

Download File

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