You saw me talking about investments several times so far – this thing is large investment, that one is not so large, and so on. But what are all the costs of running a premium content site? Here. Let’s have a look:
Creating the content is the most important and unavoidable cost in such business. Some sites may do fine without advertising or any paid SEO service (or any SEO work at all), but no premium content site can happen without content.
And in many cases this will be the largest investment you’ll make. If you are creating the content yourself you should factor your time. If you hire someone to create it, directly count the dollars.
It’s impossible to give estimate without knowing your exact business model. But we can do a couple of very rough calculations just as example:
- A subscription based membership site with a hundred high quality articles, 10 videos, and a couple of member only tools. Project about $5,000 for the articles (we are talking about quality stuff here), $2,000 for the videos and $1,000 – $2,000 for the tool, assuming it’s a simple one.
- A set of 3 e-courses, about 20 lessons each, with assignments, exams and certificates. Provided you have someone with expertise this is going to be about $3,000 – $4,000 for writing the lessons, $2,000 or so for creating quizzes, assignments and certificates.
- A site selling 3 approx. 200 pages long e-books and a master set of several videos and audios. You need roughly $500 for the creation of each e-book and $5,000 – $10,000 for the videos.
These are of course very rough estimates and are all made out of the blue. They should be sufficient to give you the idea that starting a small premium content site requires $5,000 – $15,000 for the content creation. This is not huge amount for starting a business, but is not like it’s free of expenses either. If you are planning to start a large info site with several thousand articles, multiple the costs accordingly.
Also note, I consider $50 per quality article is OK. Some would say that you can’t buy an expert for this amount and you may need to pay $100 or $200 per article. On the other hand, if you have the expertise and need just the writing, $20 per article will get you a decent enough writer.
Video creation and tools are different matter as a video can be done nearly free if you just speak in front of some charts, or can cost many thousands if it involves actors or effects. Tools / software are even more diverse.
Users acquisition / SEO / Advertising
Sometimes this is the second, sometimes it’s the first cost. Acquiring users can range from free to many thousands of dollars. It all depends on what numbers make sense for you and what is the value of each customer who joins your site.
There is no way to give estimates here as variables are too many. In some niches the cost per click can be pennies and placing a banner can be $50 per month. In other niches a single click in the search engine results may go to $20, $30, or even $100.
So you have to calculate this yourself based on your business model and niche. There are few things to consider:
- Are you going to rely on search engine traffic? If yes, how are you going to get it? The best strategy might be building a partly public membership site so at least some of your content is exposed to search engines. Just don’t forget that having content alone does not always mean you’ll get traffic. You may (will) still need inbound links.
- If you are paying for ads you absolutely must know your customer lifetime value. When starting, you may need to assume. For example if you are selling a single course at $199, this will be your customer value because there are no upsells. So you need to figure out how much you can spend per acquired customer. Anything up to $100 is probably OK. So if you are using Adwords and paying $2 per click, you must have at least 2% conversionя on your sales page to make things work.
- If you rely on freebies to draw you customers you still must promote the freebies. Usually it’s easy to get users download a free report in exchange for email address and offers like this will convert at 20% or 30%. But you still have to pay for these visitors. And if then only 5% of the download convert to paid signup (customer), we are talking overall conversion rate of 1% – 1.5%. So this approach may be worse than paying to deliver the visitors directly to your sales page.
We are going to talk a lot more about acquiring users in the next article. Just make sure whatever method you decide to use you make some rough estimates at least.
The things are very diverse here as well. You can very well spend $0 on software. Just install Joomla or WordPress and get some plugins. There are plenty of membership site plugins and many of them are free (for example our Konnichiwa! or Paid Membership PRO)
The paid ones aren’t that expensive either. One of the most popular ones – s2Member is just $89.
Even if you plan to run an e-learning site you can start with $0 by using Moodle our free WordPress LMS like our Namaste! LMS and a free quiz plugin like our Watu or Slick Quiz. (This article is not meant to be a review of software solutions – I am merely giving examples).
So you can start with less than $1,000 for the technical side of things. Probably consider $500 – $800 or so for some decent site design (more if your site is going to be complicated and less if you’ll just buy a ready WP / Joomla! / Drupal theme).
If paid newsletter is your business model, mailing list / newsletter / autoresponder plugins or scripts are usually less than $100. Or you can go by subscription service like MailChimp. That’s going to be expensive once you go beyond 2,000 subscribers though.
If for some reason you need your site custom built you may need few thousands on this front too.
And that’s that. The technology is important but it’s not your biggest worry when starting such business. Figuring out the good content and acquiring users are.
Hosting & server fees
Hosting is no longer the big expense it used to be. In fact it can be pretty small one – often a shared host for $5 per month is good enough to handle a membership site with few hundred customers. And 500 x $39 per month for example makes almost $20,000 in income. You see, it’s not a big expense compared to the potential income.
If your site is heavy on DB queries like some complex LMS-es are, or you have built many tools, or you are hosting a lot of audio and video files you may need a VPS or dedicated server. Assume $50 – $100 or $200 monthly for this.
Another option is to go with good load-balanced cloud hosting service – they are too many to count so I can’t recommend a specific one. The cost can come about the same or less than bare metal servers for small sites. For larger sites it might be more cost efficient to get a bare metal dedicated server and hire a server administrator.
If you choose to build your site on WordPress you can choose to use some of the managed WP hosting providers. A good review of some is available here. As you see you’ll spend only $10 – $30 monthly on it.
In overall, hosting is not the thing to worry about. Think about your expenses for content creation and user acquisition most.
Speaking about attracting users, this is the next article in the series.