How to make a profit from web site?

If you are selling goods and services and simply need to know how to accept payments from users on your site, see how do I charge money on my web site?

If you are giving away useful information or entertainment, the two easiest and most profitable business models are :

1. Selling advertising space on your site. For most sites offering practical information, such as this site, advertising sales are the big winner. And it's a lot easier than you think. Read on for information about advertising brokers who can bring in much more revenue for you than you could ever find on your own.

2. Merchandise sales. An excellent fit for entertainment sites, like Home Star Runner for instance. For entertainment T-shirts, mugs, and the like that bear your logo or characters, especially if your site provides entertainment.

This article assumes that you've created a web site that offers something people enjoy or find useful - a product for sale, a catalog of how-to articles about your favorite hobby, a collection of recipes, tips on winning your favorite game... something good! If you haven't done that - if you have created a web site with no particular purpose other than a vague wish to make money -- you need to go back to the drawing board, decide what your site is about, and start meeting a need. As with any type of business, wishful thinking doesn't cut it. If you don't have a popular site already, you're not ready to start earning money from it.
See also Philip Greenspun's "So You Want To Join the World's Grubbiest Club: Internet Entrepreneurs" for a rather successful attempt to answer the more general question, "what should my site be about in order to make money?"

The Online Advertising Business.
Unfortunately, negotiating individual advertising deals is difficult for small sites. Fortunately, there are companies that serve as advertising brokers, placing ads on your site automatically in exchange for a significant share of revenue. Steer clear of sites that place "popup," "popunder" and other types of obnoxious advertising: these ads send negative messages about your site and are often filtered out anyway by newer web browsers. Due to such negative experiences, today's web users are much more likely to click on plain-text ads than on any type of advertising. While graphical "banner ads" that do not pop up separate windows are still respectable, most advertisers are not interested in purchasing them due to the fact that users ignore them and browsers automatically filter them.

Ad Broker Services
At the time of this writing, the best of the text link advertising brokers is clearly Google AdSense. (Disclaimer: I am a satisfied user and affiliate.)

This site recommends Google AdSense for targeted ads

The ads are typically tasteful, as relevant as Google's search engine results, and very straightforward to install on your pages without any special server-side scripting. The appearance and layout of the ads can be adjusted to meet your needs. While advertising space providers like myself are not permitted to discuss AdSense revenue, I have been a satisfied client for a long time, from which you may draw your own conclusions.

A different type of on-page advertising is offered by Kontera. (Disclaimer: i'm a satisfied customer, and an affiliate of theirs as well.) Kontera's adlink service creates advertising links from relevant words and phrases in the text of your page. These links appear in a different color from regular links, which makes them easy to distinguish, and a clear message pops up explaining the nature of the link when the mouse moves over it. Of course, adlinks never interfere with your own links. I do find it's best to disable adlinks on very, very long web pages, such as technical manuals, to avoid a long delay as JavaScript code renders the adlinks. The adlink service works great on shorter pages, and extremely long pages are usually better broken up into multiple pages anyway.

Another ad broker option is the adbrite service.

Direct deals with advertisers
If your site is popular enough, you may begin to receive offers from advertisers wishing to directly purchase advertising links. Be careful! Some advertisers are seeking to confuse search engines by purchasing irrelevant links on popular sites that can be easily confused with real content, which can have negative consequences for your site's search engine rankings when the search engine companies notice -- and of course it hurts everyone when they try to search for something useful. Other advertisers are offering relevant services of interest to your users, but will make their interest in your search engine rank very clear when negotiating with you. I try to follow these golden rules, in descending order of importance, and I recommend that you do the same:

1. Maintain the positive user experience that made your site popular in the first place.

2. Check out the content the link leads to. Would your customers find it interesting? Does the site actually have content or is it obviously a useless "placeholder" site that the owner hopes to sell based only on its search engine rank? Check back occasionally to make sure a "bait and switch" has not been pulled.

3. Take care to distinguish advertising from the true content of your site.

4. Avoid companies that ask for a long list of generic one-word links with common words like "food," "sports" and "travel" unless those subjects are actually relevant to your content. Even then, see rule #2.

5. If the service being offered is genuinely interesting and relevant for your users, the advertiser's motive for buying the ad is not as relevant to your decision.

6. If an ad is "almost" relevant, work with the advertiser to help them get the wording right. That ad for speed dating may be perfectly appropriate for an audience of techies if you find the right way to make it appealing!

7. An ad that relates to your subject matter is best. An ad that relates to other interests you know your visitors share can also be appropriate. For instance, my visitors travel frequently to technical conferences. Hotel ads are a good fit for my site, but cruise line ads would not be.

8. If you are also selling space to an advertising broker like Google AdSense, be sure to follow their terms and conditions carefully and avoid damaging a more important relationship for a one-time direct advertising deal.

9. Insist on payment in advance by wire transfer, or wait for their check to clear before running an ad. If the offer sounds too good to be true, it probably is.

The Merchandising BusinessYou want to sell shirts, mugs, underwear and other fun stuff with your web site's logo or characters on them. But you think it's going to be a lot of work. Fortunately, you're mistaken. It takes almost no work at all and doesn't involve any significant risk on your part.

What's the catch? The profit margins are low. So if you want to put things out at prices people will pay, you will only earn about a dollar or two per item. But if you find your sales are good enough to justify it, you can always switch to ordering your own custom-printed items in bulk later. I'll talk about that in a moment. But first, let's look at the easy way.

Working with CafePressCafePress offers a wide array of products that can be customized with any logo you like. They allow you to upload your own artwork in most common graphics formats, and they do the rest, including billing and shipping. Which makes things about as painless as possible.

There is no signup fee, although they do offer plans where you pay a small monthly or yearly fee and receive better service.

Check out CafePress here (disclaimer: I am a satisfied CafePress vendor and affiliate).

Creating Your Own MerchandiseYou can find local T-shirt-screen printing shops in most areas that can turn around an order for several hundred shirts at a great price. So the profit margins will be much higher... but you're taking on the risk of unsold goods. And you're responsible for shipping. And returns. And inventory. And billing, though PayPal makes that part fairly easy.

Still, if you find that your CafePress shop is selling hundreds of items per year, it may be worth the effort to do it yourself and keep the profits... or set lower prices to stimulate sales.
Sites like Custom Ink can give you online price quotes for custom shirts. You'll notice that prices drop quickly when you order hundreds of items. But for the best pricing, you may have better luck with a local company... after checking out their references, of course.

How do I accept payment on my web site?
There are many ways to accept payment for goods or services via your web site. When the question is "how can I charge money for this?" the right answer depends on the nature of your site and the size and frequency of the payments you expect to receive from customers.

If you do not expect to take thousands of dollars in orders every month right away, or if you are not ready to invest roughly $100 up front and numerous hours of your time in opening a credit card merchant account and obtaining an SSL certificate for your own secure web site, you should definitely check out PayPal. As of this writing, PayPal is by far the easiest way to start accepting payments for purchases of goods or services via the web. Everything you need is provided, including "shopping cart" pages and "buy now" buttons. You do not need to learn any sophisticated scripting. PayPal allows your customers to pay by credit card or check, and many of your customers will already have a PayPal account, since PayPal is the preferred payment method on the EBay auction site. In fact, using PayPal can increase the chances that your customer will regard your site as trustworthy and choose to do business with you.

I have no affiliation with PayPal, except as a satisfied client; my own customers are given both options: use my own secure store and merchant account, or use PayPal. Those purchasing less expensive items often choose PayPal.

For those who are processing orders on a larger scale, or who must also be able to accept orders by phone, fax and postal mail, it may be more cost-effective to obtain a credit card merchant account. A credit card merchant bank clears the transactions for you and deposits them within about 48 hours to your company's checking account. There are usually monthly minimum fees, in addition to a percentage of each transaction, also known as the "discount rate," and typically a small per-transaction fee as well. You will also need to set up a secure web server, such as the freely available ApacheSSL server; you can arrange this through your web hosting company, but you will need to pay an annual fee to an SSL certificate provider for an encryption key which proves to web browsers that you are who you say you are. Without this key, your users will not see the "lock" icon in their browser that is widely considered synonymous with safe online shopping. And, of course, you will need to greatly improve the quality of your web server's security if you plan to pass other people's credit cards through it; companies have been blackmailed more than once by hackers who have obtained customer credit card information from poorly secured sites.

If this sounds like too much work to do right, arrange for a consultant to do it, use the services of a company like The Processing Network that provides PayPal-like web services for those who do have merchant accounts, or use PayPal.