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I have a free tool for your niche marketing toolkit today.
Over the last weeks, I’ve been constantly doing keyword research for new niches to explore. One thing that became kinda annoying over time is to calculate the estimated profits of a new site every time in my head.
My calculator tells you what profits to expect if you rank #1 for your keyword. All you need to fill in is the monthly search volume, the estimated CTR and conversion rate and your commission.
It’s by far not groundbreaking, but it should help you with your go/nogodecision for certain keywords.
Check it out here. It should be pretty straightforward to use. I also included notes with instructions that appear when you hover over the corresponding cells.
Note: Of course, you can’t sell 2.94 products. I left it unrounded for accuracy reasons.
How to calculate estimated profits
If you want to know how the calculator works, keep reading. If you hate math, you can stop reading now and check out the calculator instead.
The formulas
Monthly Search Traffic = Monthly Searches [exact match!] x 42% (Note: 42% is the average click through rate to your site if you rank #1)
Estimated Sales = Monthly Search Traffic x CTR (%) x Conversion Rate (%)
Estimated Income = Sales x Profits per Sale
Example
Let’s say your keyword gets 2800 monthly searches [exact match!]. If you rank #1 in Google, you will statistically get 42% of all searches to click through to your site. 2800 x 42% = 1176.
A typical CTR (Click Through Rate) on a small niche site might be 25%, and salesletter conversionrate might realistically be 1%. Let’s say you get $22 commission for each sale.
How much money will you make?
Estimated Sales = 1176 x 0.25 x 0.01 = 2.94
Estimated Income = 2.94 x 22 = $ 64.68
Again: Of course, you can’t sell 2.94 products. I left it unrounded for accuracy reasons.
Do you have any questions? Do you know a better method to estimate profits? Discuss in the comments.
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This is the last post on this blog while it is called “Live Life Big”. Over the next week, I’m moving to a cool new domain. I’ll also finally get a twitter handle that you can pronounce. Stay tuned.
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{ 5 comments… read them below or add one }
Nice! Keep them coming and keep me updated thru my email. Thank you.
Thanks Anthony.
Cool post but I am kind of confused on the math here. Maybe you can help me understand it.
You say that the click through rate (CTR) as the 1st Google Result would be 42% (on average).
So wouldn’t your calculation be
2800 * 0.42 * 0.01 = 11.76
If 1176 people will go to your site and the conversion rate is 1% than wouldn’t you sell 11.76 units?
Thanks for your reply, David.
If your conversion rate is 1% and you get 1176 visitors, you will sell 11.76 units. That’s true.
However, I buit this tool with affiliate sites in mind, which means that I want them to click on my affiliate link. After clicking on that link, they are forwarded to the salespage where the conversion rate might be 1%. Of course, not everybody is going to click on the link. A conservative estimate is 25%.
The calculation therefore becomes:
2800 * 0.42 * 0.01 * 0.25= 2.94
If you don’t have an affiliate site but are selling the product directly on your site, you can forget the Click Through Rate variable and set it to 100% (instead of 25%, everyone is already on your site).
Also keep in mind that all those figures are estimates and real numbers are likely to vary.
Thanks again for your comment.
Great explanation David, now I understand that clicking through to the affiliate link is what adds the 0.25 into the equation. I will definitely use this as I test out some affiliate marketing, thanks for the great tools.