**If you’re an affiliate marketer, what’s your time worth?**

Too many affiliates are wasting their time chasing ‘free’ traffic and it’s costing them plenty.

Free traffic takes a lot of time to generate at the kind of volume that makes it worthwhile. If you’ve got the patience of a saint then you might be able to devote 12 months to build an authority site that’ll consistently deliver 10K plus uniques per month. This is about the minimum you can expect to need in order to make an decent enough income.

But if you’re no saint, then you’ll quit before you get there. **Guaranteed**.

It’s hard to value your time if you work for yourself online, particularly if you don’t really have a lot of data to analyse. So I thought I’d try and illustrate how much it might be costing you.

I’m going to make a bunch of assumptions about the numbers involved in calculating the value of your time. Some of these assumptions are pretty random – selected simply to give me nice round numbers to play with (so we all don’t have to worry about any tricky math).

Bear with me while I work through this – it’s pretty heavy if you’re not into mathematical analysis, but I hope that in the end the conclusions will be worth the effort.

**Assumption 1: You can spend 20 hours a week working on your online business**

The first assumption is how many hours you can devote to your online business every week.

The time you have available to work online is going to be different for everyone. If you have a 9-5 job then you’re probably working nights and weekends online. If you work shifts or part-time then your circumstances are different. If you don’t have a job, you’re in a whole different category.

Just to keep things simple, let’s assume you can devote 20 hours a week to working online. This is just 2 hours per weeknight and 10 hours over the weekend.

**Assumption 2: You can earn $20/hr if you sold your time**

It can be hard for people who work for themselves to value their time. For example, when I work online I often hit the laptop mid- morning then take a break in the mid-afternoon (I pick up kids from school and chauffer them around to sports and music lessons etc). Then I grind away late at night. Sometimes my schedule is totally random.

If you’re looking to make some more money (or ultimately replace your j.o.b. with online income) then you’ve probably already worked for the Man all day and have other things you need to do at night besides just bashing away at your campaigns (like ironing a shirt for tomorrow).

If you work for a living then getting an evening job or finding shift work that fits your schedule might not be practical. I mean, if you’re at home with a family at night then you might be able to find time to do some online stuff and still stop for dinner, put kids to bed, talk with your partner, unwind etc. Working online suits this kind of lifestyle whereas getting a second job doesn’t. But if you’re single with no family, then things are different.

Just for argument’s sake, let’s assume you could get a job and earn $20/hour.

**Summary 1: You can earn $400/week if you had another j.o.b.**

The first two assumptions are the basis for working out how much your time is worth, but it’s just the beginning. To give yourself a baseline you’ve worked out how much time you can spare for working online and you’ve estimated what you could earn if you spent that time working for a wage.

So straight up, you could be making $400 per week (20 hours x $20/hour) if you were selling your time to the Man instead of investing your time in your business.

That’s $20,800 a year.

**Assumption 3: Your EPC is $0.50/click for targeted traffic**

For the third assumption, we’re going to consider a concept called ‘earnings per click’ or EPC. EPC is possibly the most basic and maybe most important number when it comes to analysing how effective your marketing campaigns are. Simply put, EPC is your revenue divided by the number of people who visited the offer through your link.

So if 500 people viewed an offer and you made $100 in commissions, your EPC is $0.20. In other words, on average you’ll earn $0.20 for every person who clicks your link.

As an example, let’s say you can make $0.50 EPC for targeted traffic (and by targeted traffic I mean clicks from people on your email list).

**Summary 2: You need 800 clicks to earn $400**

Because EPC is a function of your revenue and traffic, we can work backwards from EPC to calculate how many clicks you’ll need to earn a certain amount.

If you can earn $0.50 EPC and you want to earn $400 from your online business (i.e. to earn as much as you could make in one week working) then you’ll need 800 clicks.

That is, $400 divided by $0.50 = 800.

**Assumption 4: Your CTR is 50%**

For the next assumption we’re going to look at your ‘click through rate’ or CTR. CTR is another simple mathematical statistic you can work out from your data. It’s simply the percentage of people who see your link and decide to click it.

So if 5000 people see your link and 500 click it, your CTR is 10%.

I’m going to assume that you generate targeted visitors by using email marketing. People open your emails and then they see a link to an offer. They then either click it or they don’t.

Let’s assume your CTR is 50%. This means half of the people who open your emails click your affiliate link.

**Assumption 5: Your open rate is 50%**

If you’re emailing your subscribers then you’ve got to deal with the fact that not everyone is going to open the emails you send. If they don’t open your email, they don’t see your link and therefore can’t be included as someone who could potentially click it.

Sometimes your open rate is influenced by the fact that you don’t hit someone’s inbox (i.e. your email goes to spam and they never see it). But just as likely it just means they aren’t checking their email regularly or they’re simply ignoring you.

Your open rate is just another percentage – how many people you email divided by how many open the emails. Your autoresponder service will keep this statistic for you.

If you send an email to 10,000 subscribers and 6000 open it then your open rate is 60%.

I’m assuming that your email open rate is 50% for people who receive your emails. This means half the people you email actually read what you send to their inbox.

**Summary 3: You can earn $400 if you send 3,200 emails**

If we stop and put together what we’ve got so far we can work out how many emails you need to send to earn $400.

You need 800 clicks to earn $400, but only 50% of people you email will click the link. This means you need 1,600 people to open your emails and at least see the link. And since 50% of people don’t open your emails, you need to email 3,200 people.

So you can earn $400 if you send 3,200 emails.

(Still with me? I know math isn’t everyone’s cup of tea.)

**Assumption 6: Your confirmation rate is 85%**

I recommend that you use double opt-in when you build your email list. Some autoresponder services make it almost compulsory, but usually you can switch it off if you really want. I don’t think you should (though I always suggest you test everything).

Double opt-in means that when someone gives you their email address they aren’t added to your list until they get their first email and click a link to confirm they really are the owner of that email address and that they definitely want to receive your emails.

I won’t go into the reasons I think you should go with double opt-in apart from saying that in the long-run you’ll get fewer subscribers, but they’ll be better quality and more responsive, which is what you really want (and seeing you’re paying your autoresponder service for each subscriber on your list, why pay them for duds).

Anyway, if we assume you’re going with double opt-in, then some people won’t confirm. If you get 1000 people to give you their email and only 750 confirm then your confirmation rate is 75%.

Let’s assume yours is 85% for argument sake.

**Assumption 7: Your opt-in rate is 20%**

For the next assumption we’re going to look at your opt-in rate. Your opt-in rate is simply the percentage of people who view your squeeze page and give you their email and permission to contact them.

So if 1000 people visit your squeeze page and 300 give you their email, your opt-in rate is 30%.

I’m going to assume that your opt-in rate is 20%. This means one person subscribes to your list for every five people who visit your squeeze page.

**Summary 4: You can earn $400 if you get 18,825 visitors to your squeeze page**

I’ve assumed that your opt-in rate is 20%, your confirmation rate is 85% and we know that you can earn $400 if you email 3200 people.

Working backwards, if you need 3200 people on your list to email and only 85% of people who give you their email will confirm, then you need 3765 people to give you their email address.

But if only 20% of the people who visit your lander give you their emails, then you need 18,825 people to visit your squeeze page.

(I know this is turning into a long exercise, but I think it’s important for you to understand the numbers involved in the traffic game. We’re almost there.)

**Assumption 8: It takes you 50 hours and $50 to start from scratch**

So far we’ve worked out some traffic numbers, but finally we’re getting back to the question of time. We’ve almost come full circle – from working out what your time is worth to the Man to working out what it’s worth working online.

The next question is therefore how long it’ll take you to generate 18,825 visitors using free methods?

If you’re starting from scratch (i.e. you have no online presence at all) then you’ll have to invest time upfront to build a squeeze page & email sequence. You might also have to register a domain, purchase and set up hosting, configure your CMS, buy email services and set up your autoresponder.

Let’s assume it takes you 50 hours to set things up and costs you $50 for the initial domain/hosting/autoresponder.

**Assumption 9: It takes 30 seconds of your time to generate one visit to your lander **

Now you’re up and running you’ll need to generate traffic. It will not generate itself.

If you’re building an email list by driving ‘free’ traffic to a squeeze page you might be posting on your social pipes or forums or Quora or you could be guest posting or building your own blog and going down the organic search traffic route. Whatever you do, it’ll take you a whole bunch of time.

There’s really no easy way to estimate how much time it’ll take you to drive people from other websites to your squeeze page by posting your squeeze page URL around the web. If you’re lucky, or have good connections, it might not take you long at all to get in front of a large audience.

Just for argument sake, let’s assume that we can assign a period of time to each visitor you can generate on average.

Let’s assume 30 seconds per visitor. Honestly, I think that’s pretty ambitious for someone with no existing online presence or connections, but let’s say you already have a good Twitter following or something…

**Summary 5: You can make $400 if you work for 10 weeks generating free traffic**

Seeing you need 18,825 people to visit your squeeze page to earn $400, we can calculate the total amount of time it’ll take you, including set up.

After you’ve spent 50 hours setting things up, it’ll take another 157 hours to get 18,825 visitors to your squeeze page (i.e. 30 seconds per visitor). That’s 207 hours total.

Working 20 hours per week, that’s a bit over 10 weeks work to make $400. (Actually, you’ve only made $350 because of the $50 you spent on set-up, but let’s keep things simple).

**Conclusion: It cost you $4,000 to make $400**

I know it’s been a bit of a tough slog going through all these assumptions and doing all the math, but I thought it would be worth it to show you an illustration of how ‘free’ traffic isn’t really free when you account for the opportunity cost of your time.

You see, because __you took 10 weeks to make $400__, you’ve sacrificed the opportunity to work another 200 hours at $20/hr. That means __you could have earned $4000__ in the same time with another job. Instead, you earned $400.

So it really cost you $4000 to make $400.

Even if you’re not an MBA I’m sure you understand that spending $4000 to make $400 is a very bad investment.

The truth is that the assumptions I’ve made above are overly simplistic, particularly when it comes to email marketing. To get to the conclusion that you gave up $4,000 to make $400 I’ve assumed that you only emailed your subscribers once. This isn’t what you’ll be doing.

As you work more and more on your traffic you get more conversions, which results in more subscribers, more emails, more opens and more clicks. If you’re emailing every day then your cumulative links sent increases exponentially.

That’s cool, but the assumptions I’ve made above are also all based on winning campaigns. Every assumption so far has been that you’re going to make money.

But sometimes you don’t.

You win some and you lose some in this game.

So let’s just make one more assumption to skip the complexity of building an algorithm that could predict the ups and downs and the compounding impact of daily emails and all the rest.

**Assumption 10: It costs you $4000 to make $4000**

Let’s assume that after 10 weeks of work on free traffic you’ve earned $4000, not $400. This means you’ve broken even when you consider your opportunity cost. From here on out, as long as you make more than $400 per week working on your online business you’re earning more online than you could in a j.o.b.

That’s awesome – you’re now able to work from home rather than work for the Man.

But what if you could have arrived at this same position in days instead of weeks?

I mean, what if you were willing to spend $4000 of real money on paid traffic to optimize a campaign to the point where you’re starting to break even and turn a positive ROI?

Of course you’d have to have $4000 lying around, but it’s more than that – you’d have to realize that __real money and lost opportunity money are the same__.

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