July 10, 2019
Affiliate sites are easily one of the most profitable online businesses you can have.
Once they’re up and running they can make money passively and are highly scalable, which is the ultimate goal for most website owners.
What is an affiliate site?
An affiliate site is basically a content site, or blog.
The primary goal is to build traffic, then drive sales to partner websites. If readers click your affiliate link and make a purchase, you make a commission on that sale. Commission rates can range anywhere from 5 to 15% for physical products all the way to 50% or higher for digital products.
The biggest partner that affiliate sites go with is Amazon, the reason being that you are exposed to a huge network of buyers, as well as many different options for what you can promote. But there are many other options besides Amazon. Some industries will have more options than others.
Given that your model is simply promoting other people’s products, affiliate sites are one of the simplest business models in the world and can be scaled to a multi-million dollar business.
You can think of owning an affiliate site like owning real estate. They’re pieces of property that you can buy and sell. Only, it’s purely digital on the internet.
And people love buying them because they make money passively, are easy to manage, and are highly scalable.
How much are they worth?
Affiliate sites have the potential to make you money passively. Because of this, a lot of people prefer hanging onto them as a stream of income rather than selling them once they become profitable.
But if you do decide to sell yours, it could be sold for 30-35x its monthly earnings. Sometimes the multiple can even go 40+.
30-35+ is the standard amount, but other assets that come along with the sale like Facebook pages, email lists, or other valuable social media accounts can drive the valuation higher.
Other factors that can drive up the valuation is having a strong link profile. This is the holy grail for any content site, and if you’ve got strong links from authoritative sites, it will make your site worth a lot more.
Showing growth month over month can also make it more valuable to buyers. It demonstrates that you’ve been putting effort into it, and it’s proven to have steady traffic/income flow.
So how much can I make?
Let’s say your affiliate site is earning $1,000/month. This usually means that it’s worth 30k-35k.
Here is a valuation tool to see how much your website is worth.
Buying undervalued websites and flipping them
In the last few years, we’ve seen a significant market change with the selling of affiliate sites. People are building better sites, there are more buyers, and more business models, resulting in more money in the market. The sales prices are essentially skyrocketing.
A few years ago, the average valuation of sites was at 20x monthly revenue. Since then, it’s moved to 30x, and now it’s nearing 40x.
That means sites are being seen as higher quality assets and people are willing to pay a higher price for them.
And if you’re experienced, buying and flipping sites could be an extremely profitable venture for you to get into. For example, you could buy a site that makes $500/month for $15,000, grow it to $3,000/month over a year, then sell it for $90,000.
Although it takes some time, if you can do this for 3 sites, that would mean a profit of $270,000, when you only had to spend $45,000. Plus, there’s the income you would generate from the site while it’s under your possession.
Spencer Haws from Niche Pursuits is one of the biggest publicly-known affiliate site flippers. He wrote an extensive article filled with good advice.
Building new sites from scratch
When starting an affiliate site, most people opt to build their sites from scratch. This has minimal upfront costs as you only need to pay for your domain name and hosting.
For your content, you can choose to write it all yourself or outsource them to writers. But it’s doable to write 2-3 articles per week, which is plenty of new content for your site.
However, starting from scratch takes a long time. And there’s quite a bit that goes into the research and building phase. This also means it will take longer to start seeing profits.
Having said that, more and more people these days are purchasing done-for-you sites as a launching ground.
These services will do the entire niche and keyword research process, build it and deliver it to you along with all the essential tools that you need to run it. It even comes with a few initial pages of content to get you started in the right direction. The amount of time this saves can make it well worth the cost.
Not to mention that you’re ensured to get the research and planning done correctly, which many beginners fail at.
A great source for passive income
Affiliate sites are one of the simplest business models in the world – build traffic, put in affiliate links, and make commissions. It doesn’t get any simpler than that. You essentially could build it once, not touch it for a year and still be making money from it.
And there are many monetization strategies you can choose to use with content sites. But affiliate sites are particularly attractive because they require the least maintenance. You don’t need to offer any kind of customer support since the product owner provides that.
You also don’t need to ship customers any products, since vendors like Amazon will do that for you.
It’s also extremely portable. Since you don’t need to be around to ship products, you can work on it from anywhere in the world as long as you have a good wifi connection.
Hopefully, this article has given you a taste of what affiliate sites are all about, and how much you could make from selling one.
It’s a great side hobby to start off with, as it doesn’t require your divided attention. In fact, you could work on it on the side for a year and still have it grow, as long as you do put a little effort into it. Then, once it’s making money, you can either decide to sell it or hold on to it for extra income.
About Andrej Ilisin - Founder and CEO of Alpha Investors. Has a great passion for building stuff / online businesses. When he's not in front of his desktop, he's either at the gym or playing basketball. His wife doesn't approve... duh... You can read more of his stuff on his blog.