calculate_residual_incomeWhether you’re just starting out with internet marketing or already have a site or two up and running, the ability to calculate residual income for your affiliate site is a skill you’ll need to master in order to have solid, reliable predictions of your earnings.

In this post, I’ll show you the techniques I use to estimate income for a new site.

For more on the basics of residual income, click here.

The Two Numbers Needed To Calculate Residual Income

The way I see it, there are really only two numbers you need in order to have a reliable estimate of residual income: revenue per thousand users and traffic volume.

Revenue Per Thousand Users

The first number, revenue per thousand users, is exactly what it sounds like: how much money do you expect to earn for every thousand users that visit your site?

When I’m starting a new site, it can be difficult to get an accurate number for this metric, since there are a ton of factors that come into play: on site conversion rates, off site conversion rates, downstream conversion, customer retention, average sale price etc.

Not only that, but you’re likely to have all of those factors for multiple affiliate programs, which makes the calculation, well…difficult.

Instead I use a general estimate. For a back of the napkin figure, I usually use a $100 per thousand users for a new site. This is because in my experience I find that most sites have this potential.

Higher commissions usually come from higher priced products with lower conversion rates, and lower commissions usually come from less expensive products with higher conversion rates, or through multiple purchases.

This means that if I have a goal of earning $1,000/month from a site, I need to generate 10,000 users a month, which is usually a reasonable aim.

Traffic Volume

Getting a solid estimate of traffic volume can be challenging, since its impossible to know how your page will rank over time.

After an initial grace period (“the new site sandbox”) you can often expect to see something in the range of 3-5 visits per post per day. This obviously depends on the niche and the keywords used, but I find it’s a good rule of thumb for estimation purposes.

So, if you have a 100 page site, you can expect to see 300-500 views per day, which is 9,000-15,000 clicks per month. For a targeted, high quality site, these numbers are reasonable.

Putting It Together

Once you have those two numbers, putting them together is easy!

If you’re estimating a $100 revenue per thousand with 9,000 – 15,000 visitors, that means you can expect to earn $900-$1500 per month in residual income! This number will continue to grow as you keep working on your site, since affiliate sites compound over time.

Not bad for a business you can build in your spare time!

If you’re interested in learning more about how to get started with affiliate marketing, click here.

Or, read more about earning passive income through internet marketing.