The Economics of Making Money Online

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Too often people see the internet as some type of magical, mysterious genie that will give them all the money they need with no work.
True, there are many online strategies to make money while you sleep, but the same laws that apply to the rest of the business world apply here, too.
To illustrate this, we are going to compare the website we are creating with a McDonald's franchise...
Real World Economics It may seem that the internet lives in it's own bubble.
That the money, products, resources, advertisements, etc.
are all just "digital" but it is crucial that you understand that the internet is backed by real world products and services preformed by real people.
(And when you see the real checks in your mailbox, this will become even more apparent!) For example, you have a website and Amazon advertises on it.
Someone visits your site, clicks on the ad to Amazon and purchases an iPod.
The customer receives a real-life iPod, Amazon receives profit from the sale, and you receive a commission from Amazon.
Win-Win-Win.
This entire system was created because a real person bought a real music player.
Since you are just getting a commission for showing the ad, it is easy to overlook this process and think that Amazon just paid you for the digital ad space on your site, seemingly for "nothing".
In reality, Amazon paid you because you sold an iPod to a real person.
The distinction seems minor, but always keep that in mind.
Always remember that you are selling metaphorical hamburgers and french fries to real people in your "McDonald's" on the web.
There is no difference.
Supply and Demand You may be familiar with the idea of supply and demand, and how this affects prices.
If your McDonald's restaurant had 100 hamburgers in stock and there was 1,000 people in line, you could charge insane prices.
But if you needed to get rid of 1,000 hamburgers and only had 10 customers, you would be practically giving them away.
When supply > demand prices will be low.
When demand > supply, you can raise prices higher.
How does this apply to our simple website? The prices your site will earn for each sale or each click will be directly related to supply and demand.
Using our last example, when consumers are willing to buy a bunch of iPods, Amazon can afford to pay you much more than when iPods just aren't selling as well.
In a larger sense, there isn't too much you can do about this, but you can position yourself to protect against lower demand.
The best way to do this is to ensure that you have multiple streams of revenue (which we will be getting to in the next lessons).
Leverage Leverage means that you can do a lot with a little.
Leverage is the concept that makes the internet an exciting place to make money.
Leverage is the reason that I can offer you strategies to make money while you sleep.
Let's look at how internet business offers us leverage: Time leverage is perhaps the biggest advantage.
Let me explain how business works online.
Because your website is up 24/7, even while you are sleeping, you can profit from it no matter what you are doing with your time.
Once your site is up (and you spend minimal time maintaining it), you are free to do whatever you want and your site will continue to profit.
If you are ambitious, you can spend your time creating another site, and another, while all of them are making money all the time.
See how you can leverage your time? If this was the McDonald's, you would be working 12 hours a day to keep your restaurant in order and when you went home at night, the restaurant would be shut down, unable to make you any money.
A second area of leverage is resources.
The system that I am teaching you takes minimal money and minimal skills to create.
It is a system that, with a little effort, you can create for under $20 and profit $200 per week or more.
Try getting that kind of return with a McDonald's franchise.
The final area of leverage is geography.
With our restaurant, we can only serve local customers.
With the internet, we can reach billions of internet users world wide.
This leverage stuff is powerful and it is the single factor that makes the internet fundamentally different (and in my opinion, better) than the McDonald's franchise.
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