How to Know When to Give Up (with Niche Sites)
If you’re anything like me, giving up on a goal or project is extremely difficult to do. You’ve invested a lot of time and probably some money as well, so you’re determined to see it through. With niche sites, most of the work is already done before you can see whether or not the project is a failure or success, so it’s tricky to determine when, if at all, to quit.
Ironically, failure is an important step to success, so knowing when to quit is extremely important, because it will impact your ultimate success (that is, if you eventually to become successful).
A Note on Profitability
In general, your decision to create and maintain a niche site should be based on its profitability – either current profitability or expected future profitability.
You might ask – “How can I determine this? Couldn’t the site technically earn money forever?” Yes, technically that’s true. You don’t want to wait around forever to get your money back, however. After all, if I told you that you could build a site today and recoup your costs in 10 years, would you really feel it’s worth your time to build that site today? Probably not.
With the micro-niche sites I’m building, in order for me to build a site and continue maintaining it, I want to make sure the site is profitable after one year. One year is a logical time frame for me, because that’s how long I register my domains for. The site won’t require any money until year two (when the domain needs to be renewed), so there’s no harm in giving the site one year to become profitable.
Fortunately, you should know if your site will be profitable in a year before you get to the one year mark. I’d guess that in anywhere from 2 to 6 months into the site’s life, you’ll have a pretty good idea of how profitable it’ll be in the near future.
Here’s the cost structure for one of my typical micro-niche sites:
Domain cost (avg. cost, this varies): $8
Initial content cost: $17
SEO/Backlinking cost: $5 (in a future post, I will explain this cost)
Total = $30
[Note: I am excluding hosting costs because all sites are on one host, and this price remains fixed regardless of how many sites I build...on a per site basis, it comes out to a very small amount per month.]
With this cost structure, in order for my site to be profitable after one year, it must earn at least $2.50/month. As you can see, it doesn’t take much for a micro-niche site like this to become very profitable.
One important note: This “cost structure” doesn’t include one big item – my time. In this case though, even though my time is valuable, I am assuming that if I weren’t building a niche site, I’d be watching TV or some other non-income producing activity.
Okay, So When Do You Give Up?
This is where things get interesting. Let’s say, after 1 year, your site only earns $25. By our criteria above, we’ve failed, because the site wasn’t profitable after one year.
However, assuming the site requires no additional work to maintain, should we give up on it? Not necessarily. If you believe your site will also earn $25 in year two, you shouldn’t give up. Although this isn’t a lot of money, the site will only require you to spend $10 or so to renew the domain. What this means is, your site will be profitable in year 2.
If you earn $25 in year 2, and only spent $10 to maintain the site in year 2, your decision has earned you a profit of $15, without requiring any additional work.
When making the decision to give up, you have to ignore the factors that won’t change – i.e. the money you’ve already put into the project, that you can’t get back. (For the economics students out there, these are called “sunk costs.”) Your decision needs to be based on future costs and future expected earnings.
Figuring out whether or not to put more time into a site (i.e. adding content or backlinks) is a bit trickier, since it’s not purely a mathematical question. If, after a year, your site has earned less than $30 (using my example above – keep in mind this amount could be different for you), and you’ve added a decent amount of content and made a good effort with SEO/backlinks, your time is probably better spent finding a new keyword and building a new site.
But Wait…It’s Still Not That Simple
You didn’t think it was this “black and white,” did you? Of course not! If you’re considering giving up on your site, you have to also ask why your site is failing (or will potentially fail). There are a few main situations you’ll see:
1) The site’s ranking isn’t high enough for your target keyword - If you’ve done a fair amount of SEO work and the site isn’t ranking, and you’ve passed your “time to quit” threshold (for me, the one year mark), I would give up and spend your efforts elsewhere. We all know that backlinking is perhaps the most time consuming part of building a niche site, so if you’re not earning due to ranking, it’s probably best to move on.
2) No one is visiting the site – You’re confused. Your site is ranking in the top 5 for your targeted keyword, yet very few people are visiting your site. This is a classic case of poor keyword research (or perhaps you picked a keyword that was seasonal or based on a current event that people no longer care about). If your target keyword isn’t bringing you traffic, it’s time to give up. And make sure to do better research next time.
3) You’re getting lots of traffic but earning very little – This situation leaves room for hope. Where there are visitors, there is potential for income. Have you tested different ad placements? Have you tried a different (more attractive) theme? Perhaps you’re using AdSense to monetize the site, but because it’s a product-based niche, the site would be better monetized with Amazon affiliate links. The bottom line is, if you’re receiving good traffic but not earning much, you should first find a way to better monetize that traffic before giving up.
If you’re struggling to earn money with your niche sites, hopefully this post will help you determine if and/or when to give up on your site. Remember, failure is an integral part of success. If you can identify failure better (or more quickly), you’re one step closer to success. And each time you fail and give up, be sure to know why. That’s valuable information for future projects.
What do you think? How have you determined when to give up, especially with niche sites?