Show Me the Math!

Show Me the Math! Don’t worry. I’ll explain as we go. Here is the basic formula again: Traffic + Conversion = Income Since “conversion” is a rate applied to the traffic, the formula is more accurately stated as: Traffic X Conversion = Income Notice that there is no time factor in the above equation. In order to calculate income based on a certain period of time, we need to add a time factor. [Traffic/hr] X Conversion = [Income/hr] How much money you earn in an hour depends on how much traffic you generate in that hour. Now let’s think of traffic in terms of webpage views or traffic credits in an exchange. It’s just easier to consider “a credit” than “a traffic”, which makes no sense. Let’s also put income in terms of dollars. So now the formula is this: [credits/hr] X Conversion = [$/hr] We’re almost done. We still need to define conversion. “Conversion” is a rate. It tells how much your traffic credits are worth. Take a close look at how credits convert to dollars. 1) A credit becomes a view of a splash page 2) The splash page invites a view of your squeeze page 3) The squeeze page “sells” the Traffic Report for an email address 4) The Traffic Report generates sales and income… ie. “dollars” Inputting a fixed number of credits we observe a fixed output of dollars. Divide the dollars by the number of credits [$/credit] and you know what your credits are worth. And finally our math is complete… [credits/hr] X [$/credit] = [$/hr] To simplify our earning rate [credits/hr], let’s call it our Credit Rate. What your credits are worth [$/credit] is something I call Credit Value. How much money we make per hour [$/hr] is our Rate of Income. Our logical formula is now… Credit Rate X Credit Value = Rate of Income In other words… how fast you make money (Rate of Income) depends on how fast you earn traffic credits (Credit Rate) and what those traffic credits are worth (Credit Value). This formula will be the basis of our discussions which will focus on two primary factors: your Credit Rate and your Credit Value.