jdprgm

Alright I was just thinking about something and wondered if I am not seeing something and am just being retarded.

Ok so if you sign up for a CPA site as an advertiser and say you will pay say $10 every time someone buys your product for $25 how could you possibly lose money?

The only possible problem i see is not getting anything to happen but hell your still not losing money and could just leave it up in case...

Is there something that i am not seeing here?

che1959

You are losing your time and some people put a value on their time. When I do any kind of work on my own sites, I value in the time at $10 an hour and figure that the site has to recover the cost of the domain, hosting, and my labor before I can consider it to be a success.

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SeoReborn

This business model actually exists. These are the community money saving shopping sites. Basically you sign up and buy products online through their link. In turn they get the commission and pass a percentage to you. It is all automated.

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dogfighter

That's the basic formula, but you first have to develop a product worth promoting and worth buying.

And yes, as the previous poster said, opportunity cost is a factor. You could buy a 2-family house and rent out both units, come home after an 8 hour day and go fix toilets to avoid paying a plumber, deal with tenants ruining your apartment and the nightmares of state tenant laws, worrying about floating vacancies, taxes, insurance, gentrification, etc...

Question is: What's it worth to you to not have to do those things?

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barman

you're paying for clicks with pay-per-click?

smaxor

Umm there's more to it then that. The biggest downfall of the CPA model is fraud. I have a friend that runs a company that's veyr similar to dentalplans.com. When he first set his stuff up he got hit with $40k in fraudlent charges of carders trying to verify their information. This can take a while to process with the card companies and for people to see on their statements. Then you've already paid out as the advertiser and guess who eats it. It's not the network, the affiliate already has their cash and was willing to run fraud CC's so good luck finding them. So yep you guessed it you eat it just like my friend did.

I'm not saying the affiliate model isn't awsome because it is. But as with most things what you don't see you don't know. If you're looking to get into that side of things I highly suggest you invest some time over at 5star affiliate forums reading about what kind of fraud goes on. Then invest in the best fraud prevention you can get. All that is on top of putting the offer together. It can be done but it's not as easy as it seems.

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shudogg

You asked how could you lose money? Sure you will get $10 from the company for every sale, but you have to make that sale first. Now you create a website to promote the offer... .... *crickets* ... google pops in... *more crickets*... Get the point? You get no traffic. You might get a few hits here and there, but they probably didn't convert. So you have to buy your traffic. You could use Google's Adwords, or Yahoo's similar system, or facebook, ect. It all depends on what you are selling. Like selling home loans or credit cards may not go over too well at facebook as majority of the people are teens. So adwords, you create a landing page, run advertising for your site/landing page, and hope people click/buy. It could be .10 cents a click, it could be 1$ per click. If you still aren't getting traffic/conversions, then you should adjust your keywords or re-write your ad. If you are getting clicks, then it may be something with your site (landing page?). So it costs money because you have to push your site. If you push, but nobody converts, you eat it...

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pocketrockets

He is talking about being an advertiser not a publisher.

And as already mentioned, the big risk involved is having to payout and deal with publishers who are trying to game the system with fraudulent leads.

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johnmatrix

Yeah i think a lot of people misunderstood this guy.. hes talking about starting his own CPA offer. I have considered it also, Im in a certain niche on ebay that sells like hotcakes.. i woudl love to get affiliates selling it for me eventually through a stand alone site. It does seem like it would be impossible to lose money, i buy the items for $5, sell them for $50 and then give affiliates $15 per sale.. $30 profit right there and i dont have to do a damn thing except mail items out. 50 sales a day and i'd be livin like a king. I managed 15 sales a day myself so I imagine it wouldn't be that hard for a bunch of good affiliates to do.

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HarveyJ

John: Your method sounds more like drop shipping to me, but that could just be me misunderstanding it. Still, you'll quickly find that the costs of postage (particularly rip off Australia Post postage) start to eat into your margins in a big way.

jdprgm: Well, money could be lost in a number of ways. Some networks will want you to pay an upfront fee so you don't game the system and piss off. Sure, if you're legit, nothing to worry about (other than fraudulent leads and sales) because you'll make it back in a short time if your product sales are good.
If it's a physical product that you actually ship out, I think the hidden costs are going to be shipping, levies and taxes... Not to mention the bulk quantities of the product in question required to make its wholesale cost low enough for it to be viable to sell via affiliate marketing.

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jdprgm

Hi guys thanks for all the responses.

Thanks John, I think some people did misunderstand me. I am talking about setting up a CPA offer. It would more then likely be some sort of digital product so no hidden costs. So what you guys seem to be saying is that there could be fraudulent leads? By this do you mean something were like someone uses a fake credit card or something on my site and I don't get the money but end up paying a CPA site?

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johnmatrix

Nah its not dropshipping, i've been doing it for over a year now. I have the items manufacturerd in china and sent here where I sell them with a 1000% markup. The items are quite small so its only $1 for postage, cheap enough I do free postage for my customers.

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Spades

Impressive form of diversification JohnMatrix

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satoshi

Well if no one buys your stuff, you're still stuck with the cost of unsaleable inventory no one wants. If it's a digital product, then ok but you still had to pay to create it.

With leads, then there's fraud as well as quality issues with leads that aren't fraudulent but that the buyer still wants to return (disconnected phone, for example).

Plenty of people still manage to make $$$ with it but it's not quite as easy as your post suggests.