We will explain the fundamental figures to know the economic viability of your business idea on the Internet Visits, Conversion, Average Order and Gross Margin. We pretend to be a reference helping to analyze business ideas to first-time entrepreneurs in the online world, in this blog I speak of product service analysis, value proposition of Competition analysis and key words and of course economic viability.
This metric in absolute value is fundamental for the economic viability of your project but how to know the visits that you can get before you start? I give you some clues. The first thing to do is select the keywords related to your project and use tools like the Google Ad Words keyword planner to estimate the monthly traffic for those terms.
If you know the volume of searches for your relevant keywords, you can begin to estimate the level of visits to your project. Another tool that in its free version can help you is Serums, finding out the visits of the current competitors by the keywords of your project.
If in the first metric, what is fundamental is the promotion and online marketing to reach the necessary visibility that attracts the visitors, now what we are looking for is to generate trust and to become customers. We also look for usability, that is, that the customer reaches the sales pages contact.
It will be fundamental to structure the site for visitors to reach those key pages and click the buy button. Complete the payment process. Do not expect conversion rates higher than 1%, in reality very few projects exceed these figures it is more common to find rates like those of my online projects ranging from 0.1% to 0.5%, that is, between 1 and 5 sales per thousand visits.
This is my reality, of not a few projects of my own and of clients. If you already have data offline or other, you can add the billing of a period, for example a month or a year and divide the result by the number of purchases made. Caution: Controls whether sales figures include taxes or not.
If you do not have figures, you must make an estimate for example how many units you intend to sell each product for sale and you make the sum and division as in the previous case.
If you think that you buy between one and three products for each purchase you can estimate an average purchase of two units, it is clear that they are hypotheses, but it is important to mark them because they immediately become the objectives to achieve for economic viability Of your project.
You will have immediately understood the importance of the figure it is not the same to sell houses or vehicles that sell skin creams in bottles. Finally, the fourth figure is the GROSS MARGIN of your product. This is the difference between the sales price without taxes and the cost of production or acquisition.
If it is a physical product the cost or scandal of producing it or buying it and if it is a service the hourly cost and the hours invested. You may decide to bet on drop shipping models, albeit with lower gross margin.