The Return of the Blogging Ratios

Around six months ago, Daniel touched upon ratio analysis for bloggers. Basically, he came up with two very interesting formulae for analyzing the capabilities of a blog. The first one was the Subscriber Conversion Ratio (which you can find dividing the number of subscribers by the number of published posts in a blog). The second one was the Comments Per Post Ratio (which you can find dividing the total number of comments by the number of published posts on a blog).
Both these ratios are great means to evaluate a blog in logical & statistical terms. I had the impression that Daniel would be coming up with a lot more of these in the future. However, maybe he was too busy or just forgot about it somehow – whatever the case was – I couldn’t wait anymore as I wanted to find and create some more blogging ratios that can be used to effectively evaluate a blog.
Being a ‘statistic’ freak I was able to come up with 3 blogging ratios mainly focusing on the monetization aspect of blogs. Watch Out.

Reader Conversion Ratio

This one is really close to me, it tells you exactly how much you earned for each person that visited your blog in a particular month. It shows how effectively you’ve juiced your readers.

It should be noted that this Ratio is bound to be high for bloggers who aggressively promote affiliate or personal products on their blogs, and a bit lower for more passive ones, so it directly depends on your overall blogging strategy. On the other hand, long time bloggers are more likely to have higher conversion rates than their newer counterparts.
This can be a perfect tool to see if you’re over monetizing or under monetizing. Usually the ratio will depend upon your blogging niche and as discussed earlier, your blogging strategy. However, it can be used to see if you can afford to be more aggressive or whether you’ve gone just too far.
It is indeed better to have high conversion rates because that way you’ll make more money, nonetheless it is highly recommended by most people (including Daniel) to concentrate on your content and blogging in general in the initial months and only fire up monetization efforts after you’ve achieved a decent amount of traffic.
Making Forecasts
I figured out a very interesting way of using this ratio. When you find the exact conversion rate for your blog, you can make a good estimate of how many unique readers per month you need to have additionally, to make an X amount of money. Confused?
For example;
Caroline Middlebrook has revealed that she made $2,439.59 in January, 2009 from her blogging efforts, and 24,823 unique readers visited her blog in the month. Lets calculate the ratio for her:
Reader Conversion Ratio for Caroline’s Blog equal to $2,439.59 divided by 24,823, which is equal to $0.098 per reader.
So, if Caroline wants to earn $5,000 from her blog, how many readers will she need?
She will need $5,000 divided by 0.098, which is equal to 51,020 readers.
Now, we know that she already has 24,823 unique readers in place, so she requires (24,823) another 26,197 readers to break the $5000 mark.
Break Even Analysis
Break even is the point where your costs equal your revenue, Break even analysis helps you estimate the required amount of sales you need to make in order to at least cover your expenses.
Using the break even analysis in relation with the reader conversion ratio, we can calculate the approximate No. of readers needed to at least cover the blog’s expenses. This estimation can be very useful for new bloggers.
Lets say for example your Reader Conversion Ratio is $0.12 per reader, and your monthly blogging costs (hosting, advertising, etc…) are $180. How many unique readers (per month) will you require to break even?
You would require $180 divided by $0.12, which is equal to 1,500 readers.
Therefore, this ratio can come in pretty handy if you’re trying to make some realistic goals and objectives, it can also give you a good sense of direction.
I’m quite sure that you still want to know what exactly is a Good ratio and Whats bad.
So do I, but the thing is that not too many bloggers reveal their personal income and traffic statistics so openly, in fact Caroline Middlebrook is the only blogger on my RSS feed who does this. Therefore, I’d love you guys to reveal your own conversion rates and discuss this ratio specifically in the comments section. Lets learn more about it’s mechanism.

Income Dependency Ration

It’s a general perception that a blogger shouldn’t depend too much on affiliate income and money made from selling other people’s stuff, mainly because selling personal products lead to higher profit margin and greater financial stability.

For example, you are actively promoting a fellow blogger’s eBook for which he pays you 30% commission (on selling price), and you make a decent living out of it. Just imagine what would happen if he closes the affiliate program immediately without any warning – it can be disastrous! On the contrary, if you were selling your own eBook to the same people, firstly you’d make 100% of the selling price and secondly you’ll enjoy a lot more independence over your cash flows.
I know that affiliate programs represent a great way of making money (I love them) without working too hard, and people exaggerate the demerits of depending too heavily on them, however it’s always nice to keep a check and know exactly what percentage of your income comes from affiliate programs.
Additionally, it’s great way to see from which affiliate program comes the highest portion of your income, so probably you can focus more on it.
Here’s how it works:
You have earned $4200 from your blog in January, 2009 and this income has come from the following sources:

• Clickbank Commission – $2200
• HostGator Affiliate Program – $800
• Selling Personal Product – $1000
• Google Adsense – $ 200

Your Overall Affiliate Dependency % will be: $3,000 divided by $4,200 and multiplied by 100, which is equal to 71.42%.
This means that 71.42% of your total earnings come from affiliate programs. People who believe in self sufficiency would not like this kind of a ratio too much, and will probably try to bring it down.
Thankfully I’m not one of them and I can’t live without Affiliate programs.
What are your thoughts on this?

Earnings Per Post Ratio

I’ve heard many Internet marketing gurus stressing on the importance of posting more frequently to achieve blogging success. This made me wonder if posting more often increases a blog’s income. Perhaps it’s something for Mythbusters to work on.
One thing that I’m sure of is that frequent blogging definitely increases reader visits, just like we flock on to daily blog tips every evening – DBT is so successful because daily postings lead to such an addiction for the readers that it becomes a habit for them to visit the blog everyday – add to it quality writing – failure was never an option.
As far as the relation of blog earnings with the No. of posts is concerned, I believe that there is a greater link between the two for newer bloggers than for older ones. What I mean to say is that if Daniel reduces his posting habits it wouldn’t really affect his earnings to a great extent because he’s developed himself a name and reputation which will retain the readers for him, but if a fresh blogger does it – readers may turn away and earnings will drop.
In any case if you feel that you’re not making enough cash, do try blogging more regularly; I’m sure it’d help somewhat at the very least.
Here’s the ratio to calculate your earning per post. I hope it comes in handy.

That’s all I’ve got to say for the day, thank you. It’ll be great if you apply these ratios onto your blogs and share the information in the comment section. It will be a wonderful learning experience for everyone. Also, let me know your thoughts on all the 3 ratios I’ve discussed and which one you like the most. Take care.