Spending Money to Make Money

They always say ya gotta spend money to make money.

Of course that’s not always true. But if you’ve identified a way to make money, then spending some money on it up front is the way to make more money later.

 

Last week I funded my ProBux account with $40 and used half ($20) to rent my first 100 referrals there.

You can see in the chart how that has increased my daily earnings at ProBux. In just two days ProBux overtook ClixSense. I’m holding off upgrading at ProBux because it’s a more significant expense, and you may recall (see “Day 3“) ProBux does not have a shiny reputation. Perhaps I’ll be able to use earnings to pay for an upgrade there.

NEW PTC – EVEBUX

And last week I joined a brand new PTC with no reputation at all. It’s EveBux, just launched about a month ago, and to tell you the honest truth I joined it because it has a distinctive and beautiful design.

So far, earnings have been typical — a few cents per day. You can barely see the first few days earnings — they are hiding behind the Hitzza line.

NO RENTALS AT HITZZA

Oh yeah, about Hitzza.

Sigh.

Like ClixSense, Hitzza does not offer referral rentals. And unlike ClixSense, Hitzza does not have a lot of ads to click on, so earnings are sloooooooow.

I submitted a support request asking owner Barry Langdon if he planned to offer referral renting. He replied back, “Rented referrals is on my list of things to do however, I really can not say when.”

My sense is that advertising is actually on the decline at Hizza, which does not bode well for this PTC’s future. Hopefully Barry will figure out how to attract more advertising.

In spite of earnings performance, I am considering increasing my own ad spending at Hitzza because I’m getting a good number of signups from my ad page there.

Hitzza is a good place to advertise!

SPENDING VS. INCOME

At Day 45, we ought to review spending versus income and see what our profit picture looks like. Spending on Annual Upgrades so far amounts to $0.43 per day.

My biggest cost is on Referral Renting. Spending on Rentals at NerdBux, NeoBux, and now ProBux is not easy to calculate because I am using Autopay to incrementally renew active referrals. My best “guesstimate” is that Rental costs are running at about $1.40 per day.

My spending on Advertising is costing about $0.80 per day.

Total spending = $0.43 + $1.40 + $0.80 = $2.63 per day.

Daily income from these PTCs over the past 10 days has been averaging $2.51 per day.

YIKES! — either spending or income needs to change or I will be steadily losing 12¢ per day!

NERDBUX – THE PROBLEM

The biggest problem I see is at NerdBux, where I have rented 200 referrals.

NerdBux does not qualify referrals in any way, so some that you rent have already given up on the program and are not going to be clicking and generating any income for you. About a third of my 200 referrals never clicked on a single ad.

NerdBux allows “freecycling” after 14 days. That means replacing existing rented referrals with new ones, at no cost.

I thought freecycling would easily improve my overall referral earnings, but so far the pool of incoming freecycle referrals is only a little better than the non-clickers they are replacing.

In order to maintain my total rented referral pool of 200 I have begun renewing spots, even when the current referrals are not earning, because I’ll freecycle them again. And when I renew, I am extending the renewal period to 60 or 90 days in order to get a discount on the renewal costs. That means I am spending more up front for longer rental periods.

RENTING OFFICE CUBICLES

Because of the freecycling, I am beginning to think of referral renting more like renting office space instead of renting people.

Picture the floor of an office building divided up into 200 cubicles. I rent the cubicles and they come with a worker in each cubicle. If after two weeks a worker is not generating any income, I can replace them with another worker, who will hopefully perform better. I can extend the rental period on the cubicles in order to pay less rent per cubicle, and continue freecycling the workers in those cubicles until I have a fully productive office with everyone working.

With that analogy in mind, I’ve decided I will not be renting more referrals (cubicles) at NerdBux until I’m satisfied that I can regularly “staff my office” with workers that are all producing. I may even let some of those 200 cubicles go because continuing to pay for non-productive office space is not helpful.

Managing the referrals is becoming a daily task. AutoPay is automatically renewing cubicle rents as long as the workers are clicking. But if any worker stops clicking for two weeks I want to freecycle ASAP to get other workers into those cubicles. And the opportunity to freecycle a few workers is happening each day now.

There have been times when no new referrals are available, so I check back later in the day, or the next day, until I’ve been able to get new workers into my cubicles.

This is gradually improving the productivity of my “office pool,” but it must keep improving in order for me to reach profitability. My goal now at NerdBux is to get 200 (or fewer) cubicles steadily staffed with productive workers.

A MODEL OF PRODUCTIVITY

Meanwhile over at NeoBux, where referrals are “qualified” before you get them, only one of my 100 cubicles there had a non-productive worker.

NeoBux is profitable, plain and simple.

They have earned over $23 in about 20 days, so they’ve already paid back the $20 monthly rental cost and are “in profit.” But their profitability is beginning to taper off, because of course not everyone at NeoBux has figured out how to make money, and there is some attrition as workers give up and quit clicking.

AutoPay at NeoBux includes recycling of workers, so it’s not a daily management task there. But it is not free either; it costs about 7¢ to recycle a non-productive worker.

NeoBux is a model of productivity that I hope ProBux, and eventually NerdBux can come close to matching.

SIMPLE BUSINESS

Here is a simple formula for renting referrals:

If I pay $20 to rent 100 referrals for 30 days, they will need to earn 66¢ per day to reach break-even.

If they earn more than 66¢ per day, my business is profitable. If they earn less than that, I am losing money, and renting more will just cause me to lose more money.

In a 2011 Tame Bear Weblog article titled “Simple Business” I laid out how spending money to make money can get you to a higher level of profit faster.

I am making money at NeoBux, but losing money at NerdBux. In the weeks to come we will continue to monitor that situation and see what I can do, if anything, to improve the earnings at NerdBux.

Every day I am trying to rent more referrals at NeoBux, but so far I have not been able to… There simply are no referrals available because they are in such high demand. I’ll keep trying — and I’ll let you know when it happens.

How many NeoBux referrals do you have now? Know any tricks to get more?