Ways to Make Money Online -

An overview of popular methods and techniques

There are almost as many ways to make money online as there are websites out there on the world wide web. When I first started researching the different ways to make money online, I was overwhelmed with the sheer variety of opportunities out there. The internet has become the world's marketplace and a center for entrepreneurship unlike any in history. However, there remain a few basic models for making money and the medium (in this case online) doesn't change.


Each of these ways to make money online is founded in the universal basic principle of commerce - the exchange of things of worth to meet needs. In our society, we use money to represent and quantify worth and to make it more portable than, say, dragging your herd of camels around after you. The internet has exploded at least in part because it makes our things of worth (our money) infinitely portable. I can pay someone on Madagascar $10 USD in about 4 clicks using Paypal. The currency can be immediately converted and my friend on Madagascar will get roughly 19,000 Malagasy Ariary added to their account almost instantly. The question is though, what can they give to me via the internet that I find worth $10 USD?

Understanding the basic ways to make money online

It turns out that while the internet creates an almost unlimited potential for exchange of money it does limit the delivery of some products. The key to understanding the ways to making money online and finding the one that will work for you is to figure out what and how you will deliver something of value.

Number One - Sell Something Tangible

Selling something tangible is one of the most popular ways to make money online and the natural transition from a small business to an international business that has happened ever since the internet first became wide-spread in the late 1990s. In today's market, however, selling tangible goods online is increasingly competitive and requires entrepreneurs to have a strong marketing savvy because not only are you selling to an international market but you're also competing with an international market.

Anyone thinking about selling tangible goods online should first try selling their stuff via eBay, Amazon and/or Half.com. This will help you identify if there's a demand for these products, work out the fulfillment kinks of your order processing system and enable you to have a solid idea of if/when/how your stuff will actually move online. These preexisting websites offer valuable ways to make money online with a lower overhead cost and level of technical knowledge needed than starting your own store would require.

If you want to sell your products online from your own store, I highly recommend Yahoo! Small Business solutions. This complete sales package, which teams very nicely with Paypal for payment processing, is simple to set up and inexpensive compared to other models. The price point makes this ideal for small businesses, however the system is a bit limited so if you're looking to be established as an online giant, invest the money in getting your own shopping cart and website system (OScommerce is a good one) set up. Yahoo! Small Business is limited and working with a flexible platform from the get-go will enable you to scale more rapidly. If you're only selling widgets though, and not do-dads as well, then Yahoo! Small Business is probably your best bet.

Advantages to this model - if you already have a product you create or a brick and mortar store, developing an online store can increase your reach and exposure as well as brand name. There's a large potential for exponential growth, depending on the product you're providing and it's market potential.

Disadvantages to this model - developing distribution systems for tangible goods usually requires time, energy, money and personnel. In addition, developing products, manufacturing them and getting them to customers requires traditional business systems, permits and licenses. Of the ways to make money online, this has the highest cost to start.

** I include drop-shipping with this category even though drop-shipping products doesn't require the distribution and mailing system to be handled by the seller, because it requires similar marketing and set-up.**

Number Two - Sell a Digital Product or Service

Products that can be turned into 1's and 0's and transmitted across the internet are ideal for selling online. Everything from music to web hosting to books to photos and coaching can be transmitted via the internet. This is perhaps one of the most wide spread ways to make money online. Ever use iTunes? That's a sale of a digital product. Ever buy website hosting? That's a sale of a digital product. Ever buy an ebook? Could you write one of those? That's a digital product. Do you take photos? You could sell those as a digital product online.

The key to selling a digital product or service and making money from it is the same as selling something tangible - make sure that your product meets the needs of someone and then position it so that they can find and buy it. Yea, simple right? Um, no. However, if you develop the skills to identify and create products that meet digital needs, this can be a lucrative way to create lasting income with little overhead. Unlike tangible products, an entire store is frequently unnecessary - just a website and a Paypal button. In addition, you can set up your sales system to be entirely automated from purchase to delivery.

If it sounds like I favor these ways to making money online as opposed to working with tangible products, that's correct. My goal with making money online has always been to create passive or near-passive income that requires little ongoing maintenance from me so that I'm free to do other things with my time rather than work or manage other people. This is not the case for everyone - many people dream of growing large businesses, providing jobs hundreds or thousands of people in their communities and becoming a top business person. With each of these business models the key is to develop a business that will meet your personal goals.

Advantages to this model - Distribution and delivery are very easy. In addition, you only need to create an item once and you can make money from it indefinitely. This model also has a much lower cost of entry than selling 'hard' or tangible goods online.

Disadvantages to this model- You have to create or have created for you all the goods that you're going to sell. There's a higher level of technical knowledge required in getting the distribution system set up.

Number Three - Give it Away for Free

(aka - start your own internet advertising network)

Google is the multi-billion dollar example of why this is one of the best ways to make money online. However, it can also be one of the most frustrating if you focus on the income and not on the service you're providing. Here's the basis for how this works: You create something that people on the internet are looking for. Be it a tool, a service or a hub of information. You put this golden nugget up on a website and give it away to people for free. Because it is something people want and need and better yet, you're giving it away for free, eventually you build a large quantity of traffic to your website. Thousands, perhaps even hundreds of thousands of people come to your little piece of internet real estate every month.

Guess what? Businesses who are doing model #1 and #2 want access to the traffic that you've got on your site. Because they're not giving something away for free, they can't get it themselves so they want access to yours. They want it so bad that they'll pay you for it. There are many ways that this can manifest for you - you could sell advertising space, promote affiliate programs or even generate leads for these businesses of people who want specifically what they're selling.

This is my favorite option of the ways to make money online. Because it requires little maintenance (depending on what your free product is) it is infinitely expandable as well as being a potential source of passive income.

Advantages to this model - If you've got the traffic, this can be a very lucrative way to make money that doesn't require you to do much of anything. Again, look at Google, which is a billion dollar business built on just this model.

Disadvantages - Building traffic and high-quality free resources is hard and time consuming. There can be quite a lag between when you begin your business and when you actually start to see income.

Number Four - Trade your Time for Money

Just as all these versions, when they're implemented offline, require employees to work them - so do their online counterparts require workers. If you want the regularity or lack or struggle that comes with working for someone else, then trading your time for money is one of the greatest ways to make money online.

There are many ways you can make money working online:

  • Get Paid to Teach Online - If you have a degree and some teaching experience, this is a great way to get out of the classroom and into the lifestyle you want. However, the barriers to entry are numerous as you need a degree (sometimes an advanced degree) and experience teaching.
  • Get Paid for Online Surveys - If you just want to make a little bit of extra spending cash and don't want to put in a lot of time and energy, taking online surveys are great ways to make money online. However, the income potential is limited.
  • Get Paid to Blog - Freelance writing and blogging are great ways to make money online because it's such a high demand field. If you can write, and if you can sell yourself, you can get your foot in the door with this.

Number Five - Make Your Money Do The Work

I do not know much about how to make money investing online, but I know that a lot of people do. I'm working on developing a page about this, because I know it's one of the most popular ways to make money online. Chances are that if you have a retirement plan, you can start to make money investing online through that as most plan companies now offer online investment management.

In this same category, but quite different in technique and skill sets, are people who make money trading online. These are the infamous 'day traders.' Yes, people do make money doing this - often large sums of money. While most of them aren't focused on IPOs anymore, many still invest in the FOREX market (currency exchange) and it's daily volatility and leverage opportunities makes this a great way to make (or loose!) large sums of money.

There are lots of great opportunities to make money online. If you know of one that I've not included here, or if you want more information about one I've touched on briefly, let me know!

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