I was speaking to a blogging friend recently who had read my last post about how I make money online. She asked me how much of my online income was profit, so I told her the rough percentage.

She looked a little upset at the answer, so I asked her why? This is what she told me.

I’m starting to make a bit of money now, but I’m not sure whether I’m actually making a profit.

I doubt she is the only blogger feeling that way. When those first dollars start coming in it is a very exciting time, but after a little while you might start to feel like something is amiss. You’ve got money coming in, but nothing to show for it.

As we discussed this problem further I asked her to list all of the ways she had spent money on her blog in the last year – web hosting, domain name, premium themes, a few plugins, ebooks, any coaching or training products, even anything she bought just to write a review or promote as an affiliate.

To her shock she had spent almost $1000 on her blog in the past year. That was way more than she had assumed she was spending.

Holy sh*t! I thought it was just a domain name and some hosting to run a blog, I didn’t think about all these other things!

Funny how this stuff can sneak up on you. A $20 ebook here, a $47 training course there… do you really know how much you’re spending on your blog?

Profitable Blogging Step 1: Know Your Income and Expenses

If you aren’t already doing this then I suggest you make it a top priority this week. Fire up a spreadsheet program (use Google Docs if you don’t have Excel or OpenOffice  or similar on your computer) and quickly brainstorm all of your blogging income and expenses into two columns.

I make a lot of my purchases using Paypal and one credit card so it is pretty easy for me to quickly see where most of my money has gone.

Dig out whatever email receipts or transaction reports you can to give as clear a picture as possible. Don’t skip anything just because it’s “only a few dollars”. It all adds up.

Once you’ve got it all entered in the spreadsheet subtract expenses from income to see how far ahead (or behind) you are right now.

Profitable Blogging Step 2: Decreasing Expenses

Most people will find the quickest way to increase profitability is to cut out some expenses. Some expenses can be removed immediately, such as cancelled monthly membership programs, switching to a cheaper hosting plan, or putting a self-imposed ban on buying any new information products, themes or plugins.

Other expenses can take a little longer before the cuts start to help. Domain names are a big one for a lot of bloggers. It is very easy to collect domain names for all kinds of ideas that you have, and before you know it you’re spending hundreds of dollars a year renewing domains for sites you haven’t even started yet.

You may need to make a few tough decisions there, but cancelling domain names can save you a lot of money when they come up for renewal.

Another option is to sell off any sites you started but lost interest in. Even a few hundred dollars for an established site is better than nothing.

Profitable Blogging Step 3: Increasing Revenue

Now comes the harder part – increasing your blogging income. Since you already know your expenses, having done the exercise above, you know how much you need to earn each month to start showing a profit.

If you have no income at all then this is something you may want to fix pretty quickly. Two of the fastest ways to create an income from a blog are services and affiliate marketing, because neither of them requires you to invest a lot of time upfront in creating products.

If you do have some income streams already then you can look at ways to boost those. For example if you have an auto-responder with an affiliate offer at the end of it, then it’s time to crack open those Aweber stats and look at which messages in the sequence are performing badly and try to stop those leaks so more people make it to the offer at the end.

If you sell your own products then you can look at ways to drive more traffic to your sales funnel/page, or work on boosting the conversion rate of the sales page itself. When I spent just one day overhauling my ebook sales page I doubled the monthly income from it.

Making Tough Choices

Depending on how many different blogs or domain names you’ve got at the moment you may need to make a few tough choices to increase the profitability of your business.

Like the tough choice I’m making today.

This is the last blog post I plan to write for Blogging Teacher. As much as I love this blog and am proud of what it is, I have other projects that are simply further along the road towards the goals that I have for my family and my business.

I considered keeping it going and just writing once or twice a month as I’ve been doing this year, but I’m finding it to be just too distracting from my main projects.

Nothing will change for now, I’ll leave the content where it is so that the visitors coming to it can still benefit from it. At some point in the future I’ll work out a permanent solution.

Thanks to everyone who has been a reader, subscriber, and commenter here over the last few years. Of course I’ll still be around on Twitter and the other communities where many of us are connected. Maybe you’ll see me pop up in a guest post elsewhere from time to time.