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Johanna and Sherwood decide to keep it simple at this stage: How much did they spend on PPC ads and how much did they “sell”?

Johanna has done well. The traffic wasn’t enough to make the test stand up to statistical scrutiny, but she spent about $200 on PPC and got 14 sign-ups for a free 10-tip report. If she assumes 60% would purchase, that means 8.4 people x $75 profit per DVD = $630 in hypothetical total profit. This is also not taking into account the potential lifetime value of each customer.

The results of her small test are no guarantee of future success, but the indications are positive enough that she decides to set up a Yahoo Store for $99 per month and a small per-transaction fee. Her credit isn’t excellent, so she will opt to use www.paypal.com to accept credit cards online instead of approaching her bank for a merchant account.46 She e-mails the 10-tip report to those who signed up and asks for their feedback and recommendations for content on the DVD. Ten days later, she has a first attempt at the DVD ready to ship and her store is online. Her sales to the original sign-ups cover costs of production and she is soon selling a respectable 10 DVDs per week ($750 profit) via Google Adwords. She plans to test advertising in niche magazines and blogs and now needs to create an automation architecture to remove herself from the equation.

Sherwood didn’t fare as well but still sees potential. He spent $150 on PPC and “sold” three shirts for a hypothetical $225 in profit. He had more than enough traffic, but the bulk of visitors left the site on the pricing page. Rather than drop pricing, he decides to test a “2x money-back guarantee” on the pricing page, which will enable customers to get a $200 refund if the $100 shirts aren’t the “most comfortable they’ve ever owned.” He retests and “sells” seven shirts for $525 in profit. Based on these results, he sets up a merchant account through his bank and Authorize.net to process credit cards, orders a dozen shirts from France, and sells them all over the following ten days. This gives him enough profit to buy a small display ad at 50% off (asking for a “first-time advertiser discount” and then citing a competing magazine to get another 20% off) in a local weekly art magazine, in which he calls the shirt “Jackson Pollock Shirts.” He orders two dozen more shirts with net-30 payment terms and puts a toll-free number47 in the print ad that forwards to his cell phone. He does this instead of using a website for two reasons: (1) He wants to determine the most common questions for his FAQ online, and (2) he wants to test an offer of $100 for one shirt ($75 in profit) or “buy two, get one free” ($200 - $75 = $125 profit).

He sells all 24 shirts in the first five days the magazine runs, most through the special offer. Success. He redesigns the print ad, putting answers to common questions in the text to cut down on calls for information, and decides to negotiate a longer-term ad agreement with the magazine. He sends his sales rep a check for four issues at 30% of their published rates. He calls to confirm that they received his check via FedEx and, with check in hand and deadlines looming, they don’t refuse.

Sherwood wants to go to Berlin during a two-week break from his job, which he is now considering quitting. How can he roll out his success and escape his own company? He needs to build the architecture and get his mobile M.B.A.

That’s where the next chapter comes in.

New Rich Revisited: How Doug Did It

Remember Doug from ProSoundEffects.com? How did he test the idea and go from $0 to $10,000 per month in the process? He followed these steps.

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