Fixed Costs and Fixed Time

Fixed Costs and Fixed Time

Time is money. It may be something we all agree on, but what does it really mean.

Fixed costs are nice. One of my fixed costs is hosting. When I make $4000 in a month, my hosting is $125. If I triple that, it will still cost me the same and the ROI triples.

On the other hand, PPC advertising moves with the income. If I make more through PPC this month, chances are I spent more too. Yes, I can increase ROI. But for the most part, I have to spend more money to make more. And it doesn't help that the amount of money I spend on ads is limited by my credit.

Now there are a few campaigns that I currently have running that have not been tweaked for months. But for the most part, I have to babysit. Not much now. But if I were to increase my Adwords spending to the point it replaced all the other sources of income, I would have no time to do anything else and I would be stuck in the same rat race I am trying to remove myself from.

I ran into a similar problem with the direction my blogging was going. A post a day may be recommended for a lot of bloggers. It isn't going to work for me any more. Don't get me wrong, I most likely write a post or more a day, but not on every blog. And this blog, which is mainly a journal of my journey makes no real money. And I like it that way for now. I am not looking for money here yet.

Building links is like hosting and social media marketing is like PPC advertising. Both have their place, but my time is limited, so I had to work out a balance.

A link I get to a site today will most likely be there tomorrow, next month, and next year and since I know a little SEO, the traffic results of that link may be less volume than I would expect from a Stumble but the quality of that traffic will be much greater.

Don't get me wrong. You can't just build some links and then go take a nap for the rest of the year. But here is what I know. I made $25,000 in the last 12 months from the results of links that were already there. Not John Chow money but it beats being a 24/7 internet hustler.

And all links are not created the same. Some take more time to build. A directory links takes a minute. If you want to release software to promote a site, it's going to take some time but that time will come back to you once the ball is rolling.

I am writing this post to beat something into my head. I have a weird relationship with money. I spend in the range of $100 in Adwords a day and have to pry my wallet open to buy software and hire people to speed up the link building process. Money spent there will free up time and possibly lower the need for so much advertising. It is basically a fixed cost. Spend the money and see the results for months or even years. You cannot say that for PPC advertising.

This has also forced a weird relationship with time. If I am doing my own grunt work because I refuse to hire someone than I am basically paying myself what I would pay the other guy to do it for me. So if I refuse to pay $10/hour, that is what I am paying myself. If I buy software that speeds up a process, than I am effectively raising my hourly rate. If a job that took 3 hours now only needs my guidance for 20 minutes, I just gave myself a 900% raise for that time period.

It's a way to look at things and a way to start putting money and time in balance. Hopefully it works.

Stephan Miller

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Kansas City Software Engineer and Author

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