Product concentration

You never want to put all of your eggs in one basket. This saying is relevant across several different aspects of a website, and it’s especially true when it comes to the products that bring in a website’s revenue. If a website sells products, whether directly or through affiliate marketing, we want to find out what the most popular products are and what percentage of revenue each product brings in. Why exactly is this important?

Well, if a website earns most of its revenue from one product, if something were to happen and that product were to stop selling, then the website’s revenue would tank. It’s the same concept that we discussed in the previous video!

Websites that sell or affiliate market a wide variety of products are much more stable and won’t tank in profitability and value if even a few products stop selling altogether.

This is important to consider, since a very common website you’ll find for sale is an affiliate website that got lucky with ranking for one post, and that post affiliate markets one product. While this post may bring in several hundred dollars a month, if a Google algorithm were to hurt the rankings, then the website will make virtually no money.

It’s volatility like this that we want to avoid. I almost never like a website making more than 25% of its revenue from a single product. There are some exceptions to this if the other revenue is spread between many other products, but it’s an unnecessary risk.