Millionaire Lifestyle With 2% Profit Margins

written by BlogEx on June 24, 2008 in Make Money Online and Motivation with 40 comments

What if you ran a website that made a whopping 2% profit per month? Would you be living a millionaire lifestyle?

Most people would say “no way”. If I didn’t know any better, I’d be right there with you. Basically what a 2% profit margin means is if your site makes $1,000 per month in sale, your expenses to generate that $1,000 is $980, leaving a profit of $20.

Wow, How Exciting Right?

Well, this is exactly what a friend of mine does, but on his 2% profit margin website, he is able to fly around the world in first class and stay at 5 star hotels every single month. He is truly living the millionaire lifestyle.

Here’s How He Does It.

He has a website that sells kids outdoor wooden playground sets. Obviously by selling these huge wooden playgrounds online, after shipping and all the competition in that market, it’s a very low margin e-commerce product.

But, his average order size is $2,600 per sale. His cost for a $2,600 playground is $2,100 and he spends about $450 to generate each sale (advertising, credit card processing fees, etc), so his “profit” per sale is a measly $50 per playground set.

I didn’t even know you could sell playground sets online, but he does and he sells a lot of them! In fact, he sells an average of 6 playgrounds per day, every single day of the week. By running some quick numbers, he is making about $300 per day in profits based on $15,600 per day in sales. His total profit for one year comes out to about $110,000 (about $9k per month).

Not bad, that’s for sure, but that’s not really that much money to be taking trips around the world every month like he does. So what’s his secret?

Credit Card Points!

You see, he has an American Express card that allows him to earn points for travel. For every $7,500 he puts on his AMEX card, he “earns” $100 in free travel. Since all of his playgrounds are dropshipped from the manufacturer, he is able to pay for all his inventory using his American Express card. Also, his advertising is put on his AMEX card and whatever other expenses he has.

His business spends $465,000 per month on his American Express card. That means, his card is earning him $6,200 in FREE TRAVEL every single month. He earns almost as much credit for free travel than he does with his entire business…

It’s a pretty neat concept. His passion is traveling, so rather than spending his own money on flying to Paris for the weekend, his business expenses allow him to do it for free. Imagine what you could do if your business generated $74,000 worth of free travel for you this year. You could take your entire family on multiple vacations, all fly first class and stay at the best possible hotels, all completely free. Now that’s a sweet benefit of starting your own business.

How hard would it be to make $2,000,000 per month in sales if you were spending $1,980,000 to generate those sales? You would be making a whopping 1% profit of $20,000 per month from the website, but you would also be earning $26,400 PER MONTH in free travel if you used your AMEX card.

Crazy.