By Chuck Woodbury
From time to time, readers ask us how we can afford to give away cash, gift certificates and other prizes in contests. Okay, I will explain.
First, a little background
RVtravel.com relies on the donations of about 4 percent of our readers to help fund our operation. It’s important to us. But some readers who consider donating notice that we regularly give away money and prizes in contests. Some think, “I’m not going to give them money if they just give it away!”
Let me explain.
First, some of the prizes are provided by the manufacturers or retailers of the products. The exposure is like free advertising for them. It only costs them their cost of the product. So we don’t spend a penny.
When we give away cash, gift certificates another other prizes (say worth $50 or less), we absorb the cost. We know that the contest will attract a certain number of page views. And we know that on average, if we calculate a year’s income from donations, advertising and other sources, and divide it by the number of pages our readers viewed in that year, we’ll earn a certain amount ON AVERAGE for each page viewed. Let’s say it’s 2 cents.
We know that when we sponsor a contest, a certain number of readers will click through to the page to enter the contest. Let’s say, for example, that 2,000 readers do that. That would be a realistic number, although it can be more. Usually, the more valuable the prize, the more readers will enter.
But let’s say, for now, that 2,000 readers click through to enter the contest. So, again, oversimplifying, if 2,000 people visit the contest page, we will earn $40 (2 cents per viewer x 2,000 views). If the contest prize costs us $25, we actually earn $15.
If we give away a prize that cost us $50, more readers will likely enter. Say 4,000. So that would gross us $80, earning us $30.
So that’s how it works. And this is why we have so many contests. We have a huge circulation and we know that a certain number of our readers love them and will click to the contest page to enter. Plus, we love giving away stuff.
So, to sum up, it hardly ever costs us money to give away money or prizes. We actually make money or at least break even. That income goes into the pot to help us pay our bills, and earn a fair profit.
Does that make sense?
Oh, by the way, if you want to contribute to our efforts, to help us be the best we can be, you can do it here.