What Would You Do If You Had a Website Passively Earning $1 Million a Year?

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Let’s say that you built a great money printing website that’s earning $1,000,000 per year, and the site requires very little  maintenance  or attention. The earnings are steady, and the costs associated with running the website are just a few thousand dollars for hosting and security.

If you were in this situation, what would you do? Would you continue to build out your website in the hopes of making it a $10,000,000 website? Would you try to acquire similar domain names in an effort to replicate your success on another website? Would you retire and spend your time enjoying life?

Of course all of this is contingent upon whether you could live comfortable off of $1,000,000 for the rest of your life and whether this website will continue to be a producer for all time.

Let’s just say things are exactly like they are for you right now and the website shows no signs of slowing down. What would you do?

54 COMMENTS

  1. Interesting post, Elliot.

    If you have a site grossing a million a year, then you would certainly have to have great traffic. You would be selling ads based on cpm and direct ad sponsorships to large companies, etc.

    A site like that could easily be worth 7 to 10 million to a company or group of investors that had a passion and vision to create a much more diversified site or portal that could then attract a much bigger payoff.

    So, if I didn’t have that passion and/or vision for taking the site to that next level…I would try to sell it in that range and move on to the next project.

  2. To me that is an easy answer. The purpose of a business is to build an entity that generates first, cash flow, second, profit. If you have a site that is at a million dollars profit you continue to milk it, taking the profits and investing them into another entity that can also generate the two mentioned above. Of course, you could take the money and see if you can get increase the profits while keeping an eye on the margins. Often more revenue means decreased margins. Now I only wish I had those real decisions to make.

  3. I agree with Ahmed, except he forgot the most important third, that would be the two miniskirt clad models toting ak47’s as my… bodyguards, Lol.

  4. The first year I’d buy more domains about other subjects. Year two I’d make a “real” company out of one of them. Year three I’d buy an ipad LOL. Then I’d get into real real estate. My wife and I always say if we won the lottery we’d build the worlds largest animal shelter…the million+ I’d be making by year 3 should handle it. 🙂

  5. Anthony,
    Would you sell an apartment you rent for 5,000 a month for $600,000 ?
    A website grossing $1,000,000 a year on auto pilot with no expenses should go for a least 25 mil.

  6. I own a site that is passively earning $1,000,000 a year? I think this wishful thinking sits right up there with stocks that will go up forever and housing that will go up forever. Perpetual motion machines do not exist. Everything takes some amount of energy. $1,000,000 takes lots of energy. 🙂

  7. “Easy. Put a third in savings, a third in domains, and a third just traveling. Why else make money if you aren’t gonna enjoy it?”

    That sounds pretty good to me Ahmed, you only get one life and you can’t take the money with you 🙂

  8. Well, if it’s passively earning $1 million that means the potential with some work/input is much higher. Do the extra work (or employ a team to do it for you), and watch your earnings grow – then you can sell it for much more if selling is your final goal.

  9. Keep the site running, try to improve it by buying names and websites in that niche, try to get it to produce $2mil per year… That way, if you do want to sell in future, the assets of the site will push up the amount of $,$$$,$$$ you will get.

  10. In my world I always begin with the end in mind and would be looking for an exit a capital event!

    If you could get 10+ years earnings in one hit it gives you many more options of what you can do now rather than later.

    Tomorrow is never gauranteed is it!

    So I would always be on the lookout for a buyer.

    Withe the money you could build up another buisiness and having done it one before it would be a much smoother process having the experience from the current business plus you could leverage your time using other people with the cash in hand.

    Thats what ai would do anyway.

    Cheers

    Ed

  11. Best Use:

    Ask Bob Parsons if he wanted to give it all away to his Hodaddy Girls
    at the xmas Party for Party favours..

    P.S. NOT the transvestite looking one. LOL

    🙂

  12. I don’t think I’d sell the site. There are a lot of things I want to do beyond domaining, and having a site that delivers $1MM per year is a great, steady cash cow. I’d invest in other profitable websites/domain names and expand my business by offering marketing/web development services.

  13. Keep working on things, making sure the Google investment network & Buzz comes a Knocking with their Golden buyout, “Billion” $$$ offers. Just Google…
    Google to purchase groupon and study the formula once you’ve Got the Success story! 🙂

    All the best
    Dave

  14. I can answer this question from experience. My site never got as high as $1,000,000 per year but at it’s peak was making a bit more than half that and still makes a few hundred grand per year.

    At first I traveled for a long time (about two years). Then I settled down in my version of paradise and did nothing by party and chase women for a long time (about another two years).

    Having traveled and partied and chased women to my hearts content, I am going to grad school in a couple months. In two years when I’m finished I plan to teach students at the undergraduate level (having savings and passive income that make me essentially retired, this is how I’d like to spend my time), but reserve the right to travel and/or party and/or chase women for awhile first, if I feel like it.

    In short, I would save a lot more money than I spend and do whatever the hell I feel like.

  15. I would do all three whilst being as creative as possible in whatever grabs me.
    Being creative is the joy and seeing it through to fruition is the satisfaction.

  16. Interesting article Elliot. Like Ahmed mentioned, splitting the revenue streams up and allocating them accordingly.

    If the site was mine, generating 1 million a year profits, I wouldn’t ever get married. Simply said, never.

    – 20% to an Euro Model Agency that sends me two model quality girls every other month as companions. (the priority as we guys have needs and don’t want to deal with the once a month psycho GF on a recurring basis)

    – 20% to buying more domains. $200k can buy 1 really great name a year, or 4 really decent $50k ea, or 8 so so for $25k ea, so on..)

    – 20% for developing out such domains through use of Philippines office, team of programmers, designers, marketing and sales staff

    – 10% to advertising budget (since most marketing is done by viral marketing, social media, search engines, and in office staff in Philippines)

    – 30% to travelling the world and using 5 star hotels as my work remote workplace. ($500 a hotel night x 365 = $182k) ($500 each ticket with the two models is $1500 each one way trip. Move around every two weeks to a different city and thats $36k (up to $50k if need go further) annually in ticket prices) (and let me remind you, these 5 star places are usually empty, only 20% filled even on weekends, so if you stay for 2 weeks, that $500 a night gets you a large suite, sometimes even presidential, if its available)

    And people call me simple, pffttt…

  17. With the domain….
    – Keep the domain alive for as long as it produces.
    – Rinse and repeat with other domains
    Personally…
    – Take care of my family.
    – Move somplace where there is warm air and palm trees

  18. It depends on the domain behind it. If it was a category killer like Restaurants.com, which follows this model, I would hold. If it was randomdomain.com I would sell since Google could turn $1,000,000 into $1 overnight.

  19. An interesting question. I’d definitely try and repeat the model in other niches while upkeeping the existing site – and enjoying the profits as someone mentioned earlier.

  20. With the domain:
    – Keep the domain alive include update and maintenance.
    – Use it to push other web base business of mine.
    Other computer related:
    – open a company in the development fields (to release my other thought).
    – invest in other start-ups if possible (it depend the money the site continue to make).
    Personally:
    – Take care of my family.
    – Learn new stuff ( not only in the computer area).
    – have more fun…
    I am a geek and computers are part of my day life…
    🙂

    and probebly more….

  21. It really depends on the website, niche, market, current career, and bills. If a company offered me 10 times the annual revenue ($10m), I would sell to the highest bidder.

    In order to make money, one has to take risks. When you’re already making money, you have to be careful not to lose it. In these struggling times, people have to be passive with their spending habits.

    You have to evaluate your current situtation. If you live in New York City, then $1 million a year is not enough to go in retirement mode. I would keep the website running, and consider traveling.

    When the time is right, I would determine whether I can attract additional advertisers to double my earnings. Once the revenue doubles, I will look to sell the website. I’m sure companies will be contacting me regarding the website. Most companies are looking for businesses that can generate leads in many niches.

    I believe any amount over $10m is enough to retire. It really depends on age. $10m as a 30 year old must be wisely managed to keep from wiping out the savings. Inflation can cut into the retirement fund to reduce the impact power. It would be wise to buy a home that is less than a million.

    However, $10m as a 60 year old can last a lifetime. The money can help grandchildren attend college, as well as enough to pay off every bill except for property taxes, and random monthly bills.

  22. ^^ most are wrong

    rethoricle question…. Would you wait to hit 1mil even if it’s at $999,999.00/yr? Where’s the cut off?

    The answer is easy and has already been answered by many others like Gates, Branson, Zuckerberg, etc, etc..

    If your passion is gone, then sell.

    If you still have passion to build, then keep a stake and move forward w/ investors or by yourself.

    Glen
    PaintingService.com

  23. To me the answer is obvious. Having a website that produces $100k/month means that you have the luxury of being having capital to invest. I would invest at least half of the net profit, whether that is in the growth of the given website itself, other websites or domain names.

  24. Let’s be real now. Money today is worth more than money tomorrow. Remember, nothing stays the same. A website can be very popular today and earn a person 1 million dollars a month from Google ads revenue, but there is no guarantee it will stay that way. Why? People get bored easily and move onto something new.

    The websites you hear about making 1 million a year of people clicking on ads are just popular websites of today, but will not be the popular websites of tomorrow.

    You are best of selling it BEFORE revenue starts to drop.

    $1 million dollars after taxes is around $630,000. If you sold the website for 10 million dollars, you will pay around 37 percent of that money in taxes. I’m not saying it is a bad thing to sell the website or not, but just wanted to keep everyone in check.

    In order to keep revenue up to, or more than 1 million dollars you need to spend time generating traffic if traffic is not naturally flowing to your website.

  25. Elliot, did you happen to watch Office Space over Thanksgiving? 🙂 just curious, this sounds like a good slant on the classic question from that movie. ‘what would you do if you had a million dollars and didnt have to work?’

  26. LOL. Look at all the posts!

    Doubtful you would get a site like this.
    But as I do on smaller sites that were passive.

    I spent years learning how to maximize sites.
    This site should be making 3 million to 5 million with proper squeezing. It is so much fun doubling a revenue that others thought was maxed out.

  27. Analyze the hell out of the business rudiments of that particular keyword space, figure out why it’s making so much money and if that model is durable going forward, if it can be scaled, if so, how fast should it be scaled…

    Just because its making $1mm on autopilot today doesn’t mean it might not make significantly (less/more) next month, never mind next year.

    If I ever shepherded a site into 1mm annual passive income, it wouldn’t have been ‘by accident’ so I can assume I will already be well aware of the important info to make that decision. In some cases I would hold it, in other cases I would sell it, in other cases I would dump it at an earnings multiple, in other cases I might scale it up slowly, in other cases, I might scale it up fast.

    Depends on so many different things. Safe to assume, people who are approaching this question in formulaic fashion aren’t the sort of people who will ever develop a website that earns 1mm a year.

  28. I gave it more thought and I would restructure my priorities:

    First I would buy a midget that was similar in proportion to my physical attributes, than have him undergo plastic surgery to reconstruct his face identical to mine.

    I would then hire the most brilliant scientists in the world to create a WordPress Machine with Atomic SEO capabilities that would duplicate the success of the first site, and then I would replicate the site hundred fold.

    And THEN is when I would hire the miniskirt clad (female) Swedish models with AK47’s.

    Wait! should I build the Spaceship/Time Machine before or after hiring the Models? Aaaarghh! so much yet to figure out.

  29. @ Dean – clearly time machine would be ideal. This way you can go back in time and buy stock in companies like Microsoft, Apple, Google, Facebook when they were selling for pennies on the dollar. Come back to 2010 and you’re a billionaire. Hire the entire fleet of models from Sweden then, and afford to buy sex.com and make use of these Swedish models :-p

    Ohh man, I am getting the feeling Elliot might post next “what if you had a time machine, went back in time, bought stock and now a billionaire” thread…

    I will pre-answer that. Ever watch Swordfish? Yeah, I’d be that guy with the private army up-keeping world peace, driving cool cars and shooting powerful machine guns at government agents whose chasing you, while your hacker learns to drive a stick on that euro imported sports car.

  30. @ Dean – oh let him have his candy! (hahaha)

    Plenty of other domains you could of gone for (all dot com, cars, auctions, market, guns, insurance, sex, business, craigslist, ebay). Wonder if you would of sniped ebay before pierre, whether they would exist or even under a different name?

  31. Hi El,

    I would do exactly what I know you would do, thinking logically:

    •Retire.
    •But Retire doesn’t mean not speculating on good deals for heavy payout domains to invest in.
    •Put half the yearly earnings in secure small interest CD’s/bank notes
    •Do whatever I wanted to do for the rest of my life.

    If any domain is making a million $$$ a year right now, you can expect that to continue, maybe even at a diminishing level, for the next five years.

    With my plan, you would live on $500k a year, and save up $2.5 milllion. Of course, you’d have bought 10-20 other killer domains for less than 1 million in that five years, so you sell them for double your investment, now you’re living on $5 mill interest, monthly, which I believe comes at 3% to be about $150,000 a year, roughly $12,500 monthly. If you’re living with the mindset that family/friends, great home location, community, that’s just perfect for taking care of your kids, helping out with family/friend needs, and even saving up a few hundred a month.

    I know a lot of people will say $12,500 a month is not enough to enjoy a “big” lifestyle, but it’s all about what you think is “big”. yes?

    Being in charge of your life, answering to no person, and getting a monthly check of $12,500 for the rest of your life, and possibly much more because you’re smart enough to invest in other aftermarket domains to flip or build, that’s the course I’m on and I LIKE IT.

    Other domainers make so much money, and are blessed with this opportunity to continue this revenue avalanche. However, remember those days when you couldn’t pay the rent? One day, when I was a surfer and 21 years old, I only had $3 on me, and there was no food in the house for me and my gfriend. I bought a carton of eggs and a loaf of bread, butter, and peanut butter as a backup… and we lived on those items for several days. I KNOW what it’s like to be dirt poor, and wondering where your next dollar is coming from.

    I would like to state here, on your fantastic blog, that your readers should assess their financial state, make sure they can pay for their home rental/mortgage, minimal food, and stay positive… making their climb from this situation a challenge and a game, thinking every situation is an event to study and analyze.

    You never know when the magic bullet arrives that sends your finances into the stratosphere.

    Good luck to all!

  32. @Elliot – If a newbie wrote this question with such outrageous scenario, no one would take him seriously. But, since it is you…I just have one question. Do you happen to know such website, or one that you think might resemble your description.

  33. I’d go with Ahmed’s strategy too, I will just make 4 divisions instead of 3. The 4th would be micro financing the unfortunate, coz seriously, I can’t go on in life if others can not.

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