Anyway, there’s the question “How can you be sure that the owner will pay for every customer you send him?” and the answer is: You simply can’t.

Assume that you can be screwed and even if the guy is 100% honest, he could forget or simply don’t know that a customer came from the internet. This is why you shouldn’t feel guilty about setting high rates.

So your goal is to find a way to measure if you send customers, and if you get enough money in return. Don’t expect to maximize things and get 100% of the money that’s owed, it’s simply impossible, unless you make a website that takes care of processing the orders (e.g. an online shop).

So I would say, always do a website, if you are not paid, buy a $1 domain name, put one page with basic info and a sentence such as “We would love to give more information to our internet visitors, please call our phone number and specify you found us through the internet”. After 20 calls, the owner will start to realize that your job is valuable.

When discussing with the owner on the begin, explain him that you offer your service per year and conditions have to be discussed at the end of the year.

Then put some tracking on the website… If the owner is willing to communicate with new clients through emails, put a simple contact form on your website, which sends the messages to him but also CC the messages to you, so you can see how many requests he gets.
If not, at least, with the stats, count how many visits the website gets, then see if the money you get corresponds to the volume of visitors you generate.
If you see that there is too much difference from one month to another, it’s time to discuss with the owner.
You don’t have to accuse him, but simply say “Are you happy to get those new customers from the internet?”
And then explain him that you are sorry but you will have to stop the website at the end of this first year of service. Tell him that the amount of time you spend compared to the money you earn simply makes this website not profitable. He’s a business owner, he should understand. If not, ask him if his shop was not generating enough benefice for him to pay his bills, would he keep it or would he close it?
It’s pure economics, if he can pay you more and it’s still a benefit for him, he will do.

Since you tracked the number of visitors, and you have an idea of the number of customers he should be paying you, it’s easy for you to tell him how much you want.

He shouldn’t know that you are actually spending almost zero time to maintain his website. Don’t feel that you are cheating, it’s business. The price of every service subscription that you pay for is actually much higher than the real cost. Don’t believe that it really cost $20-30 a month to maintain your mobile phone line, one minute of communication actually costs less than a cent.

Creating websites for other is a business that can be really profitable if you respect a few rules:

1) Never work for free. Don’t accept any excuse. Set a “high” price (like I did: $20 for ONE page), because you will spend much more time than you expect, and after the project, you will realize that your average hourly rate was not so high, after all.

2) Write down what you agree to deliver.
Be precise, you don’t want the client to ask you to add an online shop when he originally paid $300 for a 4-pages website.

3) Track the success of the website.
Look at the stats. If possible, agree to do some internet promo, like I explained above, or write your web page in a way that will push people to tell the owner they came from the internet. You really want him to perceive the value you are offering.

4) Set your profitability rate
At first if you earn $100 by spending a week doing a website, it’s not much, but these $100 are better than playing with the X-BOX and having $0.
AND you’ll have earned something valuable: EXPERIENCE.
Next time, you know better how to handle the client. You know better what your rate should be. You’ll know better how to charge (all upfront, yearly rate, affiliate system, etc.)

Be prepared to get screwed a couple of times, but things will go better along the way.

Oh and a little advice regarding those freelance forums, just don’t waste your time on it unless you live in a country where earning $1 per hour is enough to pay your bills.

Now that I’m out of college, I need a way to put cash in my pocket right now to pay the bills — can’t be waiting weeks or months for IM projects to take off. I have a pretty solid skill base in web dev, but I’m hardly a seasoned professional. On freelance sites my skills wouldn’t fetch more than dirt cheap rates. So I’ve been trying to come up with a way to market my skills for greater returns.

As fate would have it, last week out of the blue my girlfriend says a friend of hers at work created an educational product for kids that parents buy at $3600 a pop, and that she wants to set up a website. Says she’ll pay maybe $200 for the site and up to $600 to me for each sale that come in through the website. I could blow $500 per conversion in a sloppy PPC campaign and still be making out like a bandit with that payout. Whether this works out with this friend or not, it really opened my eyes to what the right people are willing to pay for when it comes to web dev. AND that a few contacts can go a long way.

But I also thought this might be a once in a blue moon kind of opportunity. After reading your post, I don’t think that’s the case at all. Thanks a bunch man, this gave me the motivation I needed to go out and hit the streets. Time to form a plan of attack.

Do you have any ideas on ways to prove to the business owner that referred customers came from the internet?

I forgot to add, I read on forums that some people are using such techniques and make close to $10,000 (ten thousands) per month, even without a website.

It’s not difficult to guess what they are doing:
1) Take the business directory of your city.
2) Make a list of small firms/shops/places that can have an interest to have an online presence.
3) List the ones that are not listed on Google Local, and check that there are not too many listings for the same keywords.
4) Go door to door, discuss with the owner, tell him that you will send them customers through the internet, and offer him to test the service for free for the first three months, nothing to sign.
5) Fill the Google Local form. Warn the owner he will get some verification post within a few weeks and he needs to give it to you.
6) During the 3 months period, go back to see the owner and ask him if he gets new customers from the internet, try to get some figures. It will help you calculate the extra revenue he generates thanks to you. Better do it now when there is no money pressure for him, than the day you ask him to pay.
7) 3 months later, remind him that the trial period is expired. This is the time when you can make an offer.
Selling your service at a price of one or two thousands a year is definitely achievable.
Repeat with as many businesses as you feel like, the best is that when you make someone happy, chances are that he will help you propose your services to his friends who have businesses too.
Of course, don’t hesitate to expand the technique to other cities.