How much money do small youtubers really make? We’ve all heard the stories of how some kid makes millions every month reviewing toys and how gamers are making serious moolah just playing games. Is this the success that everyone can expect or are these the exceptions that break the rule?
It goes without saying that most creators will never get the sheer volume of views that these superstar YouTubers get. But does that mean you can’t make a good living from YouTube? Here at Money Unshackled we’ve laid the foundation for a very successful business that primarily built up an audience through YouTube.
In this post we thought it would be interesting to open up our business model with you guys, so you can see exactly how much a small YouTube channel makes every month with close to 30,000 subscribers.
A lot of people think that YouTubers get paid based on their subscriber count or number of video views, but this isn’t correct! We’re going to show you what this YouTube channel has made and what really drives that income! Let’s check it out…
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A lot of YouTubers have done videos on the “how much we make” topic but many of the ones we’ve seen clearly don’t fully understand all the different metrics that YouTube provide to creators. To be fair there is a lot of ambiguous acronyms out there such as CPM, Playback-Based CPM, and RPM. If you ever google these trying to find an average, you will get a thousand different answers.
Also, in some videos we’ve seen some YouTubers have even tried to predict other YouTubers’ incomes using a website called Social Blade. Social Blade is a great website if you want to look at a specific channel’s views or subscriber numbers, but the estimated earnings are way out.
Taking our channel as an example, Social Blade is predicting that we make between £345-£5.5k a year in advertising income. They’re basing this on a default CPM of a measly $0.25-$4.00 USD. Thankfully, our actual CPM is much higher than this, which you’ll soon see.
What The Heck Is A CPM?
CPM stands for Cost-per-mille, which means cost per one thousand ad impressions. Mille is Latin for one thousand – not a million as you might expect.
An ad impression is whenever an ad is served to a viewer irrespective of whether they skip it or not. There could be multiple ads on a video or there could be none at all.
In other words, CPM is the amount of money that advertisers will pay for one thousand impressions.
From what we’ve been able to work out, our CPM is on the high end when compared with other channels with an average of £12.35 per one thousand ad impressions. But as you can see it does tend to fluctuate within a range.
More recently though YouTube have moved away from CPM and are instead using Playback-based CPM as the preferred metric.
Playback-based CPM is very similar but rather than counting multiple ad impressions on the same video it just counts them all as one. This chart looks identical to the CPM chart just seen but it does differ slightly, giving us an average Playback-based CPM of £14.94.
So, what does this mean in terms of a YouTuber’s income? Firstly, it is the gross revenue figure, which sadly is not what we get paid from YouTube. They take a slice of 45% – leaving the creator with just 55%.
What Is RPM?
A more meaningful metric for working out what a Youtuber got paid from ad revenue is RPM, which means revenue per mille.
This time instead of being based on some confusing count of impressions, it is based on simple video views, whether they are monetised or not. Also, the revenue is the actual revenue that the YouTuber receives after YouTube have taken their cut. Our average RPM is £8.30, which is pretty good.
On all these graphs you may have noticed a few things:
- They don’t start until April 2019; and
- Income per view seems to vary hugely from month-to-month.
Although we started making videos in February 2018, we didn’t qualify for the YouTube partnership program until over a year later. You need 4,000 hours of watch time in a rolling 12-month period and 1,000 subscribers before ads can be switched on.
The reason that both CPM metrics and our RPM fluctuate so much is because there are a million different factors that drive how much advertisers are willing to pay. Seasonality plays a factor, location of your audience is huge, and so is the topic of your videos.
We saw a massive surge around March to April 2020 because investing suddenly became the hot topic due to the market crashing, and we presume advertisers were willing to pay more.
Also, we had one video in particular that had a very good CPM whose views suddenly skyrocketed as you can see here by the green line.
Does Your Audience’s Geography Matter?
Yes, the location of a YouTuber’s audience is a huge factor in determining how much they get paid.
Advertisers from wealthier countries such as Australia, Europe and the US are willing to pay more for that same advertising space. We actively target UK investing, which is handy because we get a good CPM for our UK based audience, averaging £12.48.
That definitely does not mean all UK channels will receive that high CPM, but you are far more likely to earn a good CPM from the UK than you would from India for instance. Our CPM from India is just £1.62 – 8 times lower than what we get from the UK.
How Do Views Compare To Ad Revenue?
On our channel we can clearly see that more views tend to lead to more advertising revenue. Our channel has steadily grown to 180,000 views a month and ad revenue has more or less followed suit. However, there has been a drop in the last couple of months, which was due to a lower CPM – perhaps due to seasonality after Christmas.
For the first several months we barely got any views. In fact, that little bit at the start was almost all due to paid-for promotions. We were god damn awful – no wonder advertising our videos didn’t help us grow.
How Does Total Subscribers Compare To Monthly Views?
So, we’ve seen that views are highly correlated with ad revenue on our channel but what about subscribers?
We have had amazing success in keeping our audience watching, so a special thank you to you guys who keep coming back. From what we’ve seen online, lots of small YouTube channels don’t have this consistency. For us there is clearly an overwhelming correlation between Total Subscribers and Monthly Views.
Although we’re just short of 30,000 subs, we can safely say that we can expect to get around 200,000 views per month from a subscriber base of that size.
The subscriber count is often referred to as a vanity metric, but we can say with certainty that more subscribers do lead to more views, which in turn leads to more ads, which brings home the bacon.
How Much Revenue Have We Made?
In 2020 this channel brought in £14,000 in ad revenue alone, which isn’t bad considering for half of the year we were working on it just in the evenings and weekends. Of course, this isn’t the full story, and if it was it certainly wouldn’t be worth starting a YouTube channel from a financial perspective.
When we started YouTube, we set out to create a proper business in its own right. We were never going to be satisfied with £14,000 in an entire year. Based on the hours put in that would be less than the hourly minimum wage!
Most successful YouTubers, especially the smaller channels like ours, set up multiple income streams. A popular income stream for many is by asking for donations such as via Patreon. We never did this!
The bulk of the Money Unshackled income comes from affiliate marketing and sponsorship deals, and these combined typically make up around 70-90% of this YouTube channel’s income, making ad revenue a sweetener and not the reason to start a channel. Total revenue in January alone was over £8,000.
In fact, this is the same business model Money Saving Expert use. That site started with an email newsletter and funded itself with affiliate links. Likewise, we have built a community of people on YouTube who are interested in investing. We have also laid the foundations for a successful website and more recently an email newsletter.
A lot of YouTube channels – or businesses as they should be called – fail because they are too generic. We talk exclusively about money and investing, which means investment platforms and the like want to work with us and give our viewers special offers. If you talk about anything and everything, what advertisers will pay top dollar to reach your audience? – probably not many.
Another great income stream for many YouTubers is through selling merch – Hoodies, T-shirts, mugs and so on. We assume cool, trendy YouTubers will have the most success here. Other than creating this epic Money Unshackled branded Wage Slave mug we’ve not yet gone down this avenue.
When Can You Start Making Money?
We just released a video and post about 3 side hustles that you can start today – Two of which the money will start flowing in immediately, but the 3rd, affiliate marketing, which can be done via YouTube, is a very slow burner. It starts at zero and can potentially grow to make you a millionaire.
As we already said, you can’t enable ads until you meet the eligibility requirements, which will take some time to achieve – for us it was just over a year. Also, if you’re so small that adverts can’t be activated, few companies offering affiliate schemes will want to work with you either, nor will anybody throw money at your Patreon account.
From personal experience we found that nobody wanted to work with us until around 1,000 subscribers. The more subs we had the more credibility this gave us, and more companies were willing to work with us.
Looking back, it took us an entire year to make our first £50. With hindsight this was clearly worth it but so many wanna-be YouTubers never make it this far. That’s a lot of time and effort to yield nothing in return. If we didn’t have other income streams, it would have been very difficult indeed.
What do you think of YouTube as a way to make money? Has this behind-the-scenes post inspired you or put you off? Join the conversation in the comments below.
Featured image credit: Artie Medvedev/Shutterstock.com