ProBlogger has a very good article on how much money a blog can earn. He gives examples of three blogs he is sort of involved with without revealing any names:

Blog A: For the month this blog had a total of around 20,000 page views from about half that number of visitors (ie they viewed 2 pages each. The Total earnings of this blog (all from contextual advertising) was $790.91 (USD).

Blog B: This blog had just over 40,000 page views over the month, this time from about 13,000 visitors. It?s total earnings from contextual advertising (same amount of ad units per pages as the other) was $99.08 (USD). it also earned around $35 from an affiliate program.

Blog C: Our last example is a blog that had around 160,000 page views over the month from around 80,000 visitors. It earned $515.12 from contextual ads and somewhere in the vicinity of $2,500 from affiliate programs.

He then goes on to say factors that contribute to a Blog?s earnings:

1) Traffic Levels
2) Source of traffic:
a) Loyal Reader
b) Search Engine Readers
c) Referral Traffic -
He mentions that traffic from Digg and Slashdot don’t convert well with Ads but can add to your loyal base of readers
3) Income Stream
4) Topics that you blog about
5) Age of Blog
6) Time Invested

Very interesting read for newbie bloggers.

ProBlogger