Membership Site Ideas – 3 Subscription Models For Residual Income

A subscription model is a type of business strategy where a business owner or a company receives recurring revenue on a monthly or annual interval in exchange for a product or service. 

There are a lot of businesses that became successful using this model – Amazon Prime, Netflix, and Spotify. 

For anything related to sales funnels and content creation, there’s Canva, ClickFunnels, MailerLite, and ThriveCart. 

Even food and meal-kit services are using the subscription model to scale up their business. 

Subscription-based models started with newspapers and magazines far before software as Service (SaaS) companies use this. With the internet and the use of credit cards, a subscription-based business can reach more people and payments are easier to manage. 

This type of business model makes money by focusing on retaining customers and building loyalty within your brand. Revenue is made because a customer has recurring payments to have access to the product or service. 

So, if you plan to build your business using a subscription-based model, you have to give your subscribers a reason to continue paying you. They should want to come back for more of what you offer. 

The rise of digital marketing also popularized subscription-based membership sites. 

These membership sites are owned by content creators in their particular niche or industry. 

A membership site is a website where only the subscribers can access the content on a particular site. This is protected by password and logins to ensure that only members have access to whatever is offered inside a site. 

The members pay a recurring fee to be part of a membership site and get exclusive deals or content. 

A lot of content creators have been enticed to use a subscription-based membership site. 

  • It promises long-term revenue and recurring monthly or yearly income. 
  • Just make a course and money will come in. 

But there are things that you need to know before you spend time on creating your courses as it’s not as good as you think it is. This is especially true if you’re just starting with online courses. 

This blog will give you strategies on how to plan out your membership site and the pitfalls that you should avoid along the way. 

1.Static Courses  

The first type that you should start with is a static course. It’s the most boring and simple one.  

Static courses are short content where customers pay a one-time fee to get the offer. It is usually video content where a customer watches to learn something. 

I know that you might think that it’s not a membership site. Yes, it’s true to a certain extent. But when it comes to online courses, it doesn’t have to be a membership site. 

What I recommend is you start with a low-ticket static course. These are courses that are worth $100 up to $200 absolute max. 

The reason I recommend starting with a static course that’s less than $200 is that selling online courses is hard. And it becomes harder as the price point goes up. This is regardless of what you’ve read or seen in ads and webinars. 

So, when you want to start a digital course, it’s best not to invest a lot of time (weeks or months) in creating a thousand-dollar course, only to find out that nobody wants to purchase it. 

And make sure that you don’t create a course that’s longer than five hours. 

Even if you don’t charge more than $200 for a course, the good news is that you can always increase the price later on. 

Although I recommend that you start with a five-hour course that is worth a hundred dollars. You’ll learn a lot on how to drive traffic and convert strangers to happy customers on your membership website. 

You can easily do this by using a tool like Teachable or Thinkific. 

Key Takeaway: Make A $97 Online Course To Start Using Teachable

2. Insider Information 

Insider information can be in the form of a weekly or monthly video or just a written text. Whatever way that it’s delivered is not important, it’s the information that you give to your subscribers is what’s important 

Here, you have a monthly or annual fee where people subscribe to get up-to-date reports, information, or insights. 

In reality, this type of membership site won’t work in every niche. 

A perfect example is the stock market niche. 

When it comes to the stocks that you buy or trade on a day to day basis, the numbers do change a lot. So, it makes sense that you offer a service where you provide your subscribers with information on a weekly or monthly basis on the top picks stocks. 

You would update them on what is the market status and what are your recommendations. 

What’s cool is if you can figure out a way to find a bunch of information and condense it down into something easy to digest for your course members to engage with. 

If you have a fast-changing niche, then it makes sense to stay up-to-date, then do all the research for someone so that they’ll have to log in to your portal or check their monthly newsletter. Then, they have all the information that they need and don’t have to worry about missing out. 

With this type of membership site, the main driving factor for someone to purchase is FOMO or the fear of missing out on something. 

3. Mastermind 

Our third type is monthly mastermind. 

 This is the most popular type of membership site. But the most strenuous to set up and maintain. 

So, I don’t recommend that you start with this type. You can start with the first two. 

A mastermind can be on a weekly, bi-weekly, or monthly basis. It’s up to you. You know your niche and product better. 

Here, you either hop on a webinar or record a video where you answer a bunch of questions. This is as close as you can get to one-on-one coaching or consulting with people who join your membership site. 

  • The advantage for people who join your membership site is that they can ask questions and don’t have to pay a high hourly rate to just talk to you. 
  • The advantage for you is you get to enjoy an economy of scale where you don’t have to sit down and have one-on-one meetings with people. 

You can also collect a lot of questions over a month or a week. Then, create a video that answers all of them. 

Tip: You don’t have to do live broadcasts. 

You probably see monthly masterminds that have live broadcasts where members and creators have a lot of dialogues. If that scares you and you haven’t done that before. You don’t have to do it this way. 

You can do a question submission system. You can use Google Forms and Teachable to get their questions.  Then once you have the questions, you can record a video or use a webcam and go through all of their questions. 

The price point is at $37 a month to $197 a month for this type of membership site. But there’s a huge pitfall when it comes to pricing your membership site monthly.  And we’ll get to this at the latter part of this blog. 

The price range would depend on what your niche or industry is. 

Key Takeaway: Charge $37/m For A Monthly Mastermind

Upsell 

What is cool is that you can use a sales funnel and an upsell sequence to start selling your products. So, let’s take a look at the diagram below. 

Let’s say that we start by creating a $97 course. 

So, people go to the checkout and purchase your $97 course for the first 3-6 months. That’s all you did because you’re pulling your hair on how to drive traffic. You can use Google Ads or YouTube Ads to do this. 

Now, you’re ready to create the second type of membership site and you want to start creating residual income. There’s nothing passive about membership sites, but residual. 

What you can do is create an upsell offer right after someone purchases your one-time $97 course. You can use a shopping cart software like ThriveCart. 

Once they purchase your course, you can immediately make an offer for insider information worth $10 a month or $97 a month. They can either say yes or no, depending on the information that you have for them. 

This is an easy way to increase your average transaction value. This means more money for you and you’ll be able to provide more value to the people who just purchased your course. 

Then, another six months down the road, you’re ready for the monthly mastermind. 

Now, you already have a lot of people on your email list. And you won’t have that cold start. So, you can add a monthly mastermind as another upsell in the same sequence. 

As great as this plan is, my sound. But there are downsides and pitfalls you need to be prepared for. And be aware as you go through your membership site creation. 

Mistake #1 – Income Trap

 The first one is to not get sucked into that passive-income or residual-income trap. 

Let’s do some quick math here. 

Let’s say you plan to have your newsletter or monthly mastermind at $37 a month. And the average person will stay for a year. 

It’s not reasonable to think that someone will stay for till the end of time, right?

So, a person stays for a year at $37 a month. That’s about $440. And we’ll not include the taxes that you have to pay, the software, processing fee, and other fun stuff. 

So, you could get $440 spread out over 12 months assuming they don’t cancel. Or you can offer the same course for the same annual membership or product for $297 or $197. Yes, we’ll cut the profit in half. 

It’s obvious that $197 is a lot less than $297. But you have to make sure that with the monthly membership site setup, you have to be confident that you provide so much value that people would want to stick through the entire 6-12 months. 

When you’re only started, the initial cash at the beginning will be a lot more valuable to you and your business to scale up. 

It will be a better business decision for most new course creators if they go for a one-time payment for an annual plan versus collecting a monthly payment plan for one year. 

Mistake #2 – Customer Service 

The second big pitfall is customer service. 

It doesn’t matter what type of software you use or how much your course costs, you’ll deal with emails from customers. 

This is why I like to use the term residual income rather than passive income. You could call it a passive income if you hire a dedicated customer support representative who could handle everything for you. 

But for most of us who are just getting started, we have to handle the emails ourselves. The emails will be asking for logins not working for other stuff. This way, you’ll have a dramatic increase in the number of emails that you get even if it’s a one-time course. 

Mistake #3 – Chargebacks

The third and final mistake will be chargebacks. 

This is something I see that nobody talks about. And it’s complicated that’s why I left it to the end. 

This is also the reason why I recommend that you start with a static course and have an annual payment versus a monthly payment set up. 

A chargeback is when someone calls up a credit card company and says, “Hey, you know I bought a course from company XYZ three months ago. The course was awful. I think they’re a dishonest company. And I want my money back.”

Instead of asking you for a refund, that you hope they do; they go straight to the credit card company. And the credit company looks at you as a small business. Then, check that it’s an online course so it might be a scam. We’ll just return their money. 

What they’ll do is post a chargeback on your merchant account. So, you have to not only give them a refund. But it’s like a big slap from a merchant account’s perspective. 

If you get too many chargebacks, then your account will be shut down. And you won’t be able to accept credit card payments anymore. 

  • The real kicker is that if you’re into a monthly membership site, it only takes one person to have the potential to destroy your relationship with your credit card company. 

Let’s say that someone is seven months old on your membership site. And he calls up American Express, Mastercard, or Visa to demand a chargeback. The chargeback account will be counted seven times. One for each month. 

Even if you use Stripe, they’ll see that and it’s a red flag to them. They might restrict your merchant account or they hold your account for 90 to 120 days before they pay you. 

The worst is if the credit card company sees that you have a lot of chargebacks, then they’ll cancel your merchant account. And won’t process your payments anymore. 

So, you can start with an annual plan if you want to have a membership site. Because chargebacks are a real problem and could kill your business. 

Conclusion 

There are three membership site ideas that you can choose from – static course, insider information, and mastermind classes. 

You can start with a static course then upgrade to insider information or mastermind classes over time. You can learn a lot when you start with a smaller course first like driving traffic and getting a strategy on how to improve your classes. 

As great as having a membership site as a source of residual income, there are pitfalls that you need to avoid that come with having a membership site. 

  • The trap that it’s a source of perpetual income. Your students won’t be subscribing to your membership site forever. 
  • You have to deal with customer service. Your subscribers will send you emails from time to time that you have to answer. 
  • Be aware of chargebacks. And this can potentially ruin your business when a subscriber files a complaint against you to your credit card company. 

You can also check this article if you want to learn more about membership sites versus an online course. 

Until the next, keep building the business you love. 

Jason Whaling
 

Jason Whaling is an online marketing expert, consultant, author, and a lifelong entrepreneur. Combining a mix of dynamic business strategy, consumer psychology, and social media marketing, Jason works with people like you to build their personal brands and business.