Issue #402

Why You Need (And Want) THIS For Your Business

Answer me this…

Which do you think is easier?

  1. Selling a single thing, over and over again, all to different people? Or…
  2. Selling something once and the same person pays you over and over again?

It should be obvious, but the second option is much better for your business.

That is called “continuity income”. Continuity simply means that the payments come in on a continuous basis. Monthly or annual is the most common.

One of the most common ways to do this is via a membership site. And as you might expect, I help a lot of people set up membership sites to fit their specs and their plans. And while not every membership site uses recurring billing, that’s usually the long-term plan.

It used to be that a lot of budding online entrepreneurs would automatically start thinking about selling ebooks or one-off training courses. These days, it seems as if I’m starting to see a lot more people focusing on the idea of building a membership site instead.

And, that’s awesome. I think spending your time setting up a membership site is going to be far more beneficial to your growth in the future than a one-off ebook or something similar.

Let’s Do Some Basic Math

One could write an ebook or some other kind of info product. And, let’s say you want to sell it for $20. OK, fine.

So, you have a certain number of people coming across your offer every day, and let’s assume you sell one copy per day. Just keeping it really conservative here. So, that would be a revenue of $20/day, or roughly $600 per month.

Now, realize, in order to make this work, you need a constant flow of new traffic and new prospects. Because, once a person has paid you the $20, they’re done (unless you have a fully developed product funnel and things to upsell them to).

Now, let’s say that you build a membership site instead. The information you would have placed in that ebook you now put into your membership site instead. Plus, the fact that it is a live website means you can keep it updated and add more value later.

Let’s assume you decide to keep the price at something as low as $5. And, same as the ebook, you sign up one person per day.

On the initial payment, you’d only be generating $150 per month. On first glance, it seems like a crappy deal.

But, then, let’s take it forward…

Month 2 you’re making $300. Month 3 you’re making $450. And, it increases from there. With these theoretical numbers, after a year, you’d be generating $1800 per month. That’s 3X the revenue of the single-sale model for the same amount of work.

Now, in real life, the numbers don’t stay this clean. For one, there is the issue of retention. There are always cancellations in every membership site – that’s just a fact. Now, at a price as low as $5, your cancel rate probably won’t be that high because its pretty dang cheap. But, your cancellation rate will never be zero.

Plus, you put a little more effort into this and you could easily charge more than $5.

Plus, did I mention that membership sites tend to have a higher perceived value than a PDF ebook? They certainly do.

What If You’re Not Selling Information or Training?

Doesn’t matter. There are TONS of businesses out there which have (smartly) built in continuity income.

I’ve seen coffee companies offer “coffee club” memberships where members get sent different coffees every month. Heck, there’s even stuff like the Dollar Shave Club which charges monthly to send people razors (of all things). The founder even sold the company for…. get this… a billion dollars.

We’ve all seen gyms bill monthly, whether you go or not.

A consultant could easily create an online portal component to their in-person consulting, put some backup training material in there and thus build an additional continuity income into their consulting business.

A web designer/developer could offer a monthly retainer service to their clients. In fact, as I pivoted into making technical services a much bigger focus for my own business, you may have noticed that I started a monthly Wordpress Webmaster service, too.

See, it doesn’t matter whether you’re running an “online business” in the traditional sense or not… you can still build in continuity income. There’s always a way to do it.

Continuity income grows. And it makes things predictable. Steady cash flow is ALWAYS better for a business than constantly trying to chase the next one-off sale.

I’ll take slow ands steady over the stress of chasing deals all the time. Any day.

Keep in mind, too…

Consumers these days are used to recurring billing. From utilities, to Netflix, to music services… right on down the line. The market has shown that people would rather pay a smaller fee over and over again… than one large upfront fee. Plus, so many things these days have ongoing value and support, so a one-time buy wouldn’t even make sense anyway.

There’s a lot of flexibility. Higher-end recurring for exclusive clubs and services…. right on down to “micro-continuity” where people pay just a few bucks per month (for a newsletter, or something). There’s a lot of ways to build this into your business.

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