Recurring Income: Why You Need (And Want) This For Your Business

Last Updated on March 20, 2020  

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.

One of the most common ways to do this is via a membership site.

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.

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?

What If You’re Not An Info Marketer?

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.

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 could offer a monthly retainer service to their clients.

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.

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.


Related Articles You Might Like:

Why I Switched My WordPress Hosting From WPX Hosting To Cloudways

Why I Am Switching Away From MemberMouse For My Membership Site

How To Build A Service Credit System On Your MemberMouse Membership Site

  • Leo Dimilo says:

    I know you are talking about membership sites here but it applies to literally any business. Take restaurants for example…there are very few restaurants, outside of tourist districts, that can survive off the one and done business model. Most lawyers as well as accountants (and many other professions…SEO, hosting, etc) employ retainers, sometimes monthly, to stay afloat during lean times when work is down or simply to build a base of continuous income coming in.

  • David Risley says:

    That’s true, but you also have to be careful of low-balling the price just because you don’t want to produce much. While a lower price will generally increase stick, using it as an excuse not to deliver much value probably won’t work because members will see through that.

  • David Risley says:

    Yeah, that is a good niche, I’ve heard. And, if you join the new master class, you’ll learn more. 🙂

  • John Lee Dumas says:

    I can’t wait for the membership course! I will be sitting front and center 🙂

    • David Risley says:

      Looking forward to it. 🙂

  • MeneerSimmering says:

    i am wondering if this really is working. Because people aren’t that stupid, i think they will buy an ebook sooner then a membership. The numbers shown in this article could be mathematic true, but in real life? One person a day, every day, is hard you know. And all these persons have to stay in the membership month after month. In theory, yes, but in reality, i have my doubts…

    • David Risley says:

      Well, two things:

      (1) Yes, the numbers were theoretical only to illustrate the math. In real life, people DO drop out (as I said in the post). And, yes, it can be harder (in some cases) to sell membership than an ebook because people are weary of the monthly commitment. But, usually, in that case, its just that the person hasn’t done a good enough job of providing/communicating the value. Because, we all pay several monthly programs every month that we deem as normal… because we understand the value. So, the job of the marketer is to make the prospect understand the value.

      (2) All that said, if one does a good job of the above, the numbers are FAR in favor of membership than one-off ebooks. Ebooks are best for cheap little front-end lead generators… that’s about it. Companies that grow large do it either using really big ticket stuff… or by recurring billing.

  • Some really great ideas here, David, thank you for this article. I’d never thought of it this way and was always wondering what someone other than a technology blogger could sell on a recurring basis. (I’m a food blogger). Will definitely look into this more!

    • David Risley says:

      Actually, doing recurring as a tech blogger is a bit of a chore. 🙂 It wasn’t easy coming up with something. 🙂

      For a food blogger, its hard to say without seeing your actual site. It really comes down to what your audience needs/wants. Is it recipes? Is it product recommendation? Healthy eating advice? Seems to me any of those could warrant some kind of membership program.

  • {"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}