My biggest goal of 2013 was to create a membership website. The idea behind it was to diversify my company and become independent from Google for good. Newsletters are great to keep your readers on board regardless if Google sends you traffic or not. And you can’t ask your subscribers to provide income on a monthly basis. If you send them too many “special offers”, they will tag your emails as spam and close the door for good.
But if you offer a service to help them in a specific part of their life, they may become more than readers and subscribers. They may become clients. The fact of having a service or product for sale with clients buying it puts your website in a completely different category. You are not dependent on the web anymore, you have a real business.
As I have always been very transparent with my online business, I will share everything about my new membership website with you, from the good to the bad to the ugly. I started with a soft launch on December 9th 2013 and have already made over $6,000 in the first 6 weeks of operation. Let’s look at how it went:
Man… I wish math was this simple! Sure the numbers add up very well and it is very cool to say that the site has made an average of $1K per week since the launch date. But when we look at the overall trend, it’s not exactly how it went. The first graph I’m showing is the gross revenue per subscription week by week.
Members had the possibility to sign-up for a monthly membership or an annual subscription with 2 months’ worth of rebate and a bonus (a book). The monthly price was set at $14.95 and the annual price at $149.50 USD.
The blue bar is the annual subscription, the red bar monthly and, most importantly; the green bar shows total gross revenues per week. You will also note that I’ve cut the week to months’ end as I also wanted to see the trend per month.
Without any surprised, the week of December 9th was the most profitable. Within a week, I made slightly over $3,500. After the soft launch date (I’ll come back with the notion of a soft launch versus an official launch later in this post), we can see that the average is pretty solid around $500/week. This is particularly good since the announcement was right before the Holidays. I didn’t expect much movement from December 23th to January 5th and I still made $932.04 during these two weeks.
The exact weekly average for the past 5 weeks stands at $514.88. If this trend keeps up, I can expect to make a gross revenue of $26,773.76 this year. My goal for 2014 is to make $30K from my product business segment. As I am making a steady $300 in revenue from eBook sales, keeping a weekly average of $514.88 with my membership website would enable me to achieve this plan. I find it a little tight as the projections show a gross revenue of $30,373.76. This doesn’t leave much room for unexpected events!
I also have to keep in mind that the first few weeks after a launch are always stronger. This means I will have to work harder in the upcoming months to keep this $500/week average. Right now I’m standing at roughly 30 monthly subscribers generating $426.60 net in Paypal commissions. This leaves me with about $1,650 to find in new members each month to reach my goal. This is not an easy task.
Therefore, I don’t expect to make 52K in 52 weeks this year, but I surely intend to make $26K with my membership website.
Making money is one thing, but making profits is better. Obviously, building such a product costs money. Therefore, you have to spend money upfront and hope it will succeed. I will go into more details about my expenses in another post, but I’ll list them briefly today:
Buying the website for $2,500. This was the biggest expense we had. We could have built the website on our own but we had an offer where an existing membership website was already setup. The whole site wasn’t completed (far from it!) but the structure was in place. We basically bought a skeleton and added to put meat on the bones. It enabled us to save time wondering which software to use and how manage the members.
Time spent on the website: $2,366. This is the price of my own time put into this project. This is not real money as it didn’t come out of our pockets, but I believe one should assess how many hours are worked on something to determine if it was truly profitable or not. In this case, I valued my time at $30.33/hour and worked 78 hours on the site before launch date. Yeah… it was a lot of work!
Shutterstock images for $320.60. We used 2 packages of 25 images each to build our website. We decided to buy them through Shutterstock as it offers an amazing range of high quality and professional pictures/images/buttons. We especially used Shutterstock to create our navigation buttons. The good news is that we found a 30% coupon on the internet so we didn’t pay the full price. On top of this, we still have 17 images left from our second package for future projects.
Leadpages plugin for $197. Leadpages is an amazing plugin to create professional pages where users can sign-up for a newsletter. They have several templates (you can check them out here) and can be modified as you wish. The Leadpages purchase was necessary to generate a “warm mailing list” where I could let people know about my progress and pitch my service.
Fiverr work for $55. Before finding Shutterstock, I tried ordering buttons from designers on Fiverr. To be honest, the work was barely “okay” quality and it was definitely not a good fit for my site. Therefore, I can say that I threw $55 in the trash.
Total Expenses at $5,438. The number seems pretty high considering I’ve made $6,000 in 6 weeks. But 43.5% of our expense is time spent working on the site. The real required cash flow was $3,072. When I look back at this project, I can tell we could have dropped our expenses by a few hundred bucks. The $55 bucks in Fiverr was definitely a waste and could have managed with only 1 shutterstock package at $160.30 and use our images properly. I must confess I went a little bit trigger happy with the download button for nothing! Finally, if we hadn’t bought the website structure, we could have probably done it for under $1,000 instead of $2,500. However, it was our first membership site and we preferred to save time and go with something that was already working instead of trying to make it work on our own.
In all honesty, I think that if you start your own membership site, you can do it for under $1,500 (but be ready to work over 100 hours on it!).
I’ve compiled my cumulative gross revenues and added my expenses to calculate the net profit in the following graph. You will notice that I breakeven on the 6th week with a small profit of $149.10 as at January 19th.
How’s the net profit not over $600 since I’ve made slightly over $6,000 so far? This is because there are costs involved after you launch the site! I’ve worked a total of 18 hours after the launch to answer questions, improve the site and write monthly newsletters (2 so far). This added up to a virtual cost of $546. It’s not a real cost since I didn’t get paid for it, but I strongly believe you must take the value of your time into consideration when you are working to build passive income.
I expect to work about 12 hours per month on average for a total expense of $364/month. Since we control our own product, we don’t have to pay for any other monthly fees. Therefore, the total cost of maintaining the website over a year should be around $4,368.
If I really make it to total revenue of $26,773, I will make a net profit of $22,405. This is real passive income since I’ve already “paid” myself for the hours put into the work. The other way to calculate it would be to divided the total revenue by the hours I work instead of “paying me” for it. This would equal to $185.92/hour… not bad 😉
Since I launched the site in December 2013, it means that I will receive annual renewals in the last month of the year. I’ve made $4,351.80 in December from my annual subscriptions. Since I work very hard to provide a high level of service, I can conservatively expect to keep 75% of my members. This would add-up to another $3,263.85. This is where my buffer to make my 30K in products is.
Still, these are only numbers and projections. I will provide you with my complete plan to promote my website in the next article of this series. The work required prior to launch a website is nothing compared to the work required after you launch it! If I stop the promotion today, I will definitely not make 26K from my site this year.
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