Do you want to grow your monthly recurring revenue?
At 12 years old, I started my first subscription business. Obviously I had no idea what I was doing. But these lessons I learned I have carried with me into other subscription businesses in my career. Here are 5 subscription business I have worked on and the key lessons from each one.
Low-ticket services on subscription:
$30/mo lawn care. Some clients stuck around for 8 years until I sold it in college. Big lesson was a happy customer is the best marketing. Most of growth was from neighbors word of mouth.
Physical product box subscription:
In college I began working on a nutrition supplement subscription for $99/mo. Big lesson here was churn will eat you alive. It's not about how many subscribers you get, rather how many you keep. This is a mindset shift for many entrepreneurs because the sales doesn't mark the end of the relationship but the beginning.
High-ticket services on subscription:
$1,500-$5,000/mo digital marketing retainers. I was doing the work AND working on the business. Because of this, I got stuck at $10k month recurring revenue because my offer wasn't scalable. I needed to hire more skilled marketers which would severely hurting margins. Great cash flow, poor for long building term wealth. This is a common story for digital marketing consultants and agencies.
Private club subscription:
What if marketing knowledge could be recorded and put into a library where members get access? Then build a community of like-minded people to connect with each other and help implement the trainings? That was The Entrepreneur Alliance. For $30/mo members got full access to trainings, community, and events. Lesson here – this is a very scalable model and with a few tweaks could be quite profitable. Main challenge was the price was too low and members got overwhelmed by the amount of content. More training does NOT equal more value. Members will pay a premium for you helping them sort through the noise. Don't get stuck on the content treadmill or else your members will always expect more from you and you'll never escape. Content gets them in the door, a solid community keeps them paying.
Software on subscription:
The king of subscription offers because software is often high-margin, quickly scalable, and very sellable. In less than 12 months, we grew Proof to $80,000 in monthly recurring revenue. Pre-sell your subscription before you build it by doing a "founding member launch". Bake in the cost of acquiring subscribers into your financial model so you can do paid advertising. The valuation of a SaaS can be anywhere between 3-6X Annual Recurring Revenue.
My next MRR play will be rental income in Austin, TX. Setting up the chess board for 2021 to be a great year.
The month recurring revenue (MRR) mindset is not traditional... yet once you switch over, you'll never go back.