It seems as though the entire economy is switching to a subscription model. If you are considering building a membership website, you will want to plan for the following:
Business Model & Plan
If you want to sell information on a subscription basis, you need to understand your potential audience and the value they will assign to that information. A website with sophisticated market information that could be used to create profitable trades would potentially be very valuable, but the audience may be somewhat narrow. Likewise, a website with information or entertainment for the general public may have broad appeal, but it may not be worth as much to users who can gather plenty of free information and entertainment on their own. Make sure you begin by understanding your basic business model, and then follow it up with a written business plan.
Monthly Revenue = (# of Users) x (Price/User)
Potential Market & Market Share
Next, identify the size of your potential market. For example, if you are building a platform for all real estate agents in the United States, you would have upwards of 1.3 Million potential users. It’s helpful to take that number and “stress test” it with various market share levels. For example, if you are able to get 1% of a potential market to sign up for your platform, you may still be very successful. We prefer projections against 1%, 2%, and 10% market share. If you are planning a subscription based website and think you will get 50% of your potential audience to sign up, chances are you’re being overly optimistic and you should plan for lower numbers.
Potential Market Size x Market Share % = # of Users
Revenue Projections
Now, you can project the revenue for different scenarios. Make sure to document everything in your business plan, and be prepared to change. It’s likely that the market is larger or smaller than you think, the platform may be worth more or less than you think, and your success in signing up users could be greater or lower than you expect. That’s why formulas are so helpful, because they give you a framework in which to think of the economics of your membership website.
Once you have revenue projections in place, you need to project your expenses. In addition to the cost of developing your new subscription-based website, you need to plan for the following expenses:
  • Advertising & Marketing
  • Staffing & Payroll
  • Overhead & Office Expense
  • Legal & Regulatory
  • Promotions & Discounts
  • Cost to Produce Content
  • Accounting & CRM Software
  • Design a website that fits your exact needs and accomplishes your goals
  • Cost of Capital & Debt Servicing
  • Cost of Equity Investment Capital
   Break-Even Membership Counts
With solid financial projections, you can determine your break-even number, the point at which you have enough members to cover the costs of developing and maintaining your subscription based website. For example, if your website and total expenses for year 1 are $24,000, and you intend to charge $25 per month, per user, 80 users would bring you $2,000 per month, and after one year, your $24,000 would be covered. In general, any membership number greater than 80 could yield profits.
   Ready to Get Started?
Please call 859-422-9165 or submit the form below to get started. We will learn as much as possible about your planned membership site and put together a detailed and personalized proposal, with no cost or obligation to you whatsoever.

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If you are in need of a subscription based website, please give us a call so we can set up a meeting.  It doesn’t really matter what industry you are in, we can build a top notch subscription based website for your company.  We are recognized nationally for our work in this area and would love the opportunity to learn about your vision.

eLink Design, Inc.
400 E. Vine Street, Suite 301
Lexington, Kentucky 40507