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Thinking of Creating Passive Income WIth Membership sites? Think Again

Membership-site

The idea of creating passive  recurring income for yourself with your very own membership site is extremely attractive right?
Imagine if you have a membership site that sells for  $2o/mth and let’s take for example if you can get just 20 Paying members per month ( being conservative here)You’re making $400/mth ( 20 x $20)
What if the next month you bring in another 20 paying members and you do that every month for the next 12 months
your income will look something like this below.

Month Paying members Monthly income ($)
1 20 400
2 40 800
3 60 1200
4 80 1600
5 100 2000
6 120 2400
7 140 2800
8 160 3200
9 180 3600
10 200 4000
11 220 4400
12 240 4800

 

So by the end of month 12 you will have $4800/mth recurring income right? To many of you reading this . It’s probably enough income to quit your day job..

BUT..

REALITY CHECK..
The problem is most membership sites especially if you’re in the Internet marketing niche will have a very low retention rate, you’d probably lose 50% of your members on month 2 itself!

Lets not forget you need to KEEP producing content for your existing paying members!
Just to outline the issues with a perpetual membership site
1) You need to keep replenishing members
2) You need to keep coming up with monthly content
3) You need to deal with retention rate issues..

Of course the scenario above is based on a “perpetual” membership site model where your customers will continue to pay every month until he/she cancels.

And of course I’m not here to leave you hanging and not give you a solution..
Let me talk about the other  types of membership models and the 2 that I  personally recommend you go with starting out.

3 types of membership site models

1) Perpetual membership sites – Membership sites that have never ending monthly payments, your customers pay every month until he/she cancels the plan. You will need to continue to produce fresh monthly content for your customers. There is an ongoing cost to produce content.

2) One Time fee Membership – This goes without saying is just a one time Fee and members can access the content using the membership site. Because its only a one time fee members don’t expect content every month. You only need to create the content just ONCE. Using this structure you can also have MULTIPLE level of access at different price points

3) Fixed Term Membership site –  This is a membership with a FIXED term of  monthly payments ( usually 6 – 24 mths)  Customer will be charged monthly until either A) he cancels his subscription or B) the end of  the payment term. You only need to create the Content ONCE too for each .

Don’t get me wrong but I’ve Seen many membership sites work before but if you’re just starting out creating a perpetual membership , you’re putting yourself into alot of potential trouble!

by Brandon sean

Brandon Sean is an Internet Marketing coach, product creator, email marketing expert who loves blogging. Subscribe to my blog for a daily dose of Internet marketing Tips and tricks.

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