Information and knowledge can contain a lot of value. People will gladly pay for that value.

Solo entrepreneurs like this model because it can offer more income stability than a regular sales model. For example, instead of selling an ebook or video course or similar digital product for, say, $99, a membership site might re-bill a customer’s credit card $15 per month for access to similar material. The lower initial price often encourages more people to try what you are offering, meaning more total income over the course of a year.

Moreover, having 500 members paying $15 per month means that every day 1/30th of them will be re-billed and money will flow into your bank account with predictability until the entire $7,500 is deposited. Then the next month’s billing begins.

Common Memberships

With a bit of creativity, it might be possible to create a membership site for almost any niche. But there are some very common types: dieting & nutrition, health & fitness, investing & finance, dating, and make money online are all filled with membership sites.

You probably have seen the major sites in these niches and they are worth many millions of dollars. In some cases, hundreds of millions.

As usual, the small crevices inside these areas are our focus. The ‘niche of a niche’ where the little guy can set up shop and make six figures a year doing something that is just too small for the big players to even target.

My friend, Andrew Henderson, operates a site called Nomad Capitalist. His niche is mostly, but not exclusively, high net worth individuals who are interested in internationalizing their assets, investments and citizenship. While he has several smaller products and services and conducts a major conference every year, his main offering is a membership in his Nomad Society for $2,500/year. That’s a pretty high-ticket price, but if you’re a person paying five or six figures a year in taxes or worried about a frivolous lawsuit that could cost you a small fortune, paying $2,500 is cheap if it means savings an order of magnitude more. And every 100 members represent gross revenue of a quarter million dollars for Andrew’s online business. Oh, and he lives all over the world while running the operation.

One of my own businesses today is a membership program for people who are serious about lifting weights and building muscle. It’s $47 a month and provides customized workout goals based on the user’s performance data. Very stable income from this model. Importantly, it’s unique information they can’t get anywhere else and it’s personalized to each member.

Years ago I had a simpler model that was only $19/mo and had about 1,000 members. It was all automated so I didn’t need to do anything other than watch the store. But knowing that $19,000 was going to come in like clockwork every month is something that puts a spring in your step, believe me.

This site, Liberty.me, uses the membership model. Last time I looked there were north of 5,000 members, which means this new site is already grossing at least a quarter million per year just from the small $5/month membership fee. Let’s hope it’s soon grossing millions per year.

Characteristics of a Membership Model

Most membership sites have some common elements.

They build and appeal to a well-defined community and foster a sense of that community. Members can interact, debate, help each other, learn new things, make new friends and/or new business connections. Business connections alone can often make a membership worth many times its cost.

There is usually a mix of free and paid information. You always need to provide enough free information so a newcomer can figure out what the site is about and see evidence that it’s exactly what he’s looking for. The best content—the really valuable stuff—is behind the paywall where only members can access it.

Investment sites use newsletters to advise members about trends to watch and specific stocks to buy or sell. Sales & marketing sites provide info on the latest e-commerce hacks and new technologies to get an edge on less informed competitors. We live in the information age and information has value for which people will happily pay.

In virtually all cases, membership sites are highly focused either by way of very specific information and services provided, or by being focused specifically on each individual. So some sites have information aimed only at adopted children in America trying to find birth parents, or electrical engineers looking for jobs in S.E. Asia. While other sites take commonly known fitness and nutritional advice and apply it specifically to you, a 58-year-old man who paddles a kayak 20 miles a week, has arthritis, and a pin in your elbow. That kind of specificity is worth gold.

Building Something Durable

As I mentioned, many new entrepreneurs like this model because of the predictability of income. Members’ credit cards are automatically billed at intervals they agreed on. To grow the business you just have to add more new members at a greater rate than the natural attrition. Depending on your niche and your service you might have, say, 5% of your members drop off every month. As long as you add more than 5% as new members your business grows.

The great power of being online is that you can find and target the right customers. In most sub-niches the potential market is orders of magnitude more than what you would need to make a great income. A major advantage I personally like is the ability to discover and get to know like-minded people. That potential alone is enormous because of the future opportunities you might want to participate in together. Plus, life’s just a little nicer when you’re around like-minded people who share similar goals and values.

Virtually every niche and sub-niche offers the possibility of operating a lucrative membership online business. Let me know if you want to brainstorm ideas to build one of your own so you can safely leave the rat race.

In Part 4 we’ll take a look at the Freelance model of online business.

 

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