Web Marketing: How to Calculate Your Revenue Potential

By John Arnold, Michael Becker, Marty Dickinson, Ian Lurie, Elizabeth Marsten

Membership websites are cumulative. If your marketing strategies can keep your member retention high, your income will double or triple or grow by even more over time. Member sites that are promoted correctly have little problem getting 100 paying members within a month or two.

A few things need to be ironed out before you go live with your new member website, however. These include

  • Price: How much will you charge for your member access? Most member websites have a free level and then two to five paid levels. Whatever price you offer for a member level per month should equate to more than 20 times the value over the course of a year.

    If you decide to charge $27 per month for your Level 2 membership, that would be $324 per year. Your value needs to be at least $6,000 over the course of the year for people to feel they’re truly getting a good deal.

  • Involvement: How involved do you want to be when it comes to adding new content and new features to your membership area? The average, moderately successful website will have new content added at least once weekly. That way, you can send an e-mail blast to your members telling them to log in to the membership area to access the new content.

    You must stay in frequent contact with your members lest they forget about your membership program. Releasing new content that they don’t have to pay for is a great reason to contact them. And, they’ll appreciate that you’re keeping them up to date.

  • Cost: The average membership website takes about one quarter of one person’s time to manage per week. If that person is just you, be careful to calculate how much revenue you must earn to make it worth your while. It won’t be long before you’ll want to bring in some help after you get some members.

Here’s an example of how to calculate your revenue potential. Say that your membership fee is $27 for a low-cost member site (and it’s very unusual to offer only a $27 member level). You have a high 30 percent churn rate of lost members and a very pessimistic projection for addition of new members.

Still, with all those negatives, you could earn more than $34,000 per year. If you change the monthly fee from $27 to $79, you could earn over $100,000.

Most successful member programs have a lower level of pricing at anywhere between $5 and $30, a midrange price of $50 to $100, and a third level of pricing between $300 and $1,500 per month. Now you should be getting a feel for why membership sites are so tempting to business owners today.