I remember 5 years ago when I first started Location 180 thinking to myself “man, wouldn’t it be cool if I had a site that brought in recurring passive income on a monthly basis?”
To many people it’s the holy grail of doing work online.
And it’s also the stupidest thing you can do if you’re serious about building a private community within your site.
In this post I’ll explain why I feel this way, and what to do instead to essentially get the same effect.
The Most Important Part of a Private Community
At this point all of the online communities and products I have online are a one time fee for lifetime access.
I get asked at least twice a week: why don’t you have a recurring monthly fee? It’s almost as if people feel like I left that part out by mistake.
It’s certainly no mistake. If you’re looking to create a long standing private community, the last thing you want to do is charge a membership fee each month.
To explain why, I need to briefly go into the history of Location Rebel.
So my flagship course and community now has over 800 members in it. It launched just over 3 years ago with 20 people.
During the course of the 3 years every single person in there has worked on some level or another to build a business of their own. They’ve tried different strategies and tactics, failed and had successes.
There’s a certain percentage of people who have had massive success. These people are now located all over the world managing their mini-empires and doing great.
If you have a private community, it’s these success stories that are your biggest asset.
Let’s say I have someone who joins Location Rebel, and within 12 months they’ve left their job, are working for themselves and have achieved everything they hoped to get from the course.
If I was charging them $50-100/month what’s going to happen? They’re going to leave! Maybe not right away, but eventually that person who now knows their stuff, and could potentially be sharing their knowledge with new members, is gone.
That makes no sense to me.
If you’re building a private community for the long haul, you never want people to leave. Every single success and failure becomes an experience the entire community can benefit from.
I’ve heard the average person stays in a paid private community for 3-4 months. We want people to still be around in 3-4 years. The odds are stacked against you if you’re charging them every month.
The Work Around
So now that I’ve established my thoughts on that. I will say, recurring income can be great! It can keep the person paying motivated to stay active, and it can add a level of predictability to your income that can ease a lot of your entrepreneurial stress.
So how do you work it in?
Well 6 months ago I changed the pricing structure of Location Rebel.
It was a flat $497, and I added two more payment options.
The first is an entry level version for $297.
The second is a 4 payment option, where you pay $149/month for 4 months.
This has been a great way to bring in some recurring income each month, without kicking people out of the community when they stop paying.
About 20% of all members go this route, and even though in the end they pay about $100 more over time, it makes it less daunting to make the investment in the course.
Usually as one person as finished paying their 4 months, I’ve had at least one more person that joins to make up for that income stopping.
Now on top of normal sales, I make a couple thousand dollars a month in recurring revenue from these sales.
The Exception to the Rule
The key to figuring out the best pricing model for you is understanding what your goals are.
If you’re running a SaaS (Software as a Service) business, then a monthly recurring model is great. I have tools like Adobe Creative Suite that I gladly pay $50 a month for because I use them so much. I’m locked in.
However if you’re just charging for information, then you had better be coming up with a lot of new information each month if you want people to stick around.
Same goes for private communities. If you’re charging a monthly fee for a private community or forum, you had better have a really established group of diehards that you know are never going to leave.
If I were going to start something like this, I’d do what Dan did with the Dynamite Circle. Bring in 100 of the smartest and most influential people in your niche. Make the community free for them for life, and spend months building up the processes and content to make sure everything is firing on all cylinders. Then slowly start bringing in paying members.
You’ll always have that core of smart people in the community that others will gladly pay to be a part of.
So think about your goals for your membership site. Are you trying to build an exclusive community? Do you want the same people in there 5 years from now? If so, consider charging a one time fee. If you create a product that’s worth it’s salt (is that a saying?), you’ll have no problem bringing in sales on a regular basis.
Image Credit: Rain from Dollars