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Selling Online Courses Vs. Creating a Membership Site – Which is More Profitable?

By  Sam Peiffer

If you want to know my little known step-by-step blueprint to create, launch & sell a successful digital course.. Join for free at marketersociety.com!

In this episode you’re going to discover:

  • The difference of selling online courses and creating a membership
  • The business model that is making a beginner more money
  • What you should do if you’re just starting out
  • When you should launch a product on a recurring model and when it makes more sense to sell a one-time product
  • Why recurring revenue is the biggest lie in the online marketing space
  • and much more
Read Full Transcript

Welcome to the show. Today, I want to discuss a very important topic when you're selling your first online course and you need to decide if you’re selling your online course on a one-off price or if you’re doing a membership site, where you charge your customers a monthly recurring fee of let’s say $37. Which one is more profitable for you?

And if this is the first episode on the podcast, or you haven’t subscribed yet on iTunes, please do so and leave a review with five stars if it added value to your business and to your life.

So which one is harder? Selling the online course or the membership site? For me personally, it’s creating the membership site because membership sites are high maintenance.

Membership sites are harder because you have to keep up creating new content, new courses, and everything and load it in and you are constantly working on that membership site. If you have like 10 customers, 20 customers, they’re paying you on a monthly basis, it’s not that rewarding.

What I like to do is create online courses instead because membership sites don't really work that well. Membership sites are dead in my opinion. And I can tell you some things about that because I had one too.

On the launch it worked great because they had a free trial, but after that it wasn't very profitable. So I put more work into a membership site that generated me, in a whole year €15,000, and one course that I created, made six figures in a couple of months. And that's the difference.

So I want to talk about, the first thing is price resistance. People like to pay higher prices if it's not monthly. It's much easier to sell a product that's let's say €200 than it is to sell a product that's 40 dollars or euros a month. You know that from experience.

If your smartphone provider or your mobile phone provider charges you $60 a month, it hurts you. It's much easier to go to the supermarket and buy food for $200.

That's the first thing. And as soon as you add a per month to a price, the conversions start to drop, and that's a huge red flag for me because I want high conversions.

I've tested this several times and I always find if I do instead of a $50 per month or so, I do a $300 one-time, it works 10 times better. Not 10 times, but it works much better.

So if you're planning on doing a membership site and you want, you absolutely want recurring revenue, it's the myth. So what actually exists is membership duration.

How long is an average customer staying on your membership site? Typically, for a membership site is two months. If it's very good, you can count three months, or if it's a $5 per month site, you can count a year or something. So you have to calculate how long a customer stays and then multiply that by the amount the customer pay.

Still, if it's three months and you pay $50 a month, you could charge, try charging instead of those $50 per month, you can try to charge $200, and then you make more money with the one-time purchase than you would make if the product would be a recurring product.

That's true because you'll get higher conversions I think because it's not recurring purchase people make. So it's easier for you to get a new customer and you make a little bit more money. So that's the difference.

So when you're trying to do a real recurring revenue business, so I have this software business in Germany where I have a Software-as-a-Service company, which is called SaaS.

I guess. Yeah, Software-as-a-Service, yes, it SaaS, where we have a software tool that's creating a marketing copy for businessmen and for websites and for online shops, or creating titles, products, description, et cetera.

We tried selling the software for 67. Yes, right. That's because of the price point. And we had a whole year of troubles with it. And then we changed to a one-time fee or a yearly fee of 497.

That's eight times the price. And the conversions were the same, 8%. Every person who sees that was thinking, "Okay, it's a monthly fee. Let's ... I don't want to give you money for that. So I take the free trial, use the software, and then I go, I leave now and come back if I need the software again."

So that’s not a huge of pain of disconnect. People have to have pain when they don’t pay you a monthly subscription because they would go and leave the service and you will lose the customer.

Let’s see it from the perspective of an email marketing automation tool. If you go to ActiveCampaign or to Drip or to MailChimp or something, it’s a huge pain to switch those services because you make money with those services and you have everything automated, set up, and it would cause you pain to leave the account.

So basically you can’t cancel. Then it’s very profitable to make a so-called membership site or recurring model.

So if you have something that causes pain if you don’t use the software, or if you want to switch or cancel the software, membership site or recurring revenue model, then you should absolutely do this.

And what you should do instead I think is build a cashflow business with online courses, coaching programs, or even do a Shopify store or something that generates you some quick cashflow that you can use and build something like a big branded software that causes huge pain of disconnect if you don’t use the software or you want to cancel.

So that’s the difference.

Instead of charging the monthly fee, I would highly suggest that you maybe launch a coaching program or an online course once a quarter. So you can launch four courses a year.

And like I said, the average money you make from a customer is even higher than your whole retention rate of the money you make with a customer over the three months or so when you’re doing a membership site. And that’s amazing.

So you have four new products created in a whole year instead of just one membership site. You can sell to one customer. So a customer can come and buy four times more product in a year than when you’re selling them a membership site. So what’s more valuable in this scenario?

If you liked this episode and you want to sell your own online course, you want to create it, you want to launch it, then I host a free web workshop for you. You can sign up.

Right now it’s not live because I’m preparing it for you. So depends on when you’re listening to this podcast it may be live. But right now there’s a waiting list. You can sign up.

And then if you, if we go live, I share the link with you, and then you can consume it right away. So that’s it for today. Thank you for listening. Bye-bye.

About the author

I'm the author of the Ecom Black Book. My passion is to help you make money by building a successful online business. In my free time, I share my valuable insights on my podcast and on YouTube.

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