Every industry has an example of a profitable subscription website, but how many subscriptions do you need to make money?
After all, according to a report by Gartner, by 2023, 75% of B2C (business-to-consumer) businesses will offer at least one type of subscription-based service or product.
With most companies considering adopting a subscription business model, how many subscriptions do you need to make money?
How Many Subscriptions Do You Need To Make Money?
The number of subscriptions needed to make money depends on factors like subscription price, operating expenses, and profit goals, making the answer unique to each business. If you have monthly costs of $1,000 to maintain the site and staff the business, you would need 120 subscribers on a $100 per year plan to break even. You’d need only 50 on a $240 plan, and 10 on a $1,200 per year plan.
Regarding your business’s community, it also requires several elements to achieve an income from subscribers. These elements include:
What’s The Subscription Price?
As illustrated above, your subscription price plays a significant role in determining how many subscribers you need to make a profit.
You’ll need fewer subscribers to generate revenue if your subscription fee is higher. But with a high asking price, you might find attracting customers more challenging. It’s essential to strike a good balance.
What Are Your Operating Expenses?
Running an online community will require less capital, but there are still expenses. These expenses include:
- The cost of providing the service
- Marketing of the community
- Continuous customer support,
- And more.
Reviewing these expenses against your subscription revenue will determine your net profit.
Churn Rate
When running a subscription-based business, the churn rate refers to the rate at which subscribers cancel their subscriptions.
You will want to keep the churn rate low as someone running a subscription-based business. Otherwise, you’ll need to acquire new subscribers continuously, a costly process, to replace those who leave.
Customer Lifetime Value (CLV)
It’s essential to consider the CLV of your customers.
A subscriber who remains with your service for an extended period is more valuable than newer ones. Loyal customers are brand ambassadors who educate potential new clients about your services.
Also, increasing customer retention will reduce the need to find new subscribers, which is expensive.
Break-Even Point
It’s essential to calculate what your break-even point is. Your break-even point will indicate the number of subscribers it takes to cover your costs.
Once you’ve expanded beyond this point, you start making a profit.
Market Size
With every industry-specific community business, you need to consider the size of your target market. If your potential customer base is limited to a handful of specialists, you may need to adjust your subscription fee or number of subscribers.
Since we’re talking about market size regarding how many subscriptions you need to make money, what do 500 subscribers get you?
What Do 500 Subscribers Get You?
The value of 500 subscribers can vary widely depending on the business sector, subscription pricing, and community operating expenses, but it represents a potential recurring revenue source.
When answering the question, “How many subscriptions do you need to make money?” 500 subscribers will represent a solid foundation for your community to grow and earn a regular income.
Read next: What Is A Digital Subscription Business?
