A membership site is a web site that allows registered members to access content or services in a password protected environment. Membership sites can be either free or paid for. Most forums, for example, are an example of a free membership site. Paid membership sites, also known as Paysites, require the member to pay before the member can access the content. Pay per month membership sites are easier to start up and maintain than most people realize. Because paysites can be set to run on autopilot they are one of the best ways to build long term recurring revenue. Paysites are one of the most profitable endeavors a private individual can begin on the internet. This is because paysites operate on the recurring revenue model. Many of the most profitable companies in the world use the recurring revenue model. Companies like AT&T, AOL, DirecTV make their profits by billing a loyal client base every month.

Why Start a Paysite

People start paysites for many different reasons. Many of the most successful sites were started as free sites by people that were passionate about a topic or developed a free site that was in the same niche as their hobby. Later, they realized that they could put all their content behind a “wall” and charge people for access.

Other reasons people start paysites:

  • Low Entry Costs – While it used to cost a small fortune to start a paid membership site, now it can be done for under $20 and that includes the cost of the domain and hosting.
  • Almost Effortlessness Income – Once a paysite is started, it takes very little effort to operate the site. It’s the ultimate “Do It Once – Get Paid For a Long Time” business model.
  • Geographical Reasons – A paysite can be ran from anywhere in the world. A person living in India can run a site on Fly-fishing in Montana. Many paysite owners spend a lot of their time taking vacations and traveling the world. Occasionally, they will open up their laptop, check on their sites… then go on with their vacation.
  • Very Little Technical Expertise Required – Many people get started in paysites because they have problems operating other types of websites that require technical expertise. If you can install a blog and FTP some basic files, then you can create a paysite with the information in this book. Even if you can’t, you can pay someone $50 to do it for you to get your site up and running.

Other advantages of membership sites:

  • Higher Conversion Rates: Generally a sales letter for a $19.95 membership site will convert three times higher than a $97 eBook. From my experience, the average conversion rate, with targeted traffic, for a $97 eBook is 1%, and the average conversion rate for a $19.95 niche membership site is 3%.
  • Almost Zero Refunds: Unlike an eBook or other downloadable product, membership sites rarely have to make refunds. Members will more often than not simply cancel their recurring membership instead of asking for a refund.
  • Stable predictable income: If you have a base of 500 members at $19.95 per month, then you can pretty much count on a recurring income of almost $10,000 the following month even if you don’t make another sale all month. Compare that to selling other products, where sales and income can dramatically fluctuate from month to month.
  • Members are Pre-Qualified Buyers: Every person that enters your membership site is also a potential customer for other related products. And best of all, these are people that have a credit card (since they joined the site with one) and have shown that they are willing to use it on the internet. Many membership site owners actually make more money in up sells and backend products than they do on subscriptions. While the internet is full of a lot of free information, people are willing to pay to have information researched, refined, and organized.

How Long Do Customers Keep Their Membership?

Three months is a number that is thrown around a lot in the forums as the average length of time a customer keeps a membership, however this number comes from the average length of memberships on adult sites. These numbers are skewed since the people that join adult sites are very savvy and bounce around from site to site taking advantage of free trial offers. In mainstream membership sites, the average is closer to 6 months. However, it is very hard to calculate this number since many members will stay on for years and it’s impossible to calculate when their membership will end. A better and more precise way to calculate future earnings is by calculating the attrition rate of a site’s membership base. A membership site that updates often should have an attrition rate of less than 10%, meaning that every month 10% of its members will end their membership.