Business Part 2: Choosing A Business Model That Supports The Lifestyle You Want
Remember that famous Simpsons episode where Ralph gives Lisa the Valentine’s Day card that says “I Choo Choo Chooose You” on it?
Oh Ralph, you poor little saint.
Well, in this post we’re going to discuss why we’re Choo Choo Choosing a business model for Wandering Aimfully that isn’t easy, but makes the most sense for us.
Reverse engineer your business model based on the life you want
Most businesses probably choose a business model based on what they think suits their customer or their product best and what model is uniquely suited to make the most money. That's cool and all, but it's just not how we roll.
Instead, we prefer to identify what kind of lifestyle we want to live, and reverse engineer the ideal business model that is compatible with that lifestyle.
For example... Do you love client work? Great! But does the fluctuation of income limit your freedom and flexibility to work how and when you want to work? That could become unsustainable if freedom and flexibility are important to you.
What about creating an info product and going with a "launch" model with an open and closed window of purchasing? While the urgency of a launch could be great for bigger spikes of income, are you okay with sacrificing certain chunks of time on your calendar knowing you’re going to get really busy during launch periods? And are you okay with the uncertainty that comes with putting a lot of your financial eggs in that basket?
These aren’t just hypothetical questions to you, you beautiful reader (by the way, your outfit looks AH-MAZING today. #ootd, right?... See Caroline, I'm up on all the fashion-y things!). These are actually the business models we’ve explored in the past, along with a handful of others.
We've discovered that there are advantages and disadvantages to every kind of business model, and it's worth serious consideration for how (and when) you plan to make your money as an online business owner.
Why we decided to move away from a "launch" business model
Most recently we collaborated on and sold a product called BuyOurFuture (BOF), which was a collection of all our products and services, sold at a higher price point than we’d ever sold anything before in the past (BOF was sold for $2,000, with the added bonus that our customers would never have to pay us again for anything we create in the future).
We sold BOF during a two-week launch window, which we ran in both the spring and fall.
This was a great experiment for us (we wandered aimfully, if you will) because it confirmed a few of our key assumptions:
- We proved that we could feel comfortable delivering value on a higher priced item.
- We proved that we’d built enough trust with our audiences to have over 450+ people purchase this higher priced item.
- We proved that keeping each launch of BOF small would allow us to create a hand-crafted and welcoming experience to new members.
- We proved that in keeping each launch small, we’d need to continue launching at least twice throughout each year.
The benefit of an open and closed launch like this was that we were able to get two rather large bumps in cash (with a bit of predictable monthly income due to monthly payment plans.)
The downside, however, was that we knew we had to keep doing these twice yearly launches if we wanted to keep this income stream coming. This no longer appealed to us for a few reasons.
While BuyOurFuture has done extremely well for us and we know our BOF members are happy campers (hello friends!), we didn’t love the stress and pressure that the launch model brought with it. There are so many things out of our control, and if the launch window doesn’t work out just right, it can wreak havoc on our financial situation. Plus, from the perspective of our customers, this model also requires people to purchase based on our time of launching, not what works best for their schedule or the timing of where they are in their business journey.
Keeping this in mind, we set out to use Wandering Aimfully as a way to experiment with a new business model—one that might alleviate some of the unpredictability and weight of limited launch windows.
Identify what's important to you in a business model
Using what we learned from the BOF experience, plus our extensive experience with different business models over the years, we got laser-focused on three things that were important to us in deciding on the business model of our new project: sustainability, predictability, and affordability.
balancing the value equation for sustainability
When we first discussed Wandering Aimfully over a year ago, we knew even then that we wanted to get out of the launch business model and move on from selling something where people stopped paying at a certain point. (BuyOurFuture is awesome for our 450+ customers, but we knew we planned to deliver value for years to come, so the BuyOurFuture model where customers no longer bring future revenue would eventually lead to us penalizing ourselves.) We needed a way to balance the value equation a bit more, while still providing a heck of a good deal on our products and services.
The big question: How could we deliver ongoing value but also receive ongoing value (in the form of good ole US dollars)?
Inspired by the great feedback from our lower priced BuyOurFuture payment plans, we decided to reimagine the experience as a monthly membership subscription.
Even without the "future" element, BuyOurFuture as a product —with access to our courses, software products, as well the incredibly active and motivating community—is still unbelievably valuable.
By paying for a monthly subscription to our products, services, community, and exclusive content, our customers are able to take advantage of that great value but in a way that's much more sustainable to the life of our business too.
So, that's what we decided...
The business model for Wandering Aimfully will be a $100 monthly subscription. As long as you continue to pay for your monthly membership, you will continue to get access to the plethora of goodies: all of our courses, software products, the awesome members of the community, and direct access to us.
the predictability of monthly recurring revenue
The decision to move to a monthly subscription model comes with a whole slew of challenges. But… monthly recurring revenue (or MRR if you’re fancy) gives us that predictability we’re looking for. It also solves that value equation problem that we mentioned.
Now, let’s look at some numbers (because numbers are fun):
- 20 paying members at $100 per month = $2,000 MRR
- 50 paying members at $100 per month = $5,000 MRR
- 100 paying members at $100 per month = $10,000 MRR
You get the idea. Knowing that you have $5,000 coming in every month gives you peace of mind. There are no guarantees you’ll keep all your paying customers every month (more on that below), but we believe we’ll be providing enough value at this price point based on what we’ve charged for BuyOurFuture and what we’ve heard from existing customers.
Selling this membership on an ongoing monthly basis also gives us the ability to test different marketing strategies to see the financial impact. When you only sell something twice a year (and that thing supports 90% of your income) it feels far riskier to try a new strategy or tactic.
keeping our product affordable
Lastly, as it relates to affordability, we’ve kept our ears to ground over the years and even tested a few $100-ish monthly products. This seems to be a solid sweet spot for what our current audience is willing to pay. If you think about BuyOurFuture at $2,000, under this new model that basically equates to 20 months of access. We recently surveyed our BOF members and over half of them said they recouped their $2,000 investment in the first year. That will definitely be something we focus on with the Wandering Aimfully monthly subscription: making sure a customer recoups their monthly investment and continues to get value.
Quick aside: One of our BOF members Nadia hunkered down and built and sold her first online course last year. Following our processes and systems within our courses, she made over $5,000 with her first course launch to a very small list of interested people. At $100 per month gaining access to the same products and community, her Wandering Aimfully subscription would have paid for itself for at least 4 years!
One of our personal goals with the monthly Wandering Aimfully subscription is for our customers to see the $100 charge come through each month and to think, “Yep, glad I’m still paying for that!” I know I feel that way about a few subscriptions I have, so I’d like to see that happen for our customers.
why we opted for simple, transparent Pricing
Before we go any further, I want to talk about why we’re picking $100 and not $99, $97, $95, etc.
To be blunt: We don’t want to play psychological pricing games with people.
While we know studies have proven that 5s, 7s, and 9s convert more sales, we don’t want to contribute to playing mind games on people and praying on certain psychological tactics. We’ve been using whole numbers on our products for quite awhile and we stand by selling using pricing tactics that are free from playing tricks on certain parts of our brains.
Preparing for the ongoing work of monthly subscription model
Now, for the downside of the monthly subscription model. (You didn't think we magically found the perfect business model, did you?!) For all the unique benefits of a monthly model, there are plenty of trade-offs that we know we have to be willing to take on too.
I co-own a few software products and know the effort it takes to keep a customer paying on a monthly basis. Truthfully, I think delivering value is secondary in difficulty to dealing with failed payment issues. I’d venture a guess that at LEAST 25% of customers have some sort of payment issue (failed charge, lost card, etc). Luckily there are systems and services in place that help recover failed charges, but it’s an inevitability we’re going to face and have to fight through.
A solution we’re already thinking about for inevitable failed payments (beyond a “dunning” app) is to pay someone hourly who loves doing customer support, someone who would be interested in keeping up with our customers and their payments. This probably won’t happen right away, but it’s an investment we want to make, because robo-payment-recovery isn’t very sexy to us (nor does it work for creating a positive human interaction and therefore a positive customer experience).
We should also mention we’re 100% okay with the ongoing work. We aren’t trying to create a set-it-and-forget-it business, because truthfully, we don’t want to forget it. We want to work alongside our customers. We want to watch them succeed. We’re interested in hearing their daily struggles and we want to share our own struggles with them.
There is a TON of stuff we know we’ll be creating for years to come. We aren’t short on ideas, which is partially why a monthly membership model makes sense for Wandering Aimfully. The membership is only going to get more valuable over time.
**Unpopular Business Opinion Alert:**
We want to get to our “enough” number and not worry about continued growth
This is the complete opposite of the majority of our society. Grow, grow, grow! Have a hockey-stick-shaped revenue chart! MOOAAARR MONEY!
Listen, we don’t hate money. We very much enjoy money because it affords us the ability to do and support things we love. However, we refuse to buy into the continual growth mindset.
When it comes to how much money we want to make with Wandering Aimfully, we have a monthly “enough” number in mind. My guess is when we eventually share that number with you, it might surprise the heck out of you (because of how low it is… I didn’t want to leave that thought hanging or unclear - hah!).
With a monthly membership business model, we can control the growth pace of our community and in turn our monthly revenue. We know we’ll deal with some people cancelling their membership, but we've also decided to limit how many people can sign up each month.
Limiting our own growth will give us the ability to work directly with our members and give them an amazing experience.
Limiting our growth also allows us to pace ourselves and check in often to make sure how we're working is still the life we want to be creating for ourselves.
Once we finish building Wandering Aimfully, we’ll be opening a certain amount of monthly membership spots each month for a limited amount of time. When we hit our “enough” amount of paying members, we won’t be accepting new customers.
Kind of crazy, right? Goes against pretty much all other entrepreneurs and business owners you hear about? Why would anyone say NO to more money? Well, that’s us in a nutshell. At every turn, we’re more concerned about building the lives we want and having a business that supports us. We don't want to build a business that grows beyond our control and that dictates our lifestyle.
Oh, and if you’re already interested in becoming a Wandering Aimfully monthly member, without even knowing too much about what it entails (yet!), we’ll be opening a small number of pre-order memberships verrrrrry soon. Be sure to jump on our email list below as those folks will be the ones who hear about the pre-order spots!