Membership Website Software, Billing & Hosting

Posted in: Membership Websites April, last year

The other day I mentioned what to think about when starting up a membership website and how it isn’t as easy as one may think at first. Continuing on from that first article I’m going to explore the software available to run membership websites and the few options available for receiving recurring payments, along with the importance of a good hosting company.

Software available for running a membership website

From the research I’ve done the biggest player with the most trust and credibility with a large user base is Amember. It’s currently on offer for $139.95 and to me it looks like the VBulletin of the membership software world - and at that price there’s little reason to chose a sub-standard, cheaper alternative. It’s just not worth the risk.

Let’s look at some of the key features of Amember:

It really is the dogs bollocks (that means frickin’ awesome). It supports over 60+ payment processors including the popular ones like PayPal, 2Checkout and CCBill. You can view the full list here. I’m going to compare these payments processors in a minute.

Amember also offers a free 30 day trial which I tested out. It’s simple to install even for a novice who hates anything technical like myself, and if it was in the least bit difficult to install I wouldn’t even be writing about it and I would hate it like an e-mail form script I tried to install last week and give up on. Yes, Amember is easier to install than a simple e-mail form script. Credit where credit is due…

What you basically do with Amember is create web pages, example www.domain.com/members/index.html - which then becomes a product that you insert in to the Amember administration area. Then you set-up the membership levels so members can access it. You can also set-up other products that only certain members can access, etc. It’s all very easy.

Setting up recurring billing and which payment processor to use

Here we go with my opinions again, but hey, it’s my blog - whaddya expect. :)

There are only 3 payment process I personally would consider using:

Now, they all offer recurring billing but we really need to take a brief look at each one to see which are suitable, the advantages and any disadvantages.

PayPal

The biggest advantage to using PayPal is that you’re paid instantly - funds are direct in to your account which you can use right away or withdraw to your bank account.

It’s also difficult for subscribers to cancel as you have to dig around in PayPal History, find the subscription and then cancel it from within PayPal. You could say this is a disadvantage, but if people want to leave and are having trouble - why not let them figure it out, and if they can’t, throw an extra month of subscription your way automatically.

PayPal fee’s are low when compared to other payment processors and they only skim off 1.4 to 3.4% off each transaction received.

The disadvantage to using PayPal is the many horror stories lurking around the Internet. Personally I have used PayPal for years and never experienced any problem, but then so have others and that didn’t stop their accounts going under suspicion. Accounts can be suspended for months and funds frozen if your account is under suspicion for any number of reasons.

Using PayPal for day to day sending and receiving payments is fine and if your membership site is only going to run for a few months, but I believe if you’re going to run a proper business that needs to stand the test of time, PayPal isn’t an option here.

2Checkout

2Checkout take 5.5% + $0.45 off each transaction and costs $49 to set-up - but it’s the credibility and safe-guard which makes me sway toward using 2Checkout. There are no horror stories and are well established. They pay every 2 weeks or every week and those in America, Canada, Australia and the United Kingdom can have payments sent direct to our bank accounts at no cost. Other countries are supported for wire transfers.

I can’t actually think of a disadvantage - they may take a fair amount off each transaction but that’s a small price to pay.

CCBill

The choice for adult webmasters and those wanting to peddle smut with their membership websites. PayPal and 2Checkout don’t allow adult sites, and CCBill has been the favorite in the adult industry for subscription billing for years. CCBill takes 14.5% off each transaction, which comes down if you’re doing a lot of volume - but the lowest percentage is still 11.5% for up to 50,000 transactions per month.

In this case, the advantage (peddling smut) is also the disadvantage on payment. But this is one of few companies which has a solid reputation and the one I would chose if I were to enter the ‘adult industry’.

Choosing a good host with back-up facilities

If you have a few thousand of even a few hundred paying members, the last thing you want is for them all to lose their usernames/passwords and be unable to access the site, as they will head off straight to the payment processor and cancel their subscription.

Website’s, servers.. they all crash. They all fuck-up sooner or later, therfore it’s crucial to chose a host that offers daily back-up facilities. You can back-up your entire website every day, or hour if you wish. Definately don’t skimp on hosting. You will also require hosting that supports the full requirements of Amember. They recommend 3 hosting companies but Hostgater or another solid host will be just fine.

I mentioned in the previous entry on membership sites that I would talk about making sales on the back-end, but I’ll save that for another article - this one is long enough with plenty to chew on. If you didn’t catch the first entry, read it here.

Have your say (1 comment) 5:08 pm

Membership Websites; What’s The Catch?

Posted in: Marketing and Promotion, Membership Websites April, last year

It’s the dream - a steady and reliable income from the Internet that you can count on, month after month. Forget flaky search engine rankings and ever-improving algorithms designed by uber-nerds to induce stress, anxiety and frustration in online marketers.

On the face of it membership websites seem to offer the holy grail that is residual income. Unfortunately there’s a catch. Oh, there’s always a catch.. but you knew that. We all bloody know that. Membership websites just aren’t that simple.

I’m considering starting up a couple of membership websites later in the year and I’ve been doing a lot of research on the subject a long with a lot of head scratching. It’s far more complicated than it seems on the surface.

Members will not stay with you forever

The first thought I had when thinking of membership sites was ‘If I have 1,000 members paying $10/month that’s $10,000 in revenue each month. Fantastic!’.. this however, while exciting to imagine, is not the reality when you dig in to it all.

The fact is, members that sign up will not last forever. At some point they will unsubscribe or simply not wish to use the service any longer no matter how great your content or website is. This goes for any membership site meaning the income isn’t that steady after all, and there will be an average life-time value of each paying subscriber.

So much for the dream of residual income. What you’re basically doing by running a membership site is instead of selling a product one-off for $27, you’re hoping to extract a larger amount off each member over a longer period of time. Let’s say $67. This means you can either spend more money to acquire members or a similar amount and earn more off them than you would of selling them a single one-off product.

That’s the primary catch over with; don’t be fooled in to thinking you can relax once you have a level of paying members. They will drop off at a certain rate each and every month, meaning your income dwindles unless you’re actively promoting and advertising for new members. This is a complicated process to keep a track of as you would need to know:

Finding out the above figures will take months and hundreds of members, meaning cost, time and effort before you even know if the membership site you’re running is even profitable! Of course, if you’re acquiring members via free methods of advertising and creating the content for your membership site yourself, this isn’t a problem and it’s all gravy. That probably isn’t going to be the case though, so let’s look at the costs in creating content and break even examples.

What to create a membership on

Personally I believe if you’re asking people to subscribe at a monthly fee, you must look at targeting groups who you definitely know can afford to pay monthly. While a teenager who wants to make money may be able to afford The Rich Jerk e-book from the money he received for his birthday for a special one-off price of $9, they certainly couldn’t pay $9 the month after, and again after that.

I would look at markets such as investment, stocks, gambling, leisure, sports which are expensive to play etc and markets that generally attract the wealthy or people will money to spare but also includes an active interest and not a flash in the pan hobby they may not care about in a few weeks - common sense tells us this will reduce drop-off rates and increase the length members are subscribed to your membership website.

The cost of content creation, membership fee’s and your break even point

Alright, you’ve chosen your market and decided to offer personal advice as you’re a successful stock trader with a record to back it up. People want your tips and are willing to pay you $19 per month for them.

You can either create the content yourself and offer articles, videos, presentations and audio, or out-source the work to a knowledge writer or someone in the industry. Let’s say you want to focus more on advertising your website and would prefer someone else to create the content - costing $650/month for 5 original articles, 2 stock tips and a video presentation that includes time-frames of stocks and some general advice.

Charging members $19/month you would require 34 paid and current members just to break even - and that’s not the actual reality, as the cost of acquiring those members must be factored in before you’re breaking even. This can be worked out after your first handful of members, here’s an example:

Let’s say you spent $300 on an Adwords campaign in the first month targeting stock and investment keywords which got you 1,200 clicks costing $0.25 each, and there was a click to membership ratio of 3% - 36 paid members. That’s an acquisition cost of $12.50 per paid member, meaning the first month the statistics where:

Did I mention there was a catch?

Ok - let’s say in month two you increased your spending on Adwords and paid 0.25 again but for 5,000 clicks. That’s $1,250 to acquire another 150 paying members.

Assuming no members from month one unsubscribed you now have a total of 186 members paying $19/month.

Month 2 statistics:

Now we’re getting somewhere and breaking even - wohoo. :)

Ok, that’s all for now - I made my point and I’m tired as hell. I will be posting a part 2 for this as it really, really demands one. In part 2 I will look at making more revenue off the back-end, membership site software, hosting, payment processors and more…

Have your say (2 comments) 3:11 am