Memberships vs. Online Courses: Which Business Model is Right for You?
There are a ton of ways to make money online — but the root of all of them come down to helping people.
Two common ways entrepreneurs help a wide audience is by packaging up their knowledge and experience into an online training course or a membership program/community.
But which model makes the most sense for your business?
To find out, it’s time for another Side Hustle Showdown!
For the debate, I’ve invited back two Side Hustle Show favorites:
Tune in the week to learn:
- how Jacques and Shane approach creating content for their businesses
- the differences in business models between memberships and courses
- the time commitment involved for both business models
- tips for pricing and increasing conversions
- and more
Content Strategy for Creating a Course
There can be a lot of overlap in terms of how you’d approach creating content for a course and a membership site, but he did highlight some key differences.
The main difference is that when someone signs up for a course, they are typically looking for “some sort of transformation that happens fairly quickly,” Jacques explained.
This was why he put a short timeline in the title of his course; Learn Piano in 21 Days.
When someone joins a membership, you want them to hang around longer. The content needs to be more long-term and value-driven, he added.
Jacques also said that someone is probably looking for a community when they join a membership. Along with a place where they can ask questions, get ongoing tips and tools to help them, and more.
Content Strategy for Creating a Membership
“A membership to us just represents stable, predictable revenue, over time with a lower energy output,” Shane told me.
When he and Jocelyn started their first membership they were still working full-time. They didn’t have the time to build a complete course and launch it as a product.
They also wanted to replace their paychecks, so creating a membership with recurring monthly payments made more sense and fit their situation better.
Inside their memberships, Shane said they are creating content that will provide a “curated path to a longer-term goal” for their members.
He agreed with Jacques that where memberships differ from courses is that he’s able to go much deeper into community and service.
Would a Course or Membership Better Serve Your Audience?
With so much overlap, sometimes it’s not clear if a product or service should be packaged as a course or a membership.
Shane said he sees memberships as being to fit over just about anything, and there are a number of products that just cannot be delivered as a course.
The membership platform Shane and his wife built around school curriculums and teaching could not be packaged as a course.
Shane said his members need ongoing resources and materials, “almost like a library of access underneath the courses that teach them how to do individual things,” Shane explained.
He said this can apply to teaching music, too, just as Jacques does with Learn Piano in 21 Days.
Shane has a member in his community who teaches people how to play guitar. He does this under the membership model and teaches his members how to play new songs each month and has built an active community.
This is something Jacques has started to include in his course as he’s continued to build it out. He started off with a Facebook group, and now has a community section built into his course.
Jacques still prefers to charge a higher-end price upfront for lifetime access as opposed to an ongoing monthly fee, even with the elements of his course offering ongoing support.
How Much Time Does it Take to Run a Membership Site?
Shane explained that memberships scale as more members join and more revenue comes in.
This means you’re able to hire people to help out as the numbers grow and remove yourself more from the day-to-day operations.
He’s at a point where he gets involved in the things he enjoys most, like the live Q and A’s, and has hired help to moderate forums and other time-consuming tasks.
In a typical day, Shane will take care of personal things till about 10 am. He then either records or appears on podcasts from 10-3 pm and is involved in his community.
He’s also been spending more time on the road doing weekend seminars and speaking at conferences.
Shane likes how predictable the membership model is. He said he doesn’t have to invest bursts of energy into launching and relaunching courses.
Instead, he’s able to predict his income several months out, can add new resources over time, and be more consistent with his time investment.
How Much Time Does it Take to Create and Run an Online Course?
Jacques said that there is a bigger time investment upfront when creating a course, and he said this is something he dislikes about the model.
It has its benefits though, and nowadays he has some team members helping out and is able to be more hands-off.
He records videos in batches for scheduled release and attends a weekly Q&A for his students. He’s was actually training someone to take over the Q&As in the near future when we spoke.
Apart from that, Jacques just has to check his emails every day or so to see if there is something important he needs to attend to.
Growing a Membership Audience vs Growing a Course
Comparing which model is easier to get off the ground or grow in numbers, Shane told me “I don’t need near as many leads or people to do the membership model”.
When he first launched ElementaryLibrarian.com, he had 250 on an email list. The first month, he got 25 of those people to pay $50/mo.
This brought in $2,500/mo from the start, and Shane was able to grow that to 300 people a month by the end of the first year organically.
Shane said he was able to grow his membership so quickly by serving his small audience and then seeing growth through word-of-mouth.
He said this is less work than growing a YouTube channel, focusing on SEO, and using paid ads as Jacques has had to do to increase his organic reach.
How to Attract Paying Members
Reaching people organically is the first part of the equation, converting them into paying customers is what brings in revenue.
The main avenues Shane uses to convert people into paying members are:
- Running free trials and promotions
- His podcast
- Email marketing
Giving out free trials and running promotions is the number one method for converting warm leads.
“It’s not hard to get people to pay for the second month when you give them the first month for free,” Shane told me.
How to Attract Paying Students
“We’ve gotta have traffic, then we’ve got to convert those into buyers some kind of way,” Jacques told me.
Jacques puts a lot of time and effort into both increasing his traffic, and also into getting someone to sign up for his course.
He gets a lot of organic visitors through his YouTube channel year-round. Jacques has also put a lot of time into SEO and uses some paid ads to drive more traffic into his funnel.
Jacques said he gets around 100 opt-ins a day into his evergreen funnel, and about 3% of those convert into sales.
That’s about $1,500/day from his evergreen funnel. He’s also doing a relaunch to a quarter of his list every month which pulls in sales from people he’s had sign up to his list up to 9 years ago.
What’s the Lifetime Value of a Membership Site Customer?
Revenue behind a membership model relies on the lifetime value (LTV) of a member. Shane said he has some tactics to help increase the average LTV of his members.
The first is to offer a great product, of course. The more value a member is getting from their membership, the longer they’re going to stick around.
The second thing is to try and upsell to members around the time that you think they’re likely to stop paying. Shane offers annual plans to tie them in longer.
The following year Shane also offers the opportunity to sign up for another year at a discounted rate, or they can go back to paying monthly.
Shane is also continually adding subscriptions to products and services. This stacks some more money onto monthly payments and gives members more reasons to continue their subscription.
How to Price a Membership
“It’s the clientele that will determine the price,” Shane told me.
Membership pricing can range from a few bucks a month to thousands. It’s really going to come down to your niche and what you’re offering.
One interesting thing Shane said is that membership pricing is always going to be higher than you think it is.
He recommends trying the first price that comes to your head, then seeing how high you can raise it over time while keeping your member numbers increasing.
How to Price an Online Course
Jacques currently offers a free trial, which is a peak inside his course. He then offers two tiers of pricing and said that his higher price point is by far the most popular.
For years the main package that Jacques sold his course at was $497. He’s recently been split testing the same product for $797, and he said the higher price is actually outperforming the lower one.
Jacques asked Shane what price he’d recommend if he was to switch up his model to a membership one.
Shane said he always tells people in that situation, “If you divide it by 10 and it’s under $100, I usually say just go for it.”
By implementing some of his tactics to increase the average LTV of a member, Shane said he would expect Jacques to make more money per customer by using a membership model.
Tools and Resources for Running a Membership
Shane runs almost his entire membership business through Kajabi. Kajabi is an all-in-one platform that he uses to host all of his membership stuff within his WordPress site.
For project management, Shane is using Monday.com. He said this tool has been a huge asset, and he described it as, “like a spreadsheet meets Asana, meets Zapier.”
Tools and Resources for Hosting/Selling a Course
Jacques said he went on a mission about a year ago to discover all the best tech options for his course and his students and is currently using:
- LearnDash – This is a WordPress learning management system Jacques uses to host his course.
- BuddyBoss – This is a highly customizable WordPress app that Jacques uses to build the community features in his course.
- ActiveCampaign – This is the software Jacques uses to handle his email list.
- DeadlineFunnel – Jacques uses DeadlineFunnel to increase conversions by setting personalized deadlines for customers to buy his course at a specific price.
- Asana – This is a popular project management tool that helps teams organize their work.
- Bonjoro – This is an app that enables you to easily record personal videos. Jacques has sent more than 5,000 personal videos welcoming people when they sign up for his course.
Memberships vs. Courses Closing Arguments
Jacques’ closing argument was, “I don’t think memberships are a fit for everybody, and I don’t think courses are a fit for everybody.”
He added that both are a lot of responsibility, but he thinks courses are a little simpler and said it takes a lot of drive to build and maintain a membership.
Shane agreed, in part, saying it comes down to “What do you want to do? Also, what do you want to build?”
He said that both models offer the flexibility to either be center stage and the face of the business or take a back seat and nobody has to know you’re involved.
So, for Shane, it really comes down to what you want your life to look like. Once you know that, you can choose the right business model for your business and make it fit.
Links and Resources from this Episode
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