This article will help online course teachers understand how selling services with Monthly Recurring Revenue (MRR), such as communities or coaching, can stabilize income and increase overall earnings.
We’ll start by reviewing the limitations of one-time sales, explore subscription business options for course creators, and then dive into how launching a community or coaching service can generate steady recurring revenue.
Video Tutorial
Course Revenues Can Fluctuate Throughout The Year
Course sales can fluctuate daily, monthly, or even annually due to factors like vacations, holidays, economic conditions, and current events.
Even with well-planned seasonal promotions, results can vary. You might choose to keep your course available year-round (“evergreen”) or limit access to specific launch periods, both of which impact your revenue, financial planning, and workload.
While strategies like social media, ads, and email marketing can help drive sales, maintaining consistent income from course sales alone can be challenging.
Downsides Of Course Businesses With Variable Earnings
Not having a predictable income can make managing your business difficult and create significant personal stress.
Here are some key challenges of inconsistent monthly earnings:
- Will you be able to pay your bills?
- Will you have to let go of help?
- Will you have to turn off services on bad months?
- Will you have to freelance more or get a full time job?
- Will you have to dip into your savings?
Many of these challenges can be resolved if some sort of guaranteed minimum income each month.
Subscription Businesses Earn Money Every Month
Businesses with subscription customers generate consistent revenue each month, with only small variations.
Successful subscription companies serve as great role models for creative teachers looking to stabilize their income. By adopting a similar model, course creators can build a steady financial foundation while growing their business.
For example:
- Netflix – Movies and TV shows delivered to your smart TV, laptop, gaming console, tablet, or phone.
- Zoom – High-end video/audio communications features for power users
- Adobe – Access to the latest software and files online
- ConvertKit – E-mail tools for companies to send recurring emails to interested customers
- Landscaper – Clients pay every month for the landscaper to keep taking care of the lawn
A key principle in the subscription model is maintaining a steady flow of new customers each month, as some existing ones will inevitably cancel.
To reduce cancellations, regularly remind subscribers of the value and resources they receive. Whenever possible, set subscriptions to auto-renew, but always ensure transparency by sending reminder emails before renewal and after charging their account.
What Is Monthly Recurring Revenue (MRR)
Monthly Recurring Revenue is the total subscription revenue that you can expect to get on a monthly basis.
It is your predictable revenue that you expect to earn each and every month.
In addition, each month, you may have new subscribers that can increase your total MRR.
Subsequently, you may lose a number of subscribers each month, which would reduce your total MRR. The total revenue lost due to cancels is called the Churn MRR.
Example 1: Offering A Community Membership Site
Communities provide a great way to help your students after they have taken your course.
It provides them with ongoing support for months and years. They can use the collaboration workspace to continue learning from their peers. They can also apply prior and new knowledge to accomplish personal goals.
Premium communities are usually better than free Facebook Groups because they are moderated and have no ads.
Memberships are also a great way to follow up or upsell items after customers complete a course.
Teachers can offer a preview or a significant discount for students that want to join the community after taking a course.
Access to communities is typically sold in monthly or annual subscriptions.
Example 2: Offering A Coaching Program
Coaching allows course teachers to earn additional money by providing personalized advice to students.
This advice will help students apply your course in their own life and journey.
While classes provide generic training, coaching allows students to get help on specific problems that they are encountering.
As a creative teacher and entrepreneur, you can choose to provide one on one coaching or small group coaching.
Coaching services can be sold using a specific number of sessions or in perpetuity as an ongoing recurring subscription until students don’t your help anymore.
Why Recurring Revenue Is Beneficial to Creative Teachers?
The main reason online course teachers should leverage recurring revenue services is to earn a steady base income in their business, just like if you were employed but with other entrepreneurial / freelancer benefits and tradeoffs.
Recurring revenue allows you to forecast and plan for the future. You will know that you can safely pay for extra services (Like the Premier version of Thinkific) and hire a team to help your company (Like a VA to handle sales questions while you’re on vacation).
Finally, if you ever decide to sell your school, investors will love that you have one-to-many digital products like courses, e-books, and communities that generate money without depending exclusively on you. In this case, investors would typically value and buy your company for a multiple say 5x your forecasted annual revenues.
How To Compute Monthly Recurring Revenue?
MRR is computed from the ( Average Revenue in a Month ) X ( Number of Subscribers in a Month )
The Average Revenue Per User (APRU) is the average monthly revenue you collect. So if 3 customers pay you $5 a month and 2 customers pay you $10 a month, then this example ARPU would be ($15+$20)/5 or $35/5 which would be $7.
The Number of Users for a month is simply the number of subscribers that you have in a month. This is often just called “Subs”.
MRR = ARPU X Subs
I like tracking course numbers and business expenses by month. However, it may be enlightening to also compute ARR (Annual Recurring Revenue), which can help you gauge your income and goals for future years.
Some Customers May Not Like Subscription Plans
Some customers don’t like to be locked into a subscription.
This could be because
- They don’t want a company charging them every month
- They don’t want to have to remember to cancel the subscription
- They like to know the exact total amount they will spend
- They want to avoid credit card debt
As an example, a customer may prefer to pay $120 for a year’s worth of access ahead of time, instead of $12 (or even more) for monthly access with no end date.
Driving Growth Through Follow-on Sales And MRR
Adding additional offerings like a book, community, or coaching will help increase the total revenues you earn from each course student.
During your course sales checkout process, you can attempt an order bump by seeing if your customers want to buy an additional small item like a template pack.
After you have made a good impression at the end of your course, you can suggest a next step product or service for your students. Even if you provide a deep discount, this can still help you earn more by converting 10 to 20% of your students.
Ideal, you will want the additional offering to not be a one-time sale, but a recurring source of revenue. This way you can significantly increase your total course business revenues from each student.
Lets Summarize
Teachers with course businesses can have good months or terrible months. And terrible months really hurt because you have to break all your systems, goals, and plans to survive. And like the game of Candyland, you gotta climb back up again – and that takes a while.
Subscription businesses earn a base amount of money every single month, so you know what you can spend. And all the non-recurring revenue you earn from courses is just gravy!
Two really good options for creative teachers or entrepreneurs are to offer a community support group or a coaching service. Oh, and you may want to offer a one-time payment option because some people just don’t like the feeling of auto-paying “forever”.
Most importantly, if at the end of your courses you piggyback and offer a subscription service, you will not only make more money per student, but you can have a bunch of students paying you for months or years into the future.
So now, you’re a lot smarter. Thanks for hanging out!
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The following articles and resources can help you with thinking about recurring revenue or growing your course business.
