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The key is to figure out your customer lifetime value (CLV), your acquisition cost (AC) for affiliate driven traffic and your operating cost for each member.
The CLV is the average membership cost multiplied by the amount of re-bills plus each members contribution in terms of up-sells. I have found that you need ten months to a year of data to really get an accurate CLV.
The acquisition cost is the rev-share or PPS plus each members portion of the cost of your affiliate marketing to calculate an affiliate AC or your internal marketing to calculate an internal AC.
The operating cost is all your other costs divided by the amount of members you currently have.
Your eventual profit on each join is then your CLV -AC - OC = Profit
Your PPS can be up to 100% of your CLV-OC, however that would leave you no profit.
Here are my actually numbers for Yanks.com for one particular traffic source.
CLV = $122.93
Operating Cost Per Member = $5.66 per month (times 4.8 months)
Acquisition Cost Per Member from an affiliate = $61.47
Acquisition Cost Per Member Internal = 10.96
So on this traffic source I could potentially do a $95.76 PPS. However I have other sources where I couldn't do a $30 PPS without getting into trouble.
Of course you can get into a death spiral if your PPS is too high to re-coop fast enough. For instance if I did a $50 PPS on this traffic source and someone was able to send 10k joins I couldn't cover it out of the gate.
Hope that helps.
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Todd Spaits - Co-founder - YanksCash
Premium ad-packages available - Skype for details - tmspaits
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