I was constantly told that if I got the same number in initial signups every month and retained a consistent percentage of those signups every month, there was no limit on what I could make!
It turns out that it isn't true unless you retain 100% of your initial signups, which doesn't happen in the real world. Even if you retain 50% of your initial signups (for every 2 members that have signed up, one cancels and the other decides to stay a member that month), your total sales will start to level off at about 5 or 6 months. At 33% forget it, your sales start leveling off at about 3 months.
I whipped up a chart in Excel to show what I discovered. It illustrates a website that gets 300 initial signups a month @ $14.95 a signup. The purple line is a retention of 33%, the yellow line 50% and the light blue is 67%.
There's a hell of a difference in monthly income between retaining 33% and 67% of your members, but don't be fooled - the sky is never the limit with recurring billing.
If you use iBill the whole formula gets shot to hell and you start from scratch every 2 months. That reminds me... I need to finish shopping for a new transaction processor.
