Why We’re Not Playing The Monthly Recurring Revenue (MRR) Game Any Longer
Let’s back up for just a moment and talk about where our monthly recurring revenue (MRR) journey began…
In October of 2017, we had a 3+ hour meeting where we brainstormed what would eventually become Wandering Aimfully. The two biggest parts of that brainstorming session were 1) combining our previous businesses together into one entity with an ethos you could get behind and 2) moving to a monthly membership (MRR) model and away from selling individual products.
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We whiteboard’ed the heck out of that whiteboard!
You may already know how #1 (ethos) turned out since you’re reading this! If you don’t, feel free to check out our About page.
For #2 (membership model), we wanted to move from selling individual digital products to a membership model. We’d experimented with this in 2015-2016 as BuyMyFuture and in 2016-2018 with BuyOurFuture. With Wandering Aimfully, we wanted to try to capture more consistent and predictable monthly income (the coveted, MRR).
We’ve learned A TON these past 12 months building, selling, and running a monthly membership community but something just never felt quite right.
Selling our Wandering Aimfully Membership as an ongoing monthly membership product was a great experiment. And, all things considered, we DID grow our MRR from $0 per month in May 2018 to ~$9,000 per month in May 2019 (not bad, at all).
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However, a monthly membership model, one where customers have to think about committing to pay each month, in perpetuity, is a BIG ask. And as we saw over the course of 12 months, a high percentage of our monthly members didn’t want to be paying us monthly forever.
Over a 12-month period, we sold 146 Wandering Aimfully Monthly Memberships but ended up losing 45 of those paying members. That’s a 31% membership churn, which isn’t good.
If you want to dive deep into the last 12 months of our business and our MRR adventures, feel free to read our extremely detailed “Journey to 330” post.
Where MRR is Concerned, 4% “Churn” is WAY Better Than 31% Churn
It’s not an apples-to-apples comparison, but when we sold our BuyMyFuture and BuyOurFuture products, we only lost 4% of our customers (using a lifetime pricing model). That 27% difference was enough to get us to take a hard look at continuing to use a monthly membership model or to switch Wandering Aimfully over to a lifetime pricing model.
If we look at the average value of a lifetime pricing customer (BuyMyFuture or BuyOurFuture) it’s $1,500 per person.
We had 425 people purchase BuyMyFuture/BuyOurFuture from September 2015 to March 2018
At an average value of $1,500, that’s $637,000 in revenue
Across that 30-month span, the average MRR was $21,233
At 4% “churn” we missed out on approximately $25,500 ($850 per month)
Our total revenue minus churn using lifetime pricing: $611,500
Our total average revenue per 12 month period: $244,600
If we look at the average value of a monthly membership customer (Wandering Aimfully the past 12 months), the maximum total value per member could only have been as high as $1,000.
We had 146 people purchase memberships from May 2018 to May 2019
We didn’t have 146 customers the entire 12 months, but we do know our total 12-month revenue was $71,000
Across the past 12 months, the average MRR was $5,916
At 31% churn we missed out on $4,500 per month
Even IF all customers stayed on for 12 months (which they didn’t) our maximum yearly revenue would’ve been $146,000
The final comparison for the financial side of monthly memberships versus our lifetime membership model:
Average MRR: $5,916 vs $20,383
Average 12-Month Revenue (ARR): $71,000 vs $244,600
Average New Customers Per Month: 12 vs 14
When we compared our monthly vs lifetime membership, the numbers were pretty damn clear.
The huge caveat here is that we don’t have 30 months of monthly membership data to compare with. That being said, we don’t need the full 30 months to make the right decision for us (we know what data we have NOW and aren’t interested in waiting around any longer to make a change).
The MRR and ARR numbers speak for themselves but when I broke down the customers acquired per month to reach each set of numbers it’s pretty incredible that it’s only a difference of TWO customers! Only needing two more customers to have 4x the MRR?? That’s crazy!
Aside from the stark financial differences, there are also some emotional and time-investment differences we had to consider.
We’re 100% aware of the fact that this comparison isn’t perfect but it was enough data to show us the writing on the wall. Plus, there’s a whole other side of this equation.
The emotional aspect of what you sell.
When we sold our BuyMy/BuyOurFuture product with lifetime pricing I knew the person buying that product was committed to us. They were essentially raising their hand and saying, “YES! I believe in you Zooks… for life! 
