In yesterday’s post, I suggested taking a minute to think about the people and companies you know that offer a membership or subscription service. These services bring automatic recurring revenue to the businesses, and that’s why they use this strategy to their advantage.
A membership or subscription business is a “Toll Position” business. This term was coined by Harvey Brody several years ago. He defined a “Toll Position” business as:
“Proprietary ownership and/or control of a product, a concept, real estate, a patent, a trademark, a chemical formula, or many other kinds of valuable entities, can all be used as a starting “Toll-Position” in order to earn and bank truly huge amounts of cash money in an ongoing continuous manner, for an entire career and lifetime!”
A “Toll Position” business is a business that generates large amounts of income in an ONGOING CONTINUOUS MANNER. A membership or subscription service provides large amounts of income in an ongoing continuous manner.
Let’s start this short study of “Toll Position” businesses with a few businesses that have annual memberships:
Disney Vacation Club
Go Daddy – website hosting plans
National Association of Realtors
State & Local Realtor Associations
To be a member in one of these memberships, you have to pay an annual membership fee. These annual membership fees bring in millions and millions of dollars for these businesses. Word on the street is that all of the profit in the Sam’s Club and Costco business models comes from the annual membership dues. The profit on merchandise sold in the stores covers the overhead of running the business. All da money is in the membership fee.
Now, let’s take a look at a few businesses that have monthly memberships.
Amazon (Kindle Unlimited & Audible)
Apple (Apple music & extra data storage)
ATT (Cell Service/Uverse/Internet)
Software (Your CRM)
All property management companies
* The names listed in bold have multiple subscription services.
I could obviously go on, but I think it’s easy to see that many of the best businesses in the world have one, or more, membership or subscription components engineered into the business. In fact, some of my coaching students from way back in 2006 built a membership business in front of their real estate brokerage with a monthly recurring membership income in excess of $25,000. It’s a very profitable front-end business that funnels sale after sale into their real estate sales business.
You can (and probably should) figure out a way to create one (or more) subscription businesses. A business where you generate automatic recurring income. You can obviously create your own membership, or you can use my done-for-you membership business to get started.
For more information on my done-for-you membership, check out this report where I detail a lot more on the opportunity: