July 19, 2023

Thought Experiment RE Subscription Model

Here’s a thought experiment about what it might look like to get started with converting your business to an “all-you-can-eat” subscription model.

Let’s say you have five clients who have hired you on and off over the last twelve months to do “hands work” like React development or portrait photography or video production or motion graphics or audio editing or patent searches or whatever your discipline happens to be.

To make things tricky (and more realistic), let’s imagine that each client had very different needs and therefore paid you very different amounts, like so:

Client 1: $48,000
Client 2: $24,000
Client 3: $12,000
Client 4: $ 6,000
Client 5: $ 3,000

...for a total of $93,000 for the year.

Assuming that there’s some correlation between your prices and how many hours you worked, you spent:

about half your time with Client 1,
a quarter of your time with Client 2
an eighth of your time with Client 3
a sixteenth of your time with Client 4
a thirty-second of your time with Client 5

With this information, you would need to make a strategic choice related to how many and what type of clients you want.

For example:

You might jettison folks like Client 1 because they have too much grunt work for you.

You might jettison folks like Client 5 because they have low-value needs that rarely crop up.

This would leave you with clients like 2, 3, and 4, who, combined, took up less than half of your time in the previous 12 months.

If you could sell each of them on a $3000/mo “all-you-can-eat” subscription instead of ad hoc projects, you’d make $108,000 for the year (which is $15,000 more than the previous year AND working with 40% fewer clients).

But since they have access to you on subscription, would they use you more than they did the previous year?

Probably yes, but it depends on what you do and how much of a bottleneck the client is. In any case, it’s unlikely the overall amount of work would DOUBLE.

But even if it DID double from EVERY client, you’d still be making more money, more predictably, in slightly less time, working with fewer clients.

Which seems like a big win to me.

(ASIDE: There are things you can do to ensure that subscription clients can’t bury you with an unwelcome amount of work, but that’s a story for another day.)

Yours,

—J