By Matt Ragland in Monetization — Jun 12, 2023

The Million Dollar Newsletter: Core Monetization Strategies

ICYMI last week I encourage a quick read on the basic premise and numbers of a million dollar newsletter. I received a couple emails and messages after I shared this, questioning the conversion rates and threat of cannibalizing high-ticket offers with impulse products.

I ran all the numbers, and I believe 25,000 email subscribers is the "smallest" audience needed to generate $1,000,000/year as a creator.

This is with 5 revenue streams and realistic conversion rates.

Let's dive in ➕ ✖️ ➗
— Matt Ragland (@mattragland) June 7, 2023

Let's start with the basic premise of 25-30K subs with the following offer types and conversion rates.

5 Core Monetization Strategies

Sponsorships = $1000 per email
Impulse Products ($100) = 8% of list
Commitment Products ($1K) = 2.5% of list
Memberships & Subscriptions = 3% of list at $200/year
Coaching, Consulting, & Advising = 4 at all times for $2,000/month

Of course, your results may vary. A $40 value per subscriber isn’t an outlandish number, nor is a $40 CPM on sponsorships. My friend John Meese produces a $100 value per subscriber, and other high-ticket coaches and memberships could show similar numbers or higher.

I hope it also goes without saying that the higher you push the subscriber numbers, the more realistic these numbers become. At 100,000 subscribers the path to $1,000,000 is relatively straightforward and can be accomplished with only a couple revenue streams instead of balancing all five listed above.

Membership Types and Cannibalizing the Value Ladder

Memberships can be community or content driven. My friend Jay Clouse runs a community driven membership (The Lab), and Michael Easter runs a content driven membership (2% Club). Both approaches can be very profitable but you do run the risk of cannibalizing other offers (if they exist).

Ryan Holiday has a hybrid approach called Daily Stoic Life. It’s part community, part content (mostly content). Members get a forum, extra content, and access to the courses that Ryan hosts each quarter. That’s where cannibalization comes in.

By giving members access to his courses, Ryan is technically running those “at a loss”. An annual membership costs $200, but all four courses would cost $600. I think of this operation as running “at a loss,” but it’s likely not the case.

That’s because most of your subscribers wouldn’t sign up to all four courses, and the marginal cost of adding members is zero. It’s a calculated bet that a membership is better than four annual pitches.

Balancing Memberships and Sponsors

The conversion rate of subscribers to members is normally under 10%*. Again, rates vary based on the offer’s category, fee, and place in the value ladder.

But I want to point out that your members will almost never make up a large chunk of the subscriber base. Because of this, you can add new members while keeping your sponsorship rates steady.

In my estimates above I only estimated a 3% member rate, which means your subscribers to sell ads against has dropped from 25,000 to 24,250. This will not affect your ad sales results at all.

*One data point I used here is from Lenny’s newsletter breakdown by Chenell at Growth In Reverse.

Reader Question: Commitment vs Impulse Products

Hey Matt, what’s the difference between commitment and impulse products, and which one should I start with?

I’m going to talk about this more next week but I’ll get this out of the way first. You need to decide if you want to focus on revenue or customers first.

If it’s revenue, build a 4-figure service offer, the higher the better.
If it’s customers, build a $44* impulse offer, the faster the better.

It’s easier to find 1 person to pay you $5,000 than it is to find 50 people to pay you $100. BUT. You will learn more about your offer by selling to 50 people and getting their feedback. There’s a middle ground to test both sides, but I’ll cover that in a future newsletter.

*You don’t have to charge $44, it just sounded nice in the sentence.

Impulse Products

I define an impulse product as anything that you can reliably sell for less than $150 (give or take $50). Templates, ebooks, scripts, short courses, and live workshops can all fall into this category. We can split hairs over the definition, but it’s my newsletter and I’ll say what I want to.

Justin Welsh is the king of this category with the LinkedIn and Content OS products. It’s also the most common request when people want to build a course together “like Justin’s.”

This can work really well, but I always feel compelled to remind people that success like Justin’s is a result of the sheer volume of sales he can generate through his audience. Which is obviously a result of his hard work, great content, and an incredible offer.

Commitment Products

I define a commitment product as anything that requires a significant commitment of time and/or money (often it’s both). This can be a cohort course, but not always.

The value of the information to the customer and the potential revenue it can generate makes a big difference too. For example Nick Huber’s Real Estate Masterclass sells for $2,500 and is a completely self-guided course.

My favorite and best performing courses in this style are ones like Marie Poulin's Notion Mastery, Tiago Forte's Building a Second Brain, and Ali Adbaal's Part Time YouTube Academy.

Bundles

Another option is a bundle of impulse products. Thomas Frank does this with his Notion templates for productivity, second brain, and creators. You can get just one for ~ $129 or bundle all three together for $229. It's a great upsell option to increase customer LTV.