$5 product/service X 1,000,000 customers?

A low price/high volume model

[limitup]

For the past year or so I've been moving away from the "Internet marketing" field, and getting involved with more general, mainstream products and services. Generally these are products/services are things that almost anyone on the Internet might be interested in (well at least those in the US/Canada). I've met a lot of people doing a lot of different things, and some of it is very interesting.

My latest project is a membership site that costs $5 per year. I'm shooting for 200k customers, but I think the potential is a lot bigger than that. But I'd be curious to hear from some others about this type of a low price/high volume business model. Has anyone given this any thought, come across any sites doing this successfully, etc.

[dmorison]

Are you looking to establish a company and employ people, or just to make a nice living for yourself?

Last year, Google turned over about $400K per employee*. If you are looking at 200K customers at $5 a pop; you are looking at a turnover of $1M. If you believe that you can be successful by Google's standards you are looking at a minimum of 2 full time employees.

Most companies turnover between $50K and $100K per employee; so on modest ambitions your turnover of $1M means in the order of 10 to 15 full time employees...

Just some food for thought...

* $400K per employee based on turnover of $1B and 2,500 employees. [google.com...]

[limitup]

Thanks for the reply, although I'm not sure this is a very valid comparision. I know a bunch of people who make 6-7 figures a year online with just 1 or 2 part-time 1099 contractors who provide customer service via email.

[gmac17]

this isn't a high volume example, but I talked to a guy who had an info site with a lot of visitors. It is on a topic that people are fairly hungry for information on, so he decided to charge $9 per year a year for it. He was amazed to see 10 orders his first day, which was many times what he was getting for advertising.

I think the key is information people are hungry for.

[gopi]

The biggest challenge would be marketing! ...Unless this project has some viral word of mouth potential you have to rely on paid marketing.

With a gross of just $5 per customer how would you justify PPC or affiliate program?

[Paul_B]

You'd better hope with 200K customers a year that nobody asks any questions!

Your system, FAQs etc need to be crystal clear or you'll be very quickly swamped with email...

[hfwd]

Aren't membership sites pretty much all the same in mechanics? There are a lot of scripts on how to manage & auto-bill customers...

With these mechanics in place, then all you'll have to do is make sure you have a rock solid FAQ, to weed out basic questions from your customers.

[OlRedEye]

With enough revenue you can pay a couple of employees. Problem I see is that 'information people are hungry for' are highly contested keywords. Not easy or quick to get free traffic and expensive in ppc.
Quite a bit of traffic you have to generate to get 200k subscribers.