Monthly Recurring Revenue for Course Creators on Repeating Berries
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Learning about Monthly Recurring Revenue for Online Course Creators

This article will help online course teachers learn how selling services with Monthly Recurring Revenues (MRR) like communities or coaching can help stabilize monthly income and help you grow your total earnings.

In this article, we’ll review the limitations of one-time sales, and then talk about subscription business options for course creators. Finally, we’ll dig into how launching a community and/or coaching service can generate some recurring revenues for you.

Video Tutorial

Course Revenues Can Fluctuate Throughout The Year

Course sales can vary by day, month, quarter, or even year.

Vacations, holidays, unemployment, news, and other factors can drastically affect your earnings from students.

Also even if you spend the time to ride seasonal promotions, some boosts may be larger than others.

You may also choose to have your course be available whenever students need it (“evergreen”), or only offer your course during specific launches each year.

All of these options can affect your earnings and thus your finance, strategy, and work priorities each month.

While you can spend money and time on social media, ads, and email marketing, it’s really hard to count on steady sales in the course business.

Downsides Of Course Businesses With Variable Earnings

Not knowing how much you will earn from month to month can not only make managing your business a nightmare, it can provide a great deal of personal stress too.

Here are some of the problems with not knowing how much income you will have every month

  • Will you be able to pay your bills?
  • Will you have to let go of help?
  • Will you have to turn off services on bad months?
  • Will you have to freelance more or get a full time job?
  • Will you have to dip into your savings?

Many of these problems would go away if you were sort of guaranteed some minimum income each month.

Subscription Businesses Earn Money Every Month

Businesses with subscription customers, earn money every month with only small variations from month to month.

Successful subscription companies can be a role model for creative teachers.

For example:

  • Netflix – Movies and TV shows delivered to your smart TV, laptop, gaming console, tablet, or phone.
  • Zoom – High-end video/audio communications features for power users
  • Adobe – Access to the latest software and files online
  • ConvertKit – E-mail tools for companies to send recurring emails to interested customers
  • Landscaper – Clients pay every month for the landscaper to keep taking care of the lawn

An important business principle when using a subscription model is to acquire a fair amount of new customers each month because some existing customers will inevitably cancel. To reduce cancels, try to remind customers about the value and resources of your subscription service.

Whenever possible, subscription businesses default to auto-renewal in order to keep customers forever. To stay on the good side of all your students, remember to send emails before the renewal and once their account has been charged.

What Is Monthly Recurring Revenue (MRR)

Monthly Recurring Revenue is the total subscription revenue that you can expect to get on a monthly basis.

It is your predictable revenue that you expect to earn each and every month.

In addition, each month, you may have new subscribers that can increase your total MRR.

Subsequently, you may lose a number of subscribers each month, which would reduce your total MRR. The total revenue lost due to cancels is called the Churn MRR.

Example 1: Offering A Community Membership Site

Communities provide a great way to help your students after they have taken your course.

It provides them with ongoing support for months and years. They can use the collaboration workspace to continue learning from their peers. They can also apply prior and new knowledge to accomplish personal goals.

Premium communities are usually better than free Facebook Groups because they are moderated and have no ads.

Memberships are also a great follow-up or upsell item after customers complete a course.

Teachers can offer a preview or a significant discount for students that want to join the community after taking a course.

Access to communities is typically sold in monthly or annual subscriptions.

Example 2: Offering A Coaching Program

Coaching allows course teachers to earn additional money by providing personalized advice to students.

This advice will help students apply your course in their own life and journey.

While classes provide generic training, coaching allows students to get help on specific problems that they are encountering.

As a creative teacher and entrepreneur, you can choose to provide one on one coaching or small group coaching.

Coaching services can be sold using a specific number of sessions or in perpetuity as an ongoing recurring subscription until students don’t your help anymore.

Why Recurring Revenue Is Beneficial to Creative Teachers?

The main reason online course teachers should leverage recurring revenue services is to earn a steady base income in their business, just like if you were employed but with other entrepreneurial / freelancer benefits and tradeoffs.

Recurring revenue allows you to forecast and plan for the future. You will know that you can safely pay for extra services (Like the Premier version of Thinkifc) and hire a team to help your company (Like a VA to handle sales questions while you’re on vacation).

Finally, if you ever decide to sell your school, investors will love that you have one-to-many digital products like courses, e-books, and communities that generate money without depending exclusively on you. In this case, investors would typically value and buy your company for a multiple say 5x your forecasted annual revenues.

How To Compute Monthly Recurring Revenue?

MRR is computed from the ( Average Revenue in a Month ) X ( Number of Subscribers in a Month )

The Average Revenue Per User (APRU) is the average monthly revenue you collect. So if 3 customers pay you $5 a month and 2 customers pay you $10 a month, then this example ARPU would be ($15+$20)/5 or $35/5 which would be $7.

The Number of Users for a month is simply the number of subscribers that you have in a month. This is often just called “Subs”.

MRR = ARPU X Subs

I like tracking course numbers and business expenses by month. However, it may be enlightening to also compute ARR (Annual Recurring Revenue), which can help you gauge your income and goals for future years.

Some Customers May Not Like Subscription Plans

Some customers don’t like to be locked into a subscription.

This could be because

  • They don’t want a company charging them every month
  • They don’t want to have to remember to cancel the subscription
  • They like to know the exact total amount they will spend
  • They want to avoid credit card debt

As an example, a customer may prefer to pay $120 for a year’s worth of access ahead of time, instead of $12 (or even more) for monthly access with no end date.

Driving Growth Through Follow-on Sales And MRR

Adding additional offerings like a book, community, or coaching will help increase the total revenues you earn from each course student.

During your course sales checkout process, you can attempt an order bump by seeing if your customers want to buy an additional small item like a template pack.

After you have made a good impression at the end of your course, you can suggest a next step product or service for your students. Even if you provide a deep discount, this can still help you earn more by converting 10 to 20% of your students.

Ideal, you will want the additional offering to not be a one-time sale, but a recurring source of revenue. This way you can significantly increase your total course business revenues from each student.

Slide about Monthly Recurring Revenue for Online Course & Community Teachers

Lets Summarize

Teachers with course businesses can have good months or terrible months. And terrible months really hurt because you have to break all your systems, goals, and plans to survive. And like the game of Candyland, you gotta climb back up again – and that takes a while.

Subscription businesses earn a base amount of money every single month, so you know what you can spend. And all the non-recurring revenue you earn from courses is just gravy!

Two really good options for creative teachers or entrepreneurs are to offer a community support group or a coaching service. Oh, and you may want to offer a one-time payment option because some people just don’t like the feeling of auto-paying “forever”.

Most importantly, if at the end of your courses you piggyback and offer a subscription service, you will not only make more money per student, but you can have a bunch of students paying you for months or years into the future.

For more creative teacher help building, operating, and growing your online courses, check out our ArtsyCourseExperts blog and subscribe to our email for regular tips.

More Tips For Online Teachers

The following articles and resources can help you with thinking about recurring revenue or growing your course business.

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