What $ costs come with newsletter business?
Hey!
I've been again amazed when calculating potential future growth, of how low the monthly costs of building a newsletter are comparing to the potential revenue.
Surely, I'm missing something.
I'm not there yet, but let's say I have a 20k audience that has about 3% converted to $10/mo membership. That's a $6k MRR in revenue.
As I'm using CK, the ConverKit has SparkLoop (referral tool) included in the Creator Pro and it's $251/mo.
There's the cost of running a landing/website (I'm thinking of a Ghost blog for articles), but that doesn't seem to add much.
The main cost is time, but for an indiehacker if full time, that's pretty much it.
Can you chip in, what are the other costs I should be factoring in? Am I crazy or is this a stupidly high margin business?
I think this is where companies like Substack really have figured out how to get a piece of the business. The more successful you are the more their income scales. If you are at 6k MRR and they get 10% of that cut its pretty good once it hits scale for users.
I think Substack can't be beat though for that initial start-up where your costs are essentially 0 and then if you want to migrate once you've hit scale you can drop your overhead to what you've talked about at $200-300/month instead of Substack taking 10% of your 6k MRR ($600).
Either way, if it takes you 1-2 years to hit 6k MRR and you pay 3-6k over 24 months to get there with a software stack. Guess it depends on what your budget is for start-up costs. Mine are currently $0.
Thanks for the insight - Yup, I'm trying to keep my start-up costs as close to $0 as possible too.
It's also important to factor in the transaction fees charged by Stripe or whichever payment processor you use (typically 2.9% + $0.30 of each transaction).
Also I believe 6k subscribers is about $99/mo with ConvertKit.
Yes - that's a good point! The transaction fees will be inevitable :/. Thanks for the input.
Depending on the topic of your newsletter, you may have to pay for subscriptions to various services.
For example, if you cover VC activities you may want to sign up for the pro version of Crunch Base; if you write about technology and business - The Information will be a good resource.
Where you may also end spending more money is on graphic design (to create custom cover images) and content creation (paying journalists to write for you). These of course are totally optional and dependent on your business model.
Other than that - you're good!
This is also true --- I've already seen some services I probably need to start following to keep myself on top of the info. Still seems like a really high margin business. Cheers