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Circle Editorial Team

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How to create a business model for a profitable paid community
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Ever feel like you’re building a community business based on guesswork? Not sure how to create the right business model to build a more profitable paid community?

Generating income from community memberships can be nerve-wracking, especially if it’s your first time building a paid community or you’ve been running a free community for a while and are just starting to transition to a paid one.

Don’t worry; you’re certainly not the only one struggling with creating a paid community. That’s why Community Strategist and Coach Tatiana Figueredo recently gave our Circle members an interactive workshop to help them develop a profitable business model for their community.

So, we thought it would be helpful to put together an accompanying guide showing you each step to creating your very own business model with plenty of insightful tips and a business model worksheet for good measure. Just keep reading!

Define what community means to you

Before you start building your business model, it’s a good idea to think about what the word “community” means to you. One definition could be “a group of people interested in nurturing their own and another’s growth,” for example.

Now think about what a business community means to you. How do you make money, what makes your community a business? Finally let’s look at “business model,” which is, in essence, “the story of how your business works and makes money.”

How your community can make money on Circle

To get you thinking about your own business model and ways you can make money with a Circle paid community, let’s take a look at some examples of business models from successful communities on Circle.

Ness Labs: Helps people interested in self-improvement find others to collaborate with by providing a platform to host events and connect via a Circle community.

They find customers from their email newsletter and charge $9 a month or $49 a year for membership.

Dreamers and Doers: Helps womxn entrepreneurs grow their businesses by providing visibility and networking via PR opportunities and a Circle community.

Moving from Facebook to Circle, they find customers via referrals from members and make money charging $105/month for quarterly membership.

Building a Second Brain: Helps busy productive nerds get organized and expand their creative output via a cohort based course and ongoing Circle community.

They find customers via referrals and make money by charging $1500-$6000 per cohort.

What is the dream scenario for your community?

Take a second to think about what success looks like for your community. This success doesn’t have to be about money specifically. Maybe you define success by what members are doing, how many you have, the impact your community has on their lives, etc.

Keep this dream success scenario in mind while you move on to the next steps in creating a profitable paid community: Your business model.
Your community business model template

Below is a framework for spelling out your community business model. Take a few minutes to fill in the gaps and begin pulling together a rough business model.

Tip: Be realistic -Make sure you can execute whatever you write for your business model in 6-8 weeks with the resources you currently have.

We help [members] overcome/solve [problem you solve] by [your solution]. We’ll find most of our customers [your main channel] and will make money by [your revenue].

  • Members: What few words best describe your members?
  • Problem you solve: What pain points do your members have?
  • Your solution: What does your community include/ offer?
  • Main channel: Where will you find people? Twitter, partnerships, email, etc.?
  • Your revenue: What will you charge money for? How much and how often?

Great, you’ve just created a first draft of your business model! If you struggled with it, don’t worry, we dive deeper into each element further down in this guide!

Business validation mistakes to avoid

Business validation is the process of determining if there’s a need for your community in your target market. Validating your business model can help you predict if people will buy your membership and whether your business will be profitable or not.

Here are some business validation mistakes you should avoid when validating your community business model.

Don’t spend a lot of money

Don’t spend your hard earned cash trying to validate your community with a bunch of business books that contain outdated information about using only Facebook and Google ads to drum up business.

This approach is simply not sustainable as it doesn’t help you find new members long-term. There are all kinds of free tools you can use to recruit members, so don’t pay people for interviews or hire anyone. People should be willing to chat casually about your business model.
Don’t use opinions as validation

Asking industry leaders or prominent figures in your niche for their opinions on your community doesn’t matter. The only opinions you need to focus on for building a strong paid community is that of your members.

Don’t use only surveys or focus groups

1:1 interviews with your members are always better than relying on surveys or focus groups, even if you only interview a few people. You learn so much more this way, as you can really dig deep into what they’re saying and learn things you didn’t even know to ask them about!
Don’t test without a goal

Before gathering data, know your hypothesis. Don’t go in blind and try different business tactics without thinking of the questions you’re trying to answer.

Be specific, like “I want to understand what age groups my target members fall into.” This will create too many roads for you to go down and will leave you feeling more confused than when you started!

Build your community business model step-by-step

Now it’s time to dive into each element of our business model template to help you develop a solid, strategic, and profitable business model for your community.
Meet your members

If you’re not sure who your members are and what they’re like personality-wise, meet them! Arrange interviews with current and potential members to see how you’d describe them, then try this format:

Adjective + identity

Are your community members new moms of twins? Nerdy dog parents? Ambitious female business owners?

If you’re starting a new community or trying to narrow your focus, pay more attention to the people in your community or potential members that give you energy and excite you.

Collaborating and serving these kinds of people will be much easier to sustain in the long-run since running a community can be very energy-draining!

Let’s take a look at this example from the Petminded community who originally served all pet lovers, but then realized they were most attracted to dog owners specifically:

“Petminded helps nerdy dog parents feel more confident taking care of their pets by providing regular events about Dog Science. They find most customers through event partnerships with other brands and make money by charging for courses and individual events.”

Define the problem you solve

Talk to your members or potential members about their day-to-day challenges. Gain an insight into how they feel, what they think, and what they’re doing when they look for a community like yours

Ask them about what happens when their challenges or problems crop up. See what that moment in time looks like and how they are already solving the problem.

Let’s take a look at a problem that the Buckskin Revolution solves. Instead of just teaching people how to survive outdoors, through member interviews; they learned that the major problem they’re solving has more to do with a connection to nature.

“Buckskin Revolution helps crafty outdoorsy people increase their sense of connection to the world around them by providing bi-annual online gatherings that include access to an online community. We’ll find most of our customers through YouTube and social media and make money by charging $285 for each gathering.”

Build your solution

For a community to work you need to think about how to get people in the door at the same time, instead of selling a membership one by one.

Through group coaching programs, courses, challenges, partnerships, and small events, you can transition your target members to a paid program.

By building a valuable solution to their problem. What can you offer them that will make their lives easier? If you don’t already have members, how can you convince people to join your community?

Try offering things like 1:1 coaching, webinars, and valuable resources to get new members to bite – or offer a founding member discount to those who are interested.

Decide your main channels

Choosing the channels from which you’ll attract your members can be difficult if you don’t have members in your paid community yet.

To get started, you can try getting involved in partnerships with others in the industry who appeal to your target members and spread awareness that way.

You can also engage in other communities your members are active in, like Twitter, LinkedIn, Reddit, and podcasts, to reach people who may be interested in joining your paid community.

Petminded partnered with other brands through Dog Science week, where other pet brands’ audiences attended, making it easier to launch her paid community to new audience members.

“Petminded helps nerdy dog parents feel more confident taking care of their pets by providing regular events about Dog Science. They find most customers through event partnerships with other brands and make money by charging for courses and individual events.”

Calculate your revenue

The important thing to figure out here is how much do you want to make? Then you can reverse engineer from that number to see how many members you need and how much they need to pay.

Do you need to make your membership expensive for a smaller group of people or cheaper for a lot of people? How often will they pay you and how much? Is the community membership included in a broader offering or are they just paying for the community?

Answer these questions to gain clarity on exactly what you need to achieve your desired profit from your paid community.

Tip: It’s beneficial to charge more upfront and create a lower tier later on than not charge enough and increase the price later on.

Want a profitable paid community? Get working on your business model now!

Congratulations, you’ve reached the end of our guide to profitable business models on Circle. Now it’s time to apply this framework so you can create, test, and validate your community business model for more profit and success!

Why not give Tatiana’s Business Model Worksheet a try and see how it can help you develop a winning paid community? Simply make a copy below.

Google Doc Worksheet
Notion Worksheet

We’d like to thank Tatiana for the insightful ideas she explored in her training workshop, and can’t wait for the next one! If you’d like coaching from Tatiana for your community, check out her new cohort on building a community business.

Check out Circle’s other training videos for more inspiration, motivation, and top tips.

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