How To Start a Subscription Box Business in 5 Easy Steps

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Starting a subscription box business isn’t as complicated as you may think. The consumer demand for subscription-based products and services is growing by the day. Customers can enjoy the convenience of automatically re-ordering things they need without adding more to their ever-growing list of things to do. You’ll be able to enjoy repeat, predictable business and increased revenue streams. We’ve outlined a few simple steps that will have you up and running with your new business in no time!

1. Decide on a Product or Service
The first, most important, step in starting a subscription box business is deciding on a product or service to sell. If you already know what you want to sell, that’s great!
If not, try making a list of 10 ideas of things you can sell. The best ideas are those that you know a lot about. ¬†For example: if you love cooking, try writing down ideas like “Spices of the Month” or “Bi-Monthly Knife Sharpening Service”.
The more you know about what you’re selling, the better prices you’ll be able to find; making it easier to fill your subscription box with things your customers love.
Once you have your list finished, go through each item and think of things you don’t like about it. Maybe its too heavy, or doesn’t interest you enough. Get as critical as you can about your ideas. Eventually you will be left with a single idea. If you love it, use it! If not, repeat the exercise until you have an idea you feel passionate about.

2. Get Your Pricing Right
Getting your pricing right can make or break a subscription box business. Your pricing consists of three main things:
a. Cost of Goods
b. Cost of Shipping
c. Cost to Acquire a Customer
Ultimately, these things will determine how much you charge for your subscription membership.
Your cost of goods is the actual cost you pay to purchase or manufacture the products you will be sending. If you are selling a service, you just measure it in cost per hour labor instead. Sometimes other business will give you samples of their products for free and have you send them to your customers. This is a great method for lowering your cost of goods.
Your cost of shipping is the amount you have to spend to get the product from you to your customer. Getting a good deal on shipping is paramount when running a business that ships all of its inventory. Remember, the heavier your product is, the more it will cost to ship.
Your cost to acquire a customer is generally the toughest thing to measure. If you use Google Adwords or another PPC network, you can see how much a customer costs via their reports. Things like word of mouth advertising become quite difficult to measure and even more difficult to scale. That’s why we recommend you focus on the acquisition channels you have that are easier to measure. Consider any kind of organic acquisition a bonus.
So if your customer costs you $10 to acquire, and every month you send them $10 worth of goods in a box that costs $5 to ship, your initial cost for that customer is $25. If your service was priced at $30 per month, you’d instantly make a $5 profit, then you’d make $15 per month from that customer going forward. If your service was priced at $20 per month, you’d lose $5 on that customer the first month and then make $5 from them every month, costing you 60 extra days before you break even on them.
That’s a long time to wait for your money when you’re starting out. Especially if that money is going to go back into advertising.

3. Setup Your Website
You need a website for your subscription business. There’s no getting around it. If you want the world to be able to purchase from you, then you need a presence online 24/7/365. If you don’t already have a website, you can get one from our friends at Shopify. PayWhirl’s widget integrates directly with Shopify, giving you an easy setup, so you can start selling in minutes.
The main parts of your website to focus on are:
a. Homepage
b. Pricing page
c. Terms of service.
Your homepage should contain everything a customer needs to know about your service with a definitive call to action. Big buttons like “Sign Up Now” never go out of style and help millions of businesses convert new customers.
Your homepage should also explain briefly what your business does “above the fold”. This means a user should not have to scroll their browser window to tell clearly what your business does.
Your pricing page should be clear and concise. If you have multiple plans, you should list different features and show the price to subscribe to those features. If a user clicks a plan, that should launch them straight into registration for that plan. In fact, if you use PayWhirl’s widget, you’re already doing this!
Your terms of service are important and should most likely be written by a lawyer. The terms of service cover how you deal with refunds, exchanges, etc. It also give your customers the information they need in case they need to contact you directly. If you write your terms of service, be warned you may be left vulnerable if unhappy customers’ want to take advantage of your policies.

4. Test Your Offering
Before you start offering your subscription products to the world, you should test with a small focus group. For this group, you want to try out what you plan to do with no more than 100 people. 100 people is the cutoff here because you want to be able to gather feedback from your customers without getting overwhelmed. You should have a much more intimate relationship with these initial customers, so you want to leave yourself the time and energy to do so.
Testing also gives you the ability to practice and prepare for what’s to come. Maybe you need to hire someone to help or maybe the product costs more to ship than you initially thought. This period is where you iron out all the kinks, and the only way to do that is to go through the motions.
Take your customers’ feedback seriously and consider implementing changes to your business if they ask for it. If a lot of your customers are all asking for the same thing, it will only help you to service their requests and help you better have mass appeal for your actual launch.

5. Marketing
Now you’ve decided on a product, figured out your pricing, setup your website and tested your offering. At this point, you should feel pretty darn confident in the business you’ve setup. Now all you need are more customers. Its time to do some marketing.
Marketing is really the core of any business. If people don’t know about you, how could they ever buy from you? Tell your friends and family first. Its a great way to spread the word and plant a seed in everyone’s ear so that if they talk to anyone and a product like yours comes up, they can recommend it on the spot. Customers you acquire by word of mouth are free and come with a referral. You cannot get any better quality leads than that!
Next, look at where your customers are. For instance, if you sell something to do with yoga, see if you can put up a flyer at local yoga studios. There are ton of opportunities to promote your business in your own community, so start there.
If you want to market online, you can always turn to Google Adwords and Bing Ads. There you can pay to display ads alongside search results on each of the popular platforms as well as on sites around the internet.
If you have the budget, television, radio and newspapers and magazines are great for creating buzz and getting exposure, but they can be pricey if you are just starting.

Hopefully now you’ve got a decent idea of how to start a subscription box business. It’s easier than you think and a great way to generate recurring revenue and extra income. With a worldwide trend in subscription services, the model will continue to prove itself time and again as one of the strongest business models ever created.