Your newsletter's first $100,000

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Hey pal 👋🏼

A couple years ago, I started hearing about people building newsletter businesses. Seeing those three words together was confusing and interesting.

My consulting business at the time had a newsletter for years. At one point, we had nearly 20,000 subscribers. But I only treated it like a channel to teach, inspire, and pepper our audience with updates & offers.

Operating the newsletter like a business channel? Never heard of it.

Then I started taking notice of several solopreneurs and full-timers-with-side-hustles who claimed to be building their newsletter business. I followed casually, never thinking much of it. Until I started looking into the numbers…

Lightning struck for me last August. I had the idea to launch Passive Profits. I would build it on top of a newsletter.

But what I thought I’d do with this newsletter since launch, continues to evolve. From a tool I use to write and share valuable content, to the foundational linchpin of my business.

In today’s post, I’m showing you how I’m building and growing my newsletter into the hub of my online creator business.

If you’re building a media business with a newsletter (or considering it), I hope it gives you some actionable ideas to test out.

You’ll learn:

1. The six monetized spokes (channels) of my free newsletter hub

2. Projected revenue per channel (targeting $100k by the EOY)

3. Experiments I’m running to build & iterate these channels

Over the next two Sunday deep dives, we’re going to break down the six ways I’m monetizing this newsletter.

Part One (today)

1. Premium subscriptions

2. Newsletter referrals

3. Sponsorships

Part Two (Sunday, Mar 10)

4. Exclusive (high-ticket) products

5. Commitment (mid-ticket) products

6. Impulse (low-ticket) products

For each channel, I’ll also provide revenue projections.

Keep in mind, one pivotal factor of your monetizable newsletter is subscriber count. I’m currently at 303 subscribers, with the goal of 5,000 by EOY. So today’s projections will be based on that growth timeline, assuming some degree of churn.

One note: My newsletter runs on beehiiv. Most of the same monetization capabilities exist on ConvertKit, Ghost, and, Substack (I think).

Here goes!

1. Premium subscriptions

A premium subscriber refers to people who join your newsletter and pay a recurring fee. That fee provides access and/or exclusive content, above and beyond what free subscribers receive.

I had planned to wait until 2025 to roll this out. When I asked myself why, the answers were flaky. I was waiting till my newsletter was better. Till I had figured out more stuff. Till I had a larger audience.

I additionally stalled by laboring over a quote I’ve heard Alex Hormozi say, “The longer you wait to make your ask, the greater your leverage.”

I 100% agree with that. And I can also spot my own bullshit.

In truth, I was using it as an excuse to hide out behind perfectionism. But the longer I wait, the longer it takes to learn what’s working vs not.

A couple weeks ago, I woke up in the middle of the night and remembered another Hormozi-ism: “Make them an offer so good your customers feel crazy saying no.”

Later that day I launched my premium subscription offer: Passive Profits PRO.

I went from worrying if I was ready to charge, to worrying that my offer was so good I’d lose my shirt.

It was that uncomfortable feeling of is this too much? That’s when I knew I was nearing the golden rule of creating an offer that feels like 10X value.

I’ve iterated a bunch since (and will a LOT more). Here’s what premium looks like today:

How I’m monetizing

• Monthly @ $10/mo: 1 coaching session, access to private community, Wednesday Nugget email, and humble offer to support my work

• Annual @ $100/yr: (everything in monthly, plus) 1 additional coaching session, newsletter shoutout, and a 17% discount vs monthly

Revenue projections

Based on my research, premium subscribers typically account for 3-5% of your total subscribers. To keep conservative, I’m using 2%.

Assuming everyone opts for the cheaper annual plan of $100 (vs $120 for monthly), here’s some napkin math of how I see my premium subscription channel growing this year:

In addition to the small bump in revenue, I’m also developing and deepening relationships with my audience.

During the included coaching calls, I’m helping these people accomplish their goals and break through their challenges. At the same time, I’m also learning. About their ideas, opinions, biases, questions, hopes, and fears. Those insights help me produce helpful, valuable content in future newsletter issues.

And some of those coaching clients will go on to buy my additional programs and products.

2. Newsletter referrals

Have you ever watched a trampoline act? The performers use something called the Double Bounce Effect to jumpstart their bouncing.

It works by 1-2 performers transferring their kinetic energy to a third performer. As they do, the third performer gains 2-3x the elastic energy they’d have, versus if they were jumping on their own.

This repeats a couple times, and…

Obviously I used images from Cirque Du Soleil. Still my favorite.

Once the third performer has launched, they now have ample elastic energy to help performers 1 & 2 get bouncy. They transfer back some of their energy to help launch performers 1 & 2. All three have launched faster and higher by working together.

This outcome is exactly the intent with newsletter referrals.

How it works

Newsletter operator 1 transfers their kinetic energy to newsletter operator 2 by referring their subscribers to operator 2. In beehiiv that’s mechanized through their Recommendations feature.

Most recommendations happen made during signup. For example, when someone subscribes to Passive Profits, they see five other newsletters I’m currently recommending.

You can also add newsletter recommendations within your newsletter issue.

Here’s a real example of what that looks like (if you click you’ll subscribe):

Whether during signup or in-issue, whenever someone subscribes to one of the newsletters I recommend, that operator can see they came from Passive Profits.

For example, I’ve sent five subscribers to Pure Procurement.

In return, Pure Procurement has agreed to refer subscribers back to Passive Profits.

Mutual recommendations like this are more attractive because they feel right and fair, vs a one-side referral relationship. That’s why it’s important for both sides to have similar audiences — not just interests, but size of audience, too.

How I’m monetizing

Now that we’ve covered the mechanics of recommendations, let’s talk about monetizing them.

Let’s look again at the newsletters Passive Profits recommends.

See those top two? They’re sponsored. That means Marketers in Demand and MGMT Playbook pay me to recommend their newsletter.

Profitable newsletters, or otherwise cash-rich newsletters like these two, can grow faster by paying to get their newsletter in front of your audience.

These monetized recommendations within beehiiv are referred to as Boosts.

SparkLoop is an alternative, third-party referral platform. Because it’s email platform agnostic, it allows you to recommend newsletters on any platform — beehiiv, ConvertKit, or otherwise. Though, allegedly, payouts are slightly lower than what you earn with beehiiv’s native Boosts.

Revenue projections

Of the three monetization channels we’re covering today, newsletter referrals is the one I’ve spent the least amount of time on so far. As a result, my payouts have been negligible.

Within beehiiv’s creator community that I’m a part of, I’ve heard from many operators that insist referrals are a must for early subscriber growth and monetization.

Once I hit 1,000 subscribers, I plan to ramp up efforts here. Again, more subs equals more leverage. At 1k subs, I’ll be able to court larger newsletters that pay a higher CPA (cost per acquisition) or CPM (cost per 1k impressions).

Speaking of CPAs and CPMs, according to Matt McGarry, what you command will be determined by your subscriber count and your niche.

In broad strokes, CPMs for B2B are $100-$500+. CPMs for B2C are $30-$50.

To wrap up newsletter referrals, I’m keeping projections conservative. I ballpark to make $500 in 2024 and a fair amount more in 2025.

3. Sponsorships

I’ll preface this section by saying that I’m actively studying newsletter sponsorships. This week alone, while writing this issue, I spent ~20 hours researching.

At 303 subs, it’s a little premature for me to attract the right, quality sponsors.

But I really like the idea of sponsorships for this newsletter. It means I can keep much of the content free.

So I’ll continue to study and report back to you what I’m learning and adopting. Because it’s evolving rapidly!

In 2018, newsletter sponsorships were barely a thing. By 2020, they represented a blue ocean for operators (publishers) like us to cash in from swooning brands.

All you needed to do was flash a 40%+ open rate and 6%+ CTR (clickthrough rate) and brands would throw ad dollars at you.

In 2024, it’s not only a crowded market, you need to have your shit together to attract and maintain quality sponsorships.

Based on my research, here are some loose guidelines I’ve surmised about your publishing leverage in proportion to subscriber count:

• 1k-5k subs: You’re hustling to win your first sponsors (you’re better off focusing more on newsletter referrals)

• 5k-10k: You’re still hustling but beginning to attract sponsors at varying quality

• 10k-30k: Quality sponsors are coming inbound, paying you decent CPAs/CPMs

• 30k-50k: You’re demanding higher CPAs/CPMs from quality sponsors

• 50k+: For the right sponsor, you’re in the driver’s seat

But subscriber count is not the end-all, be-all.

During my research this week, I had the opportunity to talk with a couple brand-side marketers. They shared that subscriber count is a conversation starter. However, audience fit and subscriber engagement are equally important.

They said that smaller lists with super engaged audiences can sometimes be more attractive than huge lists with ho-hum engagement.

In fact, a large media brand reached out to sponsor my little newsletter. It wasn’t a great audience match and the CPA was tiny. But I agreed to it because it was a chance to experiment and learn.

So, subscriber count matters. But not too much.

💡 During this week’s Wednesday Nugget, I’ll share some other exciting gems I picked up while chatting with these brand marketers.

Quality sponsors

So far we’ve covered what you need to do as publisher to attract quality sponsors. Let’s now define quality. Because it’s certainly more than a brand with money to throw around.

While operating New Haircut, I was able to secure some attractive brand partnerships. My criteria was simple. I partnered with brands:

• I respected

• I had built a relationship with

• Whose products/services I used and trusted

• Whose products/services were relevant to my audience needs

But according to Justin Moore, a sponsorship coach to some big-name Founder-Creators, my criteria above is merely table stakes. More accurately, it’s a bit limited and self-serving.

Quality isn’t just about who you want to partner with. In the end, you’re here to serve your audience. So your readers, fans, followers, and customers should also have a say.

Justin recommends asking your audience questions like:

1. What kinds of products do you wish I offered but don’t yet?

2. What brands and products do you use and love right now?

3. Who would you like to see me collaborate with?

Wink wink: Expect a survey with these questions in the near future.

If I only filter Passive Profits sponsors through my criteria, I’ll limit it to creator tools, newsletter platforms, and online course builders.

On the nose sponsors like those are good. But maybe you’re also looking for tools to improve focus and productivity, AI video editors, or web design services. I won’t know till I ask.

How I’m monetizing

One of the thought exercises I forced myself to do while planning out my sponsorship strategy was build a storefront on Passionfroot.

Passionfroot providers creators with a platform to sell sponsorship packages to brands.

I created three packages:

1. Featured Placement ($400): The brand gets a dedicated spot at the top of the issue, where I weave a contextual and personalized writeup into the newsletter. The brand gets featured, but not in a way that disrupts my reader’s experience.

2. Corner Callout ($50): Toward the bottom each Sunday newsletter is a section called Founder-Creator Corner. A brand can pay to advertise 1-4 of the text-based links included. To date (including today), those links have been organic (i.e. not sponsored).

3. Corner Takeover ($250): This package buys the brand the entire Founder-Creator section, with the addition of an included image.

Like everything I’m doing, these packages will evolve a bunch.

Revenue projections

It’s premature for me to have precise numbers. Still, I hope by sharing my experiments and research, you leave today with aha moments and practical takeaways.

Here are my projections for my 2024 sponsorship revenue:

I consider these to be realistic in terms of inventory sold. But I consider the revenue to be conservative, as I will almost indefinitely add/update the packages and increase their prices.

Tallying today’s 3 channels

Here’s a recap of three monetization channels we covered today:

• Premium subscriptions: $10,000

• Newsletter referrals: $500

• Sponsorships: $6,350

Total: $16,850

To hit my goal of $100,000 within my first year in business, I’ll need to generate ~$84,000 elsewhere.

Next Sunday, we’ll look at my plans to do that with owned products:

• Exclusive (high-ticket) products

• Commitment (mid-ticket) products

• Impulse (low-ticket) products — my first drops in May 🙏🏼

Good news: One of my existing owned products has already generated $1,500. We’re on our way.

And before we wrap up…

Founder-creator corner

This week’s corner is dedicated to bonus monetization resources.

💰 8 unconventional strategies to level up your sponsorship game

💰 How to increase ad CTR and get more sponsor renewals by Matt McGarry

🤝 Watch Justin Moore’s coaching calls for a free masterclass on monetization

🪴 Passive Profits community

Welcome Kaitlin, Delila, Hailey, Jackie and 27 more founder-creators who joined us this week. Our little community has grown to 303.