I’m excited to announce that we’ve released two tools today built to help interested founders plan to start a subscription business: Cratejoy’s Subscription Box Calculator + a Power User Calculator.
The financial numbers we chose as defaults for these calculators are the actual numbers for a successful subscription business. Shared with permission, of course 🙂
The Ultimate Subscription Box Calculator is an interactive educational tool that helps founders better understand core metrics of their business while also serving as useful planning tool. It explains the fundamentals behind the finances of a subscription box business, like COGS and Pricing, while updating in real time based on the value entered by the user. You can adjust the inputs and watch how the changes affect your business instantly.
Check out the Ultimate Subscription Box Calculator
We’ve also released a Power User version of the same calculator, which allows for variables to be adjusted more quickly for fast yet precise planning. We designed it for quick and easy experimentation with business models that can vary widely in terms of acquisition costs and reinvestment strategies.
Check out the POWER Subscription Box Calculator
For new business owners, the knowledge behind these metrics is immediately accessible as well. When you hover over any blue term throughout the calculators, you’ll find short and concise explanations of the terms used.
Best of all, you can export your plan as an editable excel spreadsheet (complete with formulas and formatting!), so you can drop it directly into a business plan to share with others.
We dreamed up the idea of these calculators while reading a post on reddit. Community members were attempting to guess the finances of subscription box businesses. Their efforts were misguided because they were thinking of a subscription business as an ecommerce business. This is a very common and easy mistake to make.
You can’t think of a subscription businesses as a regular ecommerce business. In a subscription business, the real money comes in the second, third and subsequent months a customer stays subscribed. These months are more profitable than the first month, as you only pay to acquire the customer in the first month. Once they subscribe, they will continue to pay month after month. This generates what we call ‘retained profits’.
Those retained subscribers (and their retained profits) also become the vehicles of future growth, especially when coupled with a powerful referral program. In subscription commerce, customer acquisition costs are an investment. They become a long term asset that you can then use that to generate more customers. They also allow you to push down on supplier costs, and gain efficiencies in your logistics.
These tools help show this in real time with powerful modeling, and this is part of the reason that we firmly believe that subscription business models are the best in the universe.
