Probably because the real answer is… “It depends.”

Firstly the question fails to tell us what kind of subscriber we are talking about.

• Is it an email subscriber?
• A podcast subscriber?
• A YouTube channel subscriber?

And secondly it doesn’t tell us what we’re using the valuation for.

• Are we selling our eZine or list?
• Are we selling the business?
• Are we simply trying to forecast revenue?
• Are we trying to justify an advertising expense to attract subscribers?

These are all important qualifications.
So in an effort to be clear here let’s set some expectations for this article. Today we’re going to look at how to value an email or RSS/podcast subscriber when trying to forecast revenue, or justify a marketing expense.

There a few key points we should agree on:

• The differences between these two types of subscribers (email or RSS)
• The methods used to monetize the “list”

The differences between email and RSS subscribers.
When we talk about email subscribers vs. RSS subscribers the fundamental difference is that email is a PUSH technology. You push your message out to your subscribers. RSS (which is used for podcast subscribers, blog subscribers, etc) is a PULL technology. Subscribers check the “feed” on their own schedule.

In the case of email you can at least check your open rate. So you’ll know that on any given send how many people actually SAW your message.

With RSS that’s not often the case. You may know that you have 10,000 RSS subscribers and that you posted a new blog or podcast on Monday - but it usually stops there. Finding out how many of those 10,000 subscribers actively pulled that message down isn’t a readily available metric to most.

The methods used to monetize the list.
Please understand that this article is not a tutorial on how to monetize your list.
(that’s a different article)
What we’re talking about here are the methods we’re using in this particular valuation exercise.

Basically there are two monetization methods we’re going to talk about today.

• offering your list products that you get paid for promoting.
• offering others the chance to place an advertisement in your message.

Let’s start with the first.
There’s a rule of thumb that’s been around for awhile that an email subscriber is worth about $1 per month. That’s actually not a bad rule of thumb if you are offering products to your list that you are paid to promote. (either it’s a product you crated and sell - or you get a commission for any sales you generate by promoting it)

But we want to be more specific than just a rule of thumb so let’s get into it.
When you promote a product or service to your list you get valuable data. You (if you have things setup well) can see which of your mist members “bought” and come up with a total number of revenue generated for that offer. Over time you’ll be able to see your conversion rate, which is the percentage of people from your list that typically take you up on your offers. You’ll also be able to determine an average order value.

If your list of 10,000 people has an average conversion rate of 30% (3,000 people usually take what you offer) - and on average you offer them one product every month that nets you $10 for each sale… your list should make you about $30,000 per month.
Which means each of your subscribers is “worth” about $3 per month to you.

Pretty good!

The second way we’re looking at is advertising revenue.
If you have an ad spot in your message that you charge a $20 CPM for that ad will make you about $200 bucks. (10,000 people at $20 for every 1,000 impressions)

If you only send one of these per month - your list is worth $200 per month to you.
Which means each of your subscribers is “worth” about $0.02 per month to you.

Big difference huh?
Yeah. And there’s another catch.

While the CPM model is generally accepted for advertising to lists it’s not a perfect way to do it.
People are paying you for impressions - and that only happens when the email is read, or the podcast listened to. Just because you sent it to 10,000 people doesn’t mean they all opened it.

But that’s it in a nut shell.
Your conversion rates, and average order values may be different - but the process of creating this quick valuation is the same. Also remember that you can use more than one monetization method. Perhaps you have both the above going on.

If you need help tracking these things, or want to talk about ways to grow your list, or increase your conversion rate. Please let us know. We can help.

There comes a time in every small to medium sized business when web design is only part of the story.
That’s where the real fun begins.

When list acquisition, list and affiliate marketing, brand penetration and perception, and analysis and automation land on your to-do list. You’re there.

It is those types of initiatives that truly allow small to mid sized businesses to compete with the giant brands of the world. That is DMD’s passion. Seriously. Sometimes I can’t sleep at night because I’m thinking about these types of solutions.

Personally, even though DMD has addressed these things for some time, I am THRILLED to officially be shifting the focus to strategic business initiatives. Web design without a larger context is just not going to deliver you anything beyond… a web site.

Our chosen audience is also key in our new focus.
It is another area of great passion, and experience. We’re officially targeting the folks we enjoy working with the most.

I hope you can feel the excitement here.
There’s plenty to do around the new site but if you’ll pardon the mess - we’ll provide you an even more focused and compelling menu of services.