In 2016 I owned a failing coffee shop in NYC. After losing money on it for almost two years I was ready to call it quits. Right before shutting it down I decided to throw a hail mary and do something drastic. It sounds unbelievable but this one change made it profitable practically overnight and completely turned the business around...
First, you might be wondering... Why would someone wait two years to shutdown a business that was losing money? Well for one thing, I was an idiot. This was early on in my career as an entrepreneur and since I had already been successful I thought everything I touched was going to work. I was wrong.
This coffee shop was not my primary business. My primary business was an adventure travel company I owned that was doing quite well at the time so I was using profits from that business to cover the losses on my side businesses (big mistake - I'll share more on this another time).
I talked to the manager who I had hired to run the cafe and told her that I couldn't sustain these losses any longer and it was likely all over, but before we did I wanted to try one last thing... She knew her job depended on it so she was game to try it. We launched an unlimited coffee subscription for $49/mo. All the coffee, cappuccinos, lattes, cold brew, tea, etc you could want for one low monthly price.
For context, normally we charged $4.50 for most espresso drinks (give me a break, it's NYC) so someone who was buying one per day 5x per week at $4.50 was spending $90/mo and some folks would even buy multiple per day. Needless to say, I was terrified to try this...
Keep in mind by this point it was early 2017 and no one had really done this before. I believe now there are a few brands out there doing membership coffee/drinks, but at the time it was mostly unheard of.
There were only two rules; you could only get one drink at a time and one per hour, that's it. Otherwise go nuts. Immediately something crazy happened... The signups started flowing in like crazy. First $1k MRR, then $3k then $5k then $10k and eventually we got up to $12k MRR at the peak of the membership program.
But what was even crazier was that our regular monthly sales didn't drop. I was certain this membership would cannibalize our regular sales. IT DIDN'T. Why? We just had more customers overall and more people buying extras like pastries, drinks, sandwiches etc. Once the word got out we basically stole every customer from every other coffee shop in a 3-4 block radius. Think about it... A coffee shop with a moat other than brand moat? It worked!
It ended up adding $10k MRR on top of our regular sales, which was exactly what we needed to save the business. I ended up keeping the coffee shop for another 3 years until 2020. Once 2020 rolled around I saw the writing on the wall and figured it was time to finally shut it down.
So why am I telling this story? First because I've never told it before. Only to a few people over drinks. But the real reason is because this story is the reason we switched Job Boardly from saas subscription pricing to one-time payment. Job Boardly was doing fine with modest growth but nothing too special. We liked it, but we didn't love it. We were suffering from "grass is always greener" syndrome. That's when this story popped back in my head. Let's do something BIG. Let's be completely different from everyone else. Why the hell not. We're still early on enough that we can afford to experiment. We switched from $49-$99/mo to $297 one-time payment. And guess what? It worked again.
The business became instantly more profitable and we're having fun again. I'm not saying you should go and do something drastic for the sake of doing something drastic, don't do that. I'm actually not saying anything at all, only sharing my experience. However, if you find yourself at the same cross roads I found myself at before calling it quits or convincing yourself that there's something better out there. Ask yourself how you could switch things up. Be as creative as possible. There isn't one way to build a business or price a product. Give yourself permission to experiment.
I was able to find our old Stripe metrics. We ran the daily sales on Square so what you see here is just the subscription revenue.
