Model what members are likely to use.
Included services have a real delivery cost. Estimating redemption gives you a more realistic picture than assuming every member uses nothing or every member uses everything.
A good membership should work for the client and the business.
The client should understand the value without doing complicated math. The business should know the expected service load, recurring revenue and contribution before adding extra perks.
Questions, answered
Before you use the number.
What does redemption rate mean?
It is the percentage of included appointments you expect members to actually use. For example, two included tans across 20 members creates 40 available tans. At 80 percent redemption, the model estimates 32 redeemed tans.
Does contribution equal profit?
No. The contribution shown here subtracts the estimated variable service cost from membership revenue. It does not subtract rent, payroll, taxes, software, marketing or other fixed business expenses.
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