Do you want to learn how to start a subscription box business?
Here’s how you can start a subscription box business and turn it into a part-time side hustle or even a full-time income.
Today, I am interviewing a subscription box expert, Sarah Williams. Sarah built a seven-figure subscription box business in only three years.
She is the CEO and founder of two 7-figure businesses, Framed by Sarah and Launch Your Box, where Sarah has worked with thousands of subscription box owners and those wanting to start a subscription box, providing in-depth training that takes them through each step of starting, launching, and growing their business.
I recently asked Sarah to take part in an interview to answer some of the common questions you may have about how to start a subscription box business.
Are you wondering questions such as:
- How do subscription boxes work?
- What are some subscription box business ideas that a person could start right now?
- How much does it cost to start a subscription box business?
- How do you find customers?
If so, please continue reading the interview below to see the answers to the questions above as well as answers to other common questions.
If you are interested in starting a subscription box business, I recommend signing up for Sarah’s free workshop so that you can take the first step. This workshop will help you figure out what you put in your subscription box, create a plan for your subscription box business, and launch your box.
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How to start a subscription box business
1. Please give us a little background on yourself and how you got started. How much have you earned from subscription boxes?
My business started as a side hustle. I was already running a brick-and-mortar retail store when I made the decision to start a subscription box for the customers that came into my store every single month. I really wanted to create something exclusive and more like a VIP experience for them.
The box was a huge hit and also grew my brick-and-mortar store because hundreds of local subscribers would come in and pick up their boxes.
During the pandemic, I made the decision to close my store because my subscription box business was booming.
Now, five years later, I have thousands of monthly subscribers and have earned over $5 million with my subscription box business alone.
2. How do subscription boxes work?
A subscription box is a curated experience in a box for a specific niche customer.
It’s packed and delivered to the customer on a regular schedule, and their payment comes out automatically.
A subscription box can be filled with food, clothing or accessories, candles or whatever you want.
It’s delivered once a month, once a quarter, once a week or however you want to set it up.
3. What do you like about having a subscription box business? What do you not like?
When you run an e-commerce business, your sales fluctuate up and down like a rollercoaster. We call it feast or famine.
A subscription box business is totally different.
You can count on sales coming in every month, making your goal simply to retain your subscribers. You already know how much product inventory you need each month, rather than guessing at it because it’s already sold. You don’t have to feel like you are selling every single day.
I love having a subscription box business because it has stabilized my business. I have a set amount of income I can depend on, and I’m able to make purchasing and staffing decisions without the stress.
Honestly, I don’t think there’s anything about my subscription box business that I don’t like.
4. Is there room for new people to start a subscription box business? How fast is the subscription box industry growing?
The industry is growing rapidly, and there’s always room for new people because there are so many potential niches for subscription boxes.
My advice for newbies is to not even try to compete with the big subscription box businesses.
Instead, they should focus on finding a specific area of interest with a cult-like following. If they can find the right niche, their subscription box is going to grow like crazy.
5. What are some subscription box business ideas that a person could start right now?
I always tell people to start with an idea that you are passionate about. If you have a hobby or a special interest, that’s the industry you should create your box for. Messaging, or understanding how to attract the right person and build your audience, is so important in the subscription box industry.
If you know your niche, you’re going to be able to speak to that so much better than somebody who doesn’t. It’s going to be easy to find your people. I’ve seen this happen often, with everything from planter subscriptions to guinea pig subscriptions to candle subscriptions.
Wherever your expertise lies, that’s the business to start your subscription box in.
6. How much money does a subscription box business make each month? Is a subscription box business profitable?
Your revenue really depends on your profit margin and how many subscribers you have. Here’s a basic way to think about it:
If you have a $20 profit on your subscription, and you have 50 subscribers, you’re making $1,000 profit every single month. All you have to do is multiply that if you want more profit.
Some entrepreneurs want a large subscription base of 30,000 subscribers or more. Some want to stay in the hundreds, because it’s more manageable for them to do it on a smaller scale.
As a subscription box owner, you can be profitable, no matter if you have 50 subscribers, 500 subscribers, 5,000 subscribers or 50,000 subscribers.
It’s up to you to determine how much your business makes each month.
7. How much does it cost to start a subscription box business?
I started my box as part of an existing business, so I didn’t start with X amount of money. My goal was to stick to a 30% profit margin at the beginning.
A new entrepreneur could start with $1,000, or $100,000. It really just depends on how many subscribers you are starting with and what your goals are.
You’ll have product, packaging, advertising, payroll, fulfillment and shipping costs. The larger your subscription base, the more boxes you have and the more costs you’ll have, because you have to buy more products. But as you grow, your cost decreases per box. This is because you can buy in bulk with packaging and products.
My main advice is to keep your box profitable, with a minimum of 30% profit margin when you start. I would also highly encourage you to increase that to 50-60% as you grow.
8. How do you decide what to put in your subscription box? Where do you get the items from? How many products are typically in a subscription box?
Deciding what you’re going to put in your subscription box is one of the first things that you have to figure out when you are starting your business. You’ll have to really understand who your ideal customer is.
Ask yourself, “Who is your ideal customer? What things do they want? What are they thinking and feeling?”
We have a free workshop that we host called “6 in 60.” It takes you through a series of steps to plan out 6 months of subscription boxes in just 60 minutes. Once you can visualize what would be in your subscription box, you can then figure out how many products you’d like to include and where you will get them from.
Typically, what I see from new subscription box owners is that they put too much in a box. It’s a problem because if there is too much, the customer can’t consume it before the next box comes. So you think you’re providing more value, but you are actually doing the opposite by giving them too much.
Starting out, you should either do one thing of the month, or at most, include three to five items in your box.
When it comes to buying the items you will include in your subscription box, there are a lot of different places that you can get your products from. You can find items at markets or you can buy wholesale on different websites. Some online wholesale marketplaces to check out include Faire, Abound and Tundra. You can also buy on global marketplaces like Alibaba and Indiamart.
9. How do you decide how much to price a subscription box?
For me, this was easy. I already had a business and I knew what my average order value was in my retail shop. When people came into my store, they would spend between $40 and $50, on average. I priced my subscription box at $45, right in that average order value range. I also added some upgrade options as well.
Again, when choosing your price, you have to take into account that you want to have a 30% profit margin.
You’ll also want to be aware of thresholds. For example, I could sell something all day long for $49. But the minute I price it $50 and cross that threshold, there is a new perceived value.
You also want to be careful that you don’t overprice your box, or you won’t get the subscribers you’d like.
Spend some time thinking about what value you’re creating and price it right for the market and for your customer base.
10. How do you market a subscription box business?
The best place to market your subscription box is via social media ads on Facebook, Instagram, TikTok or any other major platform.
Digital marketing ads are so much better than billboards, newspapers and TV. Not only are they cheaper, but digital marketing is where it’s at.
It has changed over the last several years, and it has become more expensive, but it’s still the best, cheapest and easiest place to find your customer and market your subscription box.
11. Can you list the steps needed to get start a subscription box business?
The first thing that you’re going to need to do is to build an audience. That’s the step that everybody loves to skip, because it’s the hardest. But finding your people is important. You can’t just create an amazing box and have nobody to sell it to. It will take some time, but build your audience first.
I tell my students that it will likely take 30 to 90 days to build your audience.
While you’re building your audience, you’ll need to start working through the logistics of the subscription box. This includes getting your tech stack together. You’ll need to decide how you are going to sell your box and what platform you will sell it on.
You’ll also need to start sourcing products, create your packaging and figure out fulfillment and shipping.
Now, these are all things that can be worked on while you’re building an audience. But you shouldn’t build those things first and then try to build your audience later because it takes time.
Get started building an audience yesterday, and all the logistical pieces will start to fall into place.
12. Can you tell me more about the resource you offer? (if you don’t offer a resource, then please just skip this question).
By the end of this workshop, you’ll know exactly who your box is for & what to put in it, you’ll have a plan to curate your first 6 boxes, you’ll be ready to take the next steps to launch your box, and you’ll have curated 6 months’ worth of subscription boxes!
Do you want to learn how to start a subscription box business?