Passive income… two simple but loaded words that have become associated with the world of online memberships.

It's difficult to have a conversation these days on the subject without someone bringing it up…

And that's because a lot of people think that starting a membership is a guaranteed way to make passive income…

You just set it all up once, sit back and watch the money roll in, right?

Erm, no not quite… 

You'll rarely see us talking about memberships and passive income in the same sentence…

And there's a good reason for that!

There are a lot of so-called internet marketing gurus that point you in the direction of the membership model and promise that you can make money while you sleep…

The truth is, it’s just not that simple…

And if you’re reading this post looking for me to do the same, then I’ve got some bad news for you….

A membership is never going to bring you 100% passive income.

But does that mean you can’t make any passive income from your membership?

No, it doesn't… 

It all depends on how you choose to run it.

But first, let’s get this myth out of the way…

Why memberships are NOT the “ultimate passive income business”

Truth be told, whenever we teach about memberships, we make a point of highlighting the fact that a membership is a business, not a gimmick.

And just like in any business, you need to put the work in to become successful…

You can’t expect to set up a membership site and retire to a beach in the Bahamas while your bank account bulges…

I mean that would the dream, right? 

Definitely a dream…

But it's not the reality…

The membership business model is far from quick and easy.

You don’t just set it up, take people’s money and then sit back…

It requires regular work and maintenance.

People expect consistent value for money…

And that means consistent work…

But that doesn’t mean there’s zero opportunity to earn money passively through a membership.

What we need to do instead is reframe and revisit what the words passive income really mean…

What does passive income really mean?

When it comes to passive income there's one thing I'd like you to remember…

It's a line I've said many times when speaking on stage at conferences and events around the world…

“Passive income is very rarely passive”…

A huge mistake people make is seeing it as a binary thing…

Where something is either passive, or it's not passive.

However it's not binary…

It's a sliding scale.

For example, investing in stocks and shares is a pretty passive way to make money.

It’s definitely more passive than running a membership…

But a membership is (typically) more passive than one-to-one coaching…

Anything that is one to many will generally be more passive than one to one.

So, when we look at it this way, the question of “can a membership provide passive income?”…

The answer isn’t straightforward.

You’ll find that during the course of your membership, there are times when it’ll feel more passive than others.

This is probably more prevalent with memberships that adopt the closed-door model that has periodic launches throughout the year.

During a launch for example, it won’t feel passive, but once things settle down you’ll find it becomes that way.

Another thing to consider is that the longer you run your membership, the more systems and processes you'll create to streamline the day-to-day operations.

You're more likely to outsource tasks or hire people to minimize your workload…

So this may mean that while the work is getting done, you are personally doing less of it, so your membership can become more passive.

Leveraged income vs. passive income

Instead of thinking of it as passive, let's call it “leveraged income.”

This is where the money you make is disproportionate to the effort you put into making it.

In other words, you’re not trading time for dollars.

Over the the years, what I’ve found is that most people aren’t looking for the easy, 100% passive route.

And that's a good sign! 

They’re just looking for a way to break out of the cycle of trading time for money, to get more bang for their buck and greater leverage the time they put into their business.

As membership owners we all want to break the cycle…

The good news is that, yes, a membership model can absolutely provide this if you design it that way.

You won’t get to sit back and put no work in…

But one hour’s work won’t only be worth one hour of results…

It will have a ripple effect and add value over time…

And that ripple effect is where it becomes truly passive…

After you've put the work in.

How passive can you make your membership?

You can break a membership down into three key stages:

• Starting a membership
• Maintaining it day-to-day
• Growing it

How passive your membership is will depend on how much work you want to put into each of these stages.

If you want an all-singing-all-dancing membership, you’ll need to put more effort into the first stage….

Alternatively, you could create a bare-bones website in under an hour…

Similarly, you might choose to go all out and provide new courses and content every month, live streams, and work 40 hours a week to keep it going…

Or you might just want to do two live calls with your members each month and only work 10 hours a week…

The person working just 10 hours a week probably won’t end up out-earning someone working 40 hours a week…

But they have significantly more time, and their business model is more passive.

So who’s more successful?…

The person working 10 hours a week, making $5,000 a month, or the person working 40 hours, earning $20,000 a month?

It all depends on you and what you value most.

Some people want to make as much money as possible.

But for that to happen, you need to put the work in.

You need to work those long hours and accept that this is not passive income.

Others want to make a decent income but have more free time.

Theirs, while not 100% passive, is a much more passive way to make money.

There’s a trade-off, so it’s all down to what you want…

You set the rules for your own membership…

You set the terms based on how passive you want your membership to be.

So, are online memberships a way to make passive income?

The answer is yes…

Based on the understanding that passive income is a sliding scale.

Too many people get caught up in the fantasy created by internet marketers of making lots of money with little to no effort….

That passive income is easy income… 

But those who feed you that lie are simply not telling you the full story.

That doesn’t mean passive income itself is a lie…

It just means you should be realistic about how you can make it work for you to live the life you want.

Memberships are a more passive way to make money for sure, but they will never be 100% passive….

You still have to put the work in at some point!

And that will help you dictate how passive your membership is.

I hope that helps clear up any doubts about memberships and passive income…

There’s a lot of work to go into running a membership, but the returns can be fantastic and rewarding!