How to Make a Subscription Box Business Profitable

You’re in business to make money. Discover how to make your subscription box business profitable from the beginning.

I talk a lot about mindset on this blog, on the Launch Your Box podcast, and inside my coaching membership. Mindset challenges hold subscription box owners back from taking action or making progress. An important piece of mindset for subscription box owners is stepping into the role of a CEO. Because that’s what you are. You are the CEO of your subscription box business. And being the CEO means seeing your subscription box as a business not a hobby. That means focusing on being profitable - from the very beginning. 

New subscription box owners often think they will become more profitable simply by having more subscribers. This is not true. You can be profitable with 100 subscribers. You can be profitable with 300 or 750 or 1000 subscribers. I have nearly 3000 subscribers and I’ve always been profitable. 

You can also not be profitable with 100 subscribers. Or 300 or 750 or 1000 subscribers. I remember watching an episode of Shark Tank where the entrepreneur was talking about bringing in 10 million dollars in revenue the previous year. But when the Shark asked about profitability, the entrepreneur admitted he was operating at a loss—every month. 

My subscription box has been profitable from the first month. With careful planning and attention to all the costs that go into your box, you can be profitable, too. Keep reading for tips and strategies to help you be profitable from the start. 

Buy items for your subscription box in bulk.  

Buying in bulk allows for considerable cost savings. This is true when it comes to the products you put in your boxes as well as the packing supplies you need to curate a special experience for your subscribers. When you order hundreds or even thousands of pieces, you’ll benefit from bulk discounts offered by vendors and manufacturers. 

When buying wholesale, you can negotiate discounts based on the number of items ordered or dollars spent. These are called volume discounts. 

When you’re sourcing products directly from the manufacturer, there is typically a minimum order quantity (MOQ) for each item. Each tier up from the MOQ gives you significant discounts per piece. 

When you’re just getting started, I would caution you not to order thousands of the same size boxes. Take the time to figure out what size or sizes of boxes will work best for your subscription. Learn more in this blog post. 

Set a budget for the items in your subscription box.  

In the beginning, I struggled to set and stick to a product budget. I found myself constantly tempted to add “just one more” item to the box in order to make it extra special for my subscribers. 

Then one month I realized all those “just one mores” had eaten into my profit so much that I was barely covering my costs. That didn’t leave much at all for profit. 

I was working too hard to hardly make any money! Something had to change. 

When I created an average product cost budget, it made all the difference. That tool made decisions simple. Either I had extra money to add something else to the box or I didn’t. 

I still catch myself wanting to add “just one more” to my boxes. But I don’t. I know the rules and I stick to them! 

My Subscription Box Budget FREE resource makes it easy to set a budget for your subscription box – and stick to it. 

Calculate correct shipping costs for your subscription box.    

Shipping your subscription boxes can get VERY expensive and shipping costs vary widely depending on the destination. You can either charge for shipping separately or include it in the price of your box. 

Research shipping charges to a variety of locations to determine what to allow for shipping costs. 

Make sure to spend time researching the most cost-effective ways to reduce shipping charges. Spend time talking with representatives from different carriers in your area to negotiate shipping rates. 

In this blog post, I share my top five shipping tools to make shipping more affordable and more efficient!

Count ALL the costs and manage expenses.             

We talked about product costs and shipping costs, but have you considered the cost of packaging, labels, inserts, and any other “extras” you’ll need to curate your box? 

All costs matter and all must be figured into your overall costs to determine whether you’re making a profit. 

Create and maintain a system to track these costs. Look for opportunities to save by ordering in advance or ordering bulk. Don’t be afraid to negotiate with vendors. As your subscriber numbers grow, your buying power increases. 

Know and understand your numbers.  

I know many of us creatives don’t see ourselves as “numbers people.” But you’re your business’s CEO. You have to know your numbers. 

Ciara Strickland, fractional CFO and inventory genius joined me for an episode of The Launch Your Box Podcast. Ciara and I got real about inventory, margins, and profitability. 

Ciara works with inventory-based business owners every day. And they all come to her with variations of the same questions: 

• Where is all my money going? 
• What do I do with all this debt? 
• How much inventory should I really own? 

I’ve seen it so many times. Business owners who bring in a million dollars or more in revenue each year but don’t have much money in their bank accounts. Others struggle with debt despite high sales numbers. 

Their problem isn’t with sales. It’s with cash flow. 

A cash flow problem can be fixed – if you understand your numbers. It starts with identifying what’s causing the cash flow issues. 

Ciara teaches there are 3 levers we can pull: 

• Margins
  • Increasing your profit margin by 2-3 percentage points can make a huge difference. 

• Operating Expenses
  • Write down every penny that leaves your business.

• Top-line Revenue
  • Look at this last after you’ve addressed the other two. 

You need to build your business based on profit goals, not revenue goals. Ciara has a framework for setting profit goals: 

• Look at your margins
• Look at your expenses
• Fill in your sales goals
• Look at the bottom line – what will that produce in profit? 

If you’re not happy with the profit, go back to the first three and adjust until the profit you project gives you the income you want and covers your debt.  

Listen to my interview with Ciara - you do NOT want to miss this one! 

So what is a good profit margin for a subscription box? 

Profit margins in our industry range from 5-90%! 

Realize you’ll start with a lower profit margin when you’re getting started. Once you’re able to buy in bulk and negotiate with vendors and manufacturers, your costs will go down and profits will increase.

I recommend a profit margin of 30-70% for subscription boxes, depending on your niche and number of subscribers. I don’t want you to start your box with less than 30% profit. Have a goal of pushing that closer to 50-60% as you grow. 

As a subscription box owner, knowing your numbers is essential. Download my Subscription Box Budget Excel Spreadsheet to keep track of your costs and profit margins! 

Price your subscription box the right way from the beginning.

Pricing your subscription box correctly is one of the most important parts of making a profit. Take the time to do your research. What are the price points of other boxes in your niche? What are they offering? 

When determining how to price your box, make sure you calculate ALL the costs that go into the box. From the cost of goods to packaging, shipping, and more. 

It is important to price your box right from the beginning. Pricing too low can eat into your profit margin and lower the perceived value of your box. Pricing too high means bigger challenges getting subscribers. 

Learn more in this blog post where I go into more detail about how to price your subscription box. 

You are the CEO of your subscription box business and that means focusing on profit from the start. Profitability doesn’t come from subscriber numbers alone—it comes from smart decisions, careful planning, and knowing your numbers. Your subscription box can be profitable from day one.