How to turn a service into a subscription business

Unlimited graphic design service Penji makes around $250,000 in monthly recurring revenue.

Its co-founder Johnathan Gryzbowski credits part of his business success with forgoing a paycheck for about five years so he could reinvest money back into the full bootstrapped business. His advice: "Eat dirt as often and as much as you can in the beginning."

In this episode, Johnathan discusses how the idea for Penji took shape and how he and his co-founder pivoted from an agency model to what he calls "service-as-a-service." 

Top lessons learned:

• Originally, Penji hired U.S. designers, but it was financially unsustainable. So Johnathan started hiring designers from the Philippines, Central America and Asia.
• In the beginning, they found a few A-players and then sourced people from their networks.
• Penji pays designers between $400 and $1,000 per month and the average designer works with 10 to 20 (or sometimes more!) customers per month.
• Penji launched with a $79/month plan and was losing money. Around the time the company reached 100 customers, Penji raised its prices, which now start at $399/month.
• Johnathan says SEO is the biggest source of customer acquisition. They invest a "ton of resource and time and money" into content and target a range of keywords, including "cool logos." Penji also ranks well for its industry keywords, "unlimited graphic design" and "on-demand graphic design." 

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