Let's say you sell dog biscuits on subscription. Lovely recurring revenue.
Here's the problem. I can find a dog biscuit supplier, put up a template website tonight, and tomorrow we're competitors.
That's why Chapter 5 of The Subscription Playbook is called "Dig Your Moat." A subscription gives you recurring revenue. A moat is what stops someone else taking it. In the printed book I promised readers a free "Moat" Scorecard, a diagnostic that shows how your business ranks on the factors that keep competitors away. This is it.
How do you use the MOATS Scorecard?
The scorecard follows my five-letter framework:
- Marketing supremacy: low-cost acquisition and a strong brand.
- One: no single point of failure in people, suppliers, platforms or channels.
- Audience: low customer concentration, network effects and ongoing usage.
- Toughness: sustainable competitive advantage, high gross margin, and scale.
- Switching: high switching costs and embedding.
Those five letters hold the 11 moat factors from the book. Move each of the 13 sliders to the statement that describes your business today. Not next year. Not after the new website. Today.
The results update as you go. Your answers stay in your browser, so you can come back and re-score.
How the score is worked out
Each slider runs from 1 (shallow) to 5 (wide). A letter's score is the average of its sliders, and your total adds the five letters together, exactly like the "score yourself out of five" exercise in the book.
Letter score = Average of that letter's answers (1 to 5) MOATS score = (M + O + A + T + S) ÷ 25 × 100
Every letter carries the same weight, so a weak "One" can't hide behind a brilliant brand. The fix list then picks the three individual factors with the lowest scores.
A worked example: the two-clinic physio practice
The preloaded example is the physio clinic from my MOATS framework guide. Most members arrive through GP referrals (M: 3). One physio sees 40% of patients and bookings live in one receptionist's head (O: 2). No client dominates and members visit twice a month, but there's no network effect (A: 3). It has a known sports-injury specialty and decent margins (T: 3). Members could switch clinics easily (S: 2).
Total: 13 out of 25, or 52 out of 100. A real business with gaps. The scorecard flags network effects, key-person risk and supplier risk first. In practice I'd start with One (a second senior physio and written processes) and Switching (an app with progress tracking members don't want to lose), because those are the quickest to move.
What does a good MOATS score look like?
These bands come straight from the book's exercise:
| Score | Out of 25 | What it means |
|---|---|---|
| 80 to 100 | 20 to 25 | A wide moat. Protect it and keep re-scoring. |
| 52 to 79 | 13 to 19 | A real business with gaps. Work on your lowest two letters. |
| Under 52 | 12 or below | A copycat could hurt you. Start with One and Switching. |
Two honest notes. First, you don't need all five. Stripe's switching moat is weaker than the rest of its moat, and it didn't stop businesses processing about $1.9 trillion through it in 2025. Several strong factors beat five average ones. Second, brand is the weakest factor on its own. Kodak, Blockbuster and Borders all had famous brands.
And one rule from the book worth memorizing: no single client should be more than 10% of your revenue, and your top five no more than 25%.
What to do next
- Pick your lowest letter and choose one action for the next 90 days.
- If Audience is low, see which of the six network effects you could build with the Network Effects Scorecard.
- Read the competitive moat examples and moats in the AI era, because AI has weakened some moats that looked safe in 2022.
- If you're thinking about value or an eventual sale, read valuing a subscription business. A moat is what a buyer is really paying for.
Frequently asked questions
What is the MOATS framework?
MOATS is the framework I developed for Chapter 5 of The Subscription Playbook to judge how well a business is protected from competitors. It stands for Marketing supremacy, One (no single point of failure), Audience, Toughness and Switching. Together the five letters cover 11 moat factors, from low-cost acquisition and customer concentration to gross margin, switching costs and embedding.
How often should I re-score my moat?
Once a year at minimum, and whenever something big changes: a major client arrives or leaves, a new competitor launches, a key supplier changes its terms, or a new technology appears. AI is the obvious example. Several moats that looked safe a few years ago, like a big library of generic content, have since been weakened by free AI alternatives.
Can a small local business have a moat?
Yes, although it looks different from Google's. A clinic with members on monthly plans, referrals from local partners, no single staff member everyone depends on, and records that make switching a hassle has a real moat. Small businesses usually score best on Audience and Switching and worst on One, because so much depends on the owner.
Is a subscription a moat in itself?
No. A subscription gives you recurring revenue, but anyone can copy a subscription offer overnight. The moat comes from the factors around it: customers who would struggle to switch, a community, better margins, a brand people seek out, and no single point of failure. Subscription plus moat is the combination that builds a valuable, sellable business.
Why does my moat score matter when I sell my business?
Because buyers pay for durable earnings. Recurring revenue protected by switching costs, a spread-out customer base and healthy margins is usually valued at a higher multiple than revenue a competitor could take next year. Concentration above the 10% and 25% thresholds, or a business that depends on the owner, is something buyers notice in due diligence.
Built on The Subscription Playbook
This tool turns frameworks from Robert Coorey's book into something you can use in minutes. Robert is the author of The Subscription Playbook and a Director at BPAG Accountants. More about Robert.