Pricing your memberships is an important part of running a membership site – and the tiered membership model is a popular choice. But, how do you know if it’s right for your site? What makes tiered memberships so popular?
Membership pricing isn’t just about covering the dollar value of your products; it’s about marketing psychology, what people are willing to pay, and the ways you can incorporate different elements of your membership offerings into a structure that makes sense for you and the customer. Your niche, your content, your products, and your brand are all important factors that play into your pricing choices – but regardless, there are some compelling reasons why you should consider implementing membership tiers.
In this post, we highlight some of the benefits of tiered memberships to consider, so that you can make an informed decision.
Making the most of your rockstar members
Do you have members who are super active, consuming all of your content and engaging with your site on a regular basis? What about members who bring in new traffic and referrals – even affiliates?
Your most committed members are people who could seriously benefit from membership tiers. In fact, they might be so active that they would love to have increased access to premium or high-level content!
Could you be making more money from your rockstar members? It’s certainly possible. If you have a significant portion (even a small, but dedicated portion) of your members who seem to be getting through your content more quickly, or have a higher degree of engagement than other members, you could be missing out on some opportunities for more growth and increased member satisfaction.
Not only do membership tiers allow for varying use cases and commitment levels; they also give people different ways to experience your content. For example, if you run a photography course membership site, you might have members who are (or aim to be) professionals, with other members who simply enjoy photography as a hobby.
Maybe your pro members want premium features and content to develop advanced skills and business strategies, while your hobbyist members prefer beginner-to-intermediate level resources that help them achieve much more casual goals. Membership tiers allow you to create different tracks for your members, with different levels of access to content, or different content altogether.
For the true super-fans or people who are really serious about progressing through your content, a top-tier membership is more than just icing on the cake; it can mean ultra-valuable access to self-improvement, career development, and other meaningful, life-changing stuff!
The psychology of the anchor offer
When it comes to pricing and marketing your memberships, psychology is everything. Having an anchor offer has been proven to drive customer desire, but how does it work?
An anchor offer usually refers to a higher-priced tier – an exclusive offer that “anchors” the customer’s attention and expectations to a higher price point. It also usually contains the most value, making it an attractive and sought-after offer.
The psychology of the anchor offer has been proven to boost conversions for lower-priced tiers as well, all while encouraging customers to get the most value for their money with the top-tier membership. But, if you want to take advantage of this strategy, you’ll need to have tiers in the first place!
Three or four tiers is common when it comes to tiered memberships. This can include a top-tier anchor offer, a mid-range tier, and a more affordable tier (or even a free tier), for example. Lower tiers are commonly priced up to 20% of the top-tier price, whereas mid-range tiers may be priced at around 50% of that number.
Some sites offer a wide range of monthly plans available at different pricing tiers, designed specifically for either individuals, groups, or businesses. Often, customers have the option to save money by paying annually, instead of every month. Take Kinsta, for example:
Trends and types of content
Tiers can work for any kind of content, however some niches seem to follow certain trends. Downloadable products can be well-suited for single-tier memberships, especially if you allot your members a specific number of downloads (or download credits) per month. This gives members the freedom to consume your content in the individual way they choose, while restricting the consumption to what you deem acceptable for your monthly price point.
Many membership sites that offer downloadable products like stock photos, graphics, audio files, creative project files, documents, and other digital assets use a download credit system (they may even assign different numbers of download credits to specific items to account for the appropriate weighted value). Some stock sites like Shutterstock work on a combined model that incorporates membership tiers as well as bundle packages:
Then again, some membership sites have several membership options, giving people access to different numbers of download credits per month at different price points. It really all depends on what your content is worth, how you think your members will want to consume it, and what restrictions you need to impose in order to maximize your membership revenue and avoid member churn.
Tiered memberships can be effective if you want to offer different levels of access, or access to specific categories of content or downloadable products. Maybe you publish all web-based content like posts, articles, podcasts, and videos – and you want to offer membership tiers that combine them in different ways. Or, maybe you want to reserve your very best content for premium members.
When it comes to web applications and SaaS products in particular, flat-fee memberships are quite common. Consider services like Netflix, for example; users get access to everything for one affordable monthly fee. However, some SaaS membership sites offer different tiers with additional benefits:
Upsells and extras
Do you offer one-to-one coaching? Extra content or downloadables that you don’t want to be a part of your basic membership? Webinars or trainings? Tiered memberships can be a great way to offer different levels of access to extra content, products, or services.
Instead of making a one-off purchase, members can simply sign up for a higher membership level to have access to the extras on an ongoing basis. Alternately, you might rather have a single-tier membership and keep your upsells and extras available for purchase.
Segmenting your members
If you want to tailor your marketing and communications to specific segments of your audience, tiered memberships are particularly useful. Although you can segment your member base by user activity and purchase / download history, tiered memberships make this process automatic.
Let’s say you want to direct some marketing messages toward your most active and engaged users. With tiered memberships, you could focus these efforts on your professional level members, for example. Or, if you want your standard members to upgrade, you might decide to give them certain special offers, such as a discounted premium membership, for example.
Other pricing methods to think about
If you aren’t sure about tiered memberships, or you’re curious about other pricing methods that are used for membership sites, there are a few options to consider:
It’s pretty straightforward: single-tier memberships either offer unlimited access to everything on a membership site, or include a set amount of content per month (or year). Single-tier memberships can be a bit easier on the accounting and organization front, since there’s only one tier to manage.
They can also make things a bit cleaner and simpler overall – and require less decision-making from new customers. If you have a brand new membership site, you might prefer this option to start; after all, you can always expand to membership tiers later!
Metered billing memberships
Want to charge your members based on how much they use, download, or consume? Metered billing does exactly that.
Often, sites that use the metered billing model will charge a minimum monthly subscription fee, and members pay an additional amount on top of that based on usage. Payment gateways like PayPal and Stripe are some of the best examples of this; as the store owner, you pay a fee for each transaction or successful card charge.
Some sites charge a membership fee in order to access exclusive deals. Commonly referred to as VIP memberships, members get access to goods and services at deep discounts in exchange for a recurring monthly, yearly, or one-time payment.
This is a popular model for certain services, as well as physical goods like clothing, accessories, electronics, and beauty products (think about wholesale memberships like Costco and Sam’s Club, for example) – but it can also be used for digital products and content. You might even decide to offer VIP memberships alongside another pricing model.
You’re the boss
At the end of the day, it’s your membership site – and you get to decide what makes the most sense for your business (and what feels like the right exchange of value for your content). Hopefully this post has given you some things to think about that will help you come to a conclusion, but if you’re still not sure which pricing model is best for you, consider researching your competitors to see what they are doing.
But, remember: Tiered memberships can empower your members with a more customized experience that’s tailored to specific levels of skill, experience, and / or commitment. So, if it’s appropriate for your type of products, content, and brand, why not give them that opportunity?
Regardless, you can always add membership tiers later, even if you decide to go with a different pricing model now; sometimes you just have to go with your gut instinct. So, what will you choose?
Do you have experience with tiered memberships? What insights do you have to share about using tiered memberships or other membership pricing models? Let us know in the comments below!