Figuring out what to charge your members can be downright confusing! Some membership sites seem to have such high prices, yet others are so affordable, leaving you wondering: what’s the value of my own site anyway?
Well, membership prices are definitely not “one size fits all”, and there are some significant variables that may influence your pricing decisions. Everything from your market niche and competitors, to your brand image and membership benefits converge to give your site a comprehensive value that will determine your prices, and when you invest the effort into getting it right from the beginning, you can start out on the right foot – and leave yourself room to adjust along the way!
In this post, we’ve discussed some perspectives to help you get a bit clearer on what you should charge and why.
Know your value
What is it that you have to offer your members? What are they getting with your membership that they can’t get elsewhere? What is your unique selling point? The price you charge is a direct reflection on the value you provide – and the extent of your membership benefits (or outcomes) is what will drive your price higher. What is the ultimate value of the end result that your members experience? How are their lives improved by subscribing? What differentiates you from your competitors? These are jumping-off points to think about when formulating a ballpark figure to start out with.
You always want to be aware of what your competitors are charging (and what they are delivering for that fee), but ultimately you get to decide what you’re worth. So, instead of competing solely on price, you might decide that your time, effort, knowledge, and expertise are worth a certain monetary value. Remember: your prices are an announcement to the world that establishes your level of quality and exclusivity. Are you presenting your site as a premium brand? Or are you aiming to be affordable and widely accessible? Know this first!
Figure out your costs
Although it may seem obvious, the costs of running your membership site influence the price you charge – and if you are putting in the time, energy, and cash into outfitting your site with all the bells and whistles, you want to be sure that you end up with enough revenue at the end of it all. Identifying and keeping track of your costs helps you to more accurately calculate your profit, and set your prices accordingly.
Some typical costs to consider include:
- Domain and hosting costs
- Web design and development costs
- Membership platform and plugin costs
- Payment processing fees
- Time spent creating content
- Time spent on support and communications
- Marketing and advertising costs
- Affiliate commissions
- Any hired help for things like social media, support, administration, etc.
- Any other operational costs
Decide on your revenue goals
In tandem with your membership value and associated costs, the revenue you aim to make is another pricing factor to think about. The amount you charge your members could vary greatly depending on your revenue goals and how many people you expect to sign up. If you’ve generated a lot of buzz around your site and you’re sure that you will have a larger volume of signups, you could confidently charge middle-of-the-road prices, but if you have a larger revenue goal and you’re expecting fewer initial signups (or you’re not sure), you may be looking at charging a higher price. The question then remains: is that price within the realm of what your customers are willing to pay? How do you know?
Research your niche
There are so many factors to consider when calculating your member prices that it’s easy to overlook some of the more obvious things, like researching your niche. Thoroughly understanding your competitors, your audience, and your market can arm you with the data you need to make an informed decision.
You might ask yourself questions like:
- What are your competitors charging? What pricing structure(s) are they using? How does your membership differ from theirs in terms of value and benefits? Are they premium brands?
- What is your audience willing to pay?
- What are the other popular products your audience looks for, and what do they cost?
- What is the end result your audience is looking for, and what is the dollar value of that outcome?
- Is your market niche saturated?
- Are you an authority figure within your niche, who has the clout to charge higher prices?
Many membership sites operate with recurring monthly payments – and when it comes to pricing, this alters the strategy you choose. For example, you will want to charge a lower price if you are asking people to pay you every month, whereas a one-time fee can warrant a significantly higher price. Recurring monthly membership fees are often (but not always) under $100, with one-time fees reaching into the hundreds, and sometimes even thousands.
Your revenue goals will bleed into this aspect of your pricing decision as well, in that they influence your decision to choose recurring or non-recurring payments. Maybe you want a certain amount of revenue per month instead of per year, leading you to choose the monthly option and adjust your prices accordingly. One-time fees may seem hefty at first, but they might not necessarily result in more income over a longer period of time, compared to monthly fees. Maybe you decide to offer both as options; in this case, you might think about which method you prefer, and incentivize customers accordingly.
Tiered rates and the “anchor offer”
If you decide to offer more than one membership level (tiered rates), you will want to settle on different price points to match. This is where the anchor offer comes in, driving customer desire by establishing a high-priced, exclusive option (containing the most value) that essentially “anchors” customer expectations to higher prices – and boosts conversions on your lower-priced options at the same time.
In terms of the number of membership tiers you offer, three or four is common, with an anchor offer, a mid-range offer (sometimes up to 50% of the anchor offer price), and a more affordable tier (sometimes up to 20% of the anchor offer price). You might also consider explaining what kind of experience or value people will get from each membership level, highlighting the benefits or potential outcome of investing more.
Find the sweet spot
When pricing your memberships, you’re aiming for the sweet spot – the point at which all of these factors converge – so be sure to carefully assess (or estimate) each variable line by line. The value you have to offer, your costs, revenue goals, competition and market precedents, payment model, and membership tiers will all point you in the right direction.
What have you found to be the most helpful when determining prices for your own membership site? We encourage you to share your thoughts in the comments below!