It’s like clockwork. With every New Years Day, you swear you’re going to go to the gym, eat less sweets, and take your online business to the next level.
And similarly, like clockwork, every February, the gyms empty out as members return to their normal pace of life.
Which is probably why 53.5% of people terminate their gym membership within the first year.
In fact, research suggests that the only reason gym memberships retain as many customers as they do is because of the annual commitment required for long-term contracts.
But while we can’t help you (or us) stay on track for a gym membership, we can help with that third goal: taking your online business to the next level. If you’re looking for membership software to turn your business into a recurring revenue machine, we’re here to help.
Today, we’ll talk about four questions you need to tackle to figure out how much you should charge for your membership site.
1. Should You Collect Membership Dues?
This one probably seems a little counter-intuitive. If you’re trying to bulk up your business, of course you should charge for your memberships, right?
Not quite. It depends on what your goals are for your membership site. If you want to grow an audience, your charges should be minimal, if any at all.
And, if you want your membership to support your other online products or help you sell online courses, your prices should be in the same range.
In both cases, your membership is more akin to a loyalty program that rewards customers who buy, or will buy, your other products (such as digital downloads).
Which is a smart strategy if your goal isn’t to make memberships a primary income stream. Giving away free content by offering a free membership can do a lot for your online course and download sales.
After all, 41% of consumers in the US are more loyal to brands that provide them with new experiences such as products and content.
Combine that fact with the 61% of businesses that say customer retention is their number one struggle, and you’ve got a strong business case for a free membership or loyalty program.
But if that’s not enough, there’s also this to consider:
Starting a loyalty membership program for their customers helped Dr. Axe rake in some big bucks. In three months, customers who signed up for the membership spent $235,000,000 more than non-members.
Which came to about a 2.7x increase in spending.
Obviously, part of their membership program success was providing loyalty rewards.
Which, if you’re building a free or minimal charge membership, you should copy. It’s easy to set up exclusive coupons for your online courses, digital downloads, and memberships to reward your customers.
But whether you choose to provide rewards or not, it still stands to reason that while a free membership program may not bring in direct income the way a premium one will, it’s still an easy way to create some revenue magic for the rest of your business.
And, you wouldn’t be the first creator to use it. Rewards don’t always have to be monetary, either.
Check out how Pixel Vision 8 leverages low-cost and free memberships to keep their audience engaged with the material by providing exclusive updates and demos.
Offering those updates and exclusives probably doesn’t cost Pixel Vision much by way of overhead, but it still lets them reap the benefits of building loyalty with their membership program.
MFSEF Studio offers similar rewards for signing up for its free membership program, providing subscribers exclusive content, new product information, and YouTube updates.
All of which hit the key parameters for increasing customer loyalty. And, like Pixel Vision, probably don’t cost a ton to produce.
So while this may seem like an obvious question, it’s one worth considering.
What are your goals? Are you trying to build your audience up and increase customer retention? Depending on the answer to those questions, the answer may be a surprising “no.”
If it’s a “yes,” however, you’ll want to turn to the next question.
2. How Much Should You Charge for Your Membership Program?
OK, you’ve decided that you definitely want to make memberships part of your core income, which means offering them for free isn’t an option. But -- how much should you charge? Should you start on the low-end of pricing and work your way up?
That depends on if you can prove your value. If you’re just starting out, you have to start out at the lower end of the scale to get customer testimonials and reviews so you can prove your value.
In other words, you have to build up social proof.
Like the kind Glow Recipe garnered while growing their no-name ecommerce business into a major powerhouse.
But their example -- while strong -- isn’t feasible for most of us if we’re not interested in becoming a featured guest on Shark Tank.
For a more homegrown example, check out David Delahunty’s “5 Ideas A Day” membership program.
Easier to obtain but no less impressive, David’s page makes a strong, socially-validated case for signing up for his membership program.
But even if you don’t have any features like David or Glow Skin, you can still use social proof to sell your value by featuring customer reviews.
In fact, we’ve recently changed what you can do with testimonials, and we think you’re really going to like it.
Now, click on the “+ New section” option in the left-hand panel.
You’ll see this drop-down menu population. Click on “Testimonials.”
This will add a new, pre-filled section that’s super easy to edit. Check this out.
To add and edit your testimonial, all you have to do is go through each field and enter in your customer’s name, a link to the testimonial (if you want to or can), and so on.
When all is said and done, your result is some stylish and easy social proof. Here’s mine:
Why, thank you, Mick!*
(*Mick Jagger has never signed up for my membership. Sadly.)
And, not only is this a really simple addition for your Podia storefront, but it’s also massively useful. 70% of people will trust recommendations from someone they don’t know.
“...I always include some form of social proof on them, whether it’s product reviews, testimonials, or even social media share buttons; it’s a no brainer for me.”
He’s not alone, either. For a real-life example of social proof, check out Justin Jackson’s Marketing for Developers course page:
When you have social proof like this, you can price your membership on the higher-end of the scale. So, hit up your email list and ask your most ardent customers for testimonials, then start setting your price to match.
Then, experiment with it. Will people buy at one price but not another? As long as you can prove your value, you’ve got room to play.
As for how to play, it’s surprisingly easy.
And, as you experiment, compile a table with your price point, conversion rate, and revenue to locate your optimal price for your membership program.
So, if you can’t prove your value yet because you’re just starting out, set your price at the minimum you need to recover your costs for hosting and providing the membership.
If you can, experiment with it until you find your profit sweet spot.
Just make sure you’re taking our next question into account when you do.