Pricing your online membership (Find your pricing sweet spot)

Transcript

Charging the right price for your online membership can feel tricky. You don’t want to charge too little and leave money on the table, but you also don’t want to charge too much and scare people away. In this video, we’ll go through nine questions to help you find the sweet spot for your online membership pricing. Let’s get into it.

There’s no single best approach for pricing your membership site, but answering the following questions for your business will help you feel confident that you’re charging a fair and competitive price. Let’s go ahead and dive into the first question.

Question #1: What are your goals for your membership?

This question addresses the role you want your online membership to play in your business. Do you want your online membership to serve as a major source of income, or is it meant to point your audience toward other paid products like online courses or downloads?

If your membership serves as a way to grow your audience and build awareness for other paid products, you might consider charging a low or possibly no membership fee to maximize audience growth. This strategy has been used by a number of online entrepreneurs as a way to build an audience and move them down the funnel toward paid products.

If you plan to make online membership central to your business, you can still offer a free plan with limited features, but you’ll definitely want to charge enough for your main membership plan to justify your time and energy. We’ll talk about tiers a bit later on in the video.

Question #2: Should you charge one-time or recurring payments?

Depending on the kind of content you offer in your membership and how you set it up, there may be some benefits to charging a one-time fee versus recurring payments. Let’s talk about the pros and cons of each.

With a one-time payment, you’ll typically charge a much larger membership fee and provide lifetime access to all current and future content and benefits. This type of model is used most often in community memberships or in memberships that offer a valuable archive of content but don’t necessarily add new content.

This can be a little simpler to manage, and you get a lot more money upfront. When pricing this way, you can consider the lifetime value to your member of having unlimited access and reflect that in your pricing.

With recurring payments, you can charge a monthly fee, annual fee, or both, and provide access to your content and benefits as long as payments are up-to-date. This type of model is used most often when the creator puts out new content consistently and in memberships where the creator offers coaching or one-on-one consultation.

Recurring payments are lower, but provide a lot more financial stability and can make it easier to build a sustainable online business. One-time payments may be a good fit under the right circumstances, but for most memberships, recurring payments make a lot more sense.

Question #3: What do your competitors charge?

Even though no two businesses are identical, competitor membership pricing can be a great starting point. If there’s another creator working in your industry, serving the same audience, and offering similar content and benefits, there’s a good chance their pricing could work for your audience.

Some great places to look are marketplace sites like Gumroad or Patreon. You can also do a search for your industry or membership theme along with the name of a hosting provider. For example, I can search “Podia cooking membership,” and one of the top results is Kathy’s Cooking Club.

Here are a few things to keep in mind as you research your competitors:

Consider their audience and influence

If the other creator has a much larger audience and more influence, they can probably charge a higher membership rate.

Consider the quality of their content

If their content is really professional and polished, that’s likely reflected in their pricing.

Consider where their membership is hosted

If they host their membership through a marketplace site, they have direct competition with other membership site owners for that space which means they may be somewhat under-priced. If they host through a non-marketplace provider like Podia, they can probably afford to charge a fair price for what they offer.

Another approach is to look at the general market. According to a recent report, only 28% of memberships in the $50–$99 bracket make over six figures. Compare that with 53% in the $25-$49 range, and 51% in the $15-$24 range. I’ve linked the report in the description below so you can check it out for yourself.

Question #4: What industry are you in?

When considering your membership pricing, it can be good to take into account customer behavior in the industry you serve. For example, if your membership is around things like tech, travel, or fashion, your customers likely have more disposable income and can afford a higher-priced membership.

On the other hand, if your membership is around things like art, entertainment, or DIY projects, your customers might be looking for ways to save money and would be more attracted to a lower-priced membership.

Also, is your membership B2B or B2C? Businesses usually have larger budgets for things like memberships and subscriptions, so that can be an important deciding factor.

There can always be exceptions depending on your specific approach, but this question is a great way to get you thinking about pricing from your customer’s perspective.

Question #5: What would someone pay in the real world?

Not all types of online memberships have a real-world component, but if you offer coaching or consulting, or provide content similar to what is available in print publications, you may be able to find clues for your pricing.

Let’s take coaching as an example. Let’s say you provide dance lessons. There are most definitely dance studios that you can look up and find pricing information for.

When researching this type of pricing, it’s good to keep in mind that while your offerings may be similar, there are some important differences in the delivery method. Virtual coaching can be more convenient for your customer, but they might have to spend their own money on additional equipment that other in-person businesses may provide.

As long as you’re considering and accounting for the differences, this can be a good method for figuring out your own pricing.

Question #6: Should you offer tiers?

Tiered pricing can be a great way to organize your membership content and offer something more affordable for customers who aren’t ready to go all in. In this video, I went into depth on this topic, but here, I’ll cover some of the key questions to help you determine whether or not you should offer tiers or plans for your membership.

How much time and energy do you have?

A single membership tier is much simpler and easy to manage than multiple tiers, so first consider how much time and energy you can realistically commit.

How much content do you produce?

If you only produce one piece of content per week or less, it may be difficult to offer multiple tiers. But if you offer more than that, it’s easier to justify the cost of your higher tiers based on how much your members are getting.

How much content have you already created?

If you’ve been creating content for a while and have an archive of great articles, art pieces, or other digital products, you could make those available in a higher-tier membership plan.

How much access do you want members to have to you?

If the idea of interacting directly with your members energizes you, you could leverage access to you to offer different membership tiers. The higher the tier, the more access they get.

Question #7: How much time and energy are you giving?

Speaking of access, it’s important to consider the value of your time and energy in the equation. You don’t have an infinite supply of time and energy, so it’s important to choose a price, and what your members get for that price, in a way that is sustainable.

If you offer tons of content, but you spend relatively little time producing that content, you may be able to afford to price more competitively. On the other hand, maybe you offer a weekly one-on-one coaching session, but because of the time and energy it takes to prepare, deliver, and debrief, and most importantly, because the customer is getting access to you, it’s worth more.

Question #8: What kind of ROI can your members expect?

When considering the price for your membership, one of the most important questions you can answer is what price would make this a great investment for my customer? If someone offers a business coaching membership at $499 per month, but their coaching could help you earn an extra $1500 per month in your business, that’s a 300% return on investment.

While you can’t always guarantee results, you can probably make an educated guess about the kind of value your members might realize from putting your content into action. As long as your pricing is some fraction of that value, potential customers will see it as a wise investment.

This can also be a great approach to marketing your membership, especially if you can share real examples of customers who have gotten a return on their investment from joining your membership.

Question #9: How much do you want to make?

This may seem like a silly approach to pricing, but it can actually be a great way to answer other questions about your membership. Think about how much you’d like to make. Let’s say it’s $100,000 per year. Now work backward from that and divide by some number of members, like 1000. At 1000 members, you’d need to charge $100 per year or about $8 per month per member. Or what if it was 100 members. Then you’re looking at $1000 per year or about $84 per month per member.

One of the things I love about this approach is it helps you determine a target number of members. Not everyone is cut out to run a 1,000 or 10,000 person membership. And then from there, you can figure out what you’d need to offer to make the price point worth it for your members.

Bonus tip: Use simple pricing

So you’ve gone through all the questions, and you’ve determined that the precise amount you should charge for your membership is $10.15 per month or $100.50 per year. Before you lock in those prices, it’s important to consider anything that might serve as a roadblock for a potential customer. When we see a complex amount, we tend to stop and think more, and the more we stop and think, the easier it is to talk ourselves out of hitting the buy button. By using simpler pricing, like $9 or $99, we make it easier for potential customers to breeze through the purchase.

Hopefully, these tips have helped you get closer to finding a price that’s right for you. As you start selling your online membership, don’t be afraid to experiment with different price points and see what works best for your customers. If you have any questions or thoughts, please feel free to leave a comment below.

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LINKS/RESOURCES: Online Membership Industry Report