Membership Sites Made Easy

January 17th, 2011 by - Posted in How To Make Money

money in handChoosing the right subscription price for your membership website will determine how profitable your website is.

Get the price too low and your costs, marketing in particular, will eat into your margin. You could also put people off if the price point gives the perception of low value.

Get the price too high, particularly compared to alternative sources of information, and you will put prospects off.

Before giving you some guidelines, it is very important to remember:

There is nothing to stop you from changing the price to test the market.

Many subscription website owners pluck a subscription fee out of the air when they launch their site. Often it’s based on no more than a hunch. They never test whether it is too high or too low to maximise their profits. It is difficult to change the price for a print publication, but not for an online website.

Test! Test! Test!

There are no hard and fast rules about how much you should charge for access to your website, but here are some guidelines to help you:

  • The monthly subscription can be anything from £1/$1.60 up to £1,000/ $1,600. The most common subscription charges fall in the range £4.99/$4.95 – £19.99/$19.95.
  • A website with just 1,000 members charging $9.99 a month will generate about $120,000. If this business is run from home, even after costs, it could generate a net income of over $100,000 for the individual publisher.
  • It is recommended that publishers offer a choice of payment plans, with discounts for members willing to commit for longer periods of time, for example:

– 9.97 /month, or

– 24.97 /quarter,or

–  87.00 /year

  • If you offer three pricing points, you tend to get most subscribers going for the middle one. It’s a psychological thing.

You will probably have seen on charity collection forms a choice of three donations. They do this because they know that most people will go for the middle one, which is usually set at a level higher than people would normally give:

“Please tick the donation you wish to make:

·        5.00

·        25.00

·        50.00

·        Other”

  • If you offer a monthly price point, make sure that it is much higher than 1/12th of the annual. You want to encourage people to subscribe for as long a period as possible, whilst not putting off people who want to test the water before fully committing themselves. E.g. Monthly 19.97, Annual 149.
  • Offering just an annual subscription will greatly reduce your conversion rate because you are increasing the perceived risk for prospects signing up. This is still the case even if you offer a 100% money-back guarantee.
  • Be aware that many payment providers will not allow you to charge an annual subscription because if the website closes down, they are liable for refunding members the outstanding balance for the remainder of the 12 months.

Check with your payment provider before signing up. Also, be sure that they can take automatic monthly payments if you are offering a monthly subscription. This is called ‘Recurring Payments’.

  • Generally speaking, sites aimed at consumers charge less than those targeted at businesses.
    • Consumer sites, typically £30/$50 – £120/$200 per year.
    • Business sites, typically £120/$200 – £700/$1120 per year.
  • What are the competitive sources of information for your potential audience? How much do they charge? If Manchester United charges £100 a year for membership to the official fan club, a competing online independent fan club should probably charge no more.
  • The more exclusive the content, the more you can charge. A very successful share trader, Vince Stanzione, charges £100 /$180 a month for a newsletter reporting what trades he is about to make or has just made. Jay Abraham charges $300 a month for access to his website that gives his personal advice on growing a business (www.abrahaminsider.com).
  • Study magazines in your sector. How much do they charge? What is their circulation? How will you compete? There is no rule about charging more or less than them, but you have to be sure that your value proposition is more compelling when trying to attract new members. Do remember that as an online site, you offer huge advantages over print. These benefits have a value that you can charge for.
  • People love a deal! Set your price a bit higher than you intend to charge and then discount it back. This has two benefits:
    • People perceive that the value of the content is at the higher price.
    • Prospects feel they are getting a bargain.
  • There are psychological barriers in pricing. It is better to charge $4.95 a month than $5.00, or $9.97 is better than $10.00. There are also opportunities to push pricing up towards these barriers. For example, if you charge $385 a year, you could probably get away with lifting the price to $397 without any impact on sign up rates. Just don’t break the $400 level, as this is the next psychological barrier and will cause a fall in subscriptions.
  • Don’t give discounts to loyal members! If a member returns year after year, they perceive that the price they pay is equal to the value they receive. By all means, reward their loyalty with bonus information, such as a free e-book or a research report, but don’t reduce the price. This is a very common mistake.
  • Offer promotional prices for one year, but don’t drop the general price. If you believe that you are missing out on a big market group because they are more price sensitive, offer them a promotional code/discount on the standard price. Don’t drop the price for all subscribers. A good example is if you decide you want to attract students who tend to be very price sensitive.
  • DON’T ever consider, even for a moment, charging a one-time fee for lifetime’s access. This was common in the early years of the internet, but I haven’t seen a single site that has survived with this strategy.
  • Test, test and test again! One of the greatest benefits of the internet is you can easily change pricing, offer discounts or promote free incentives with minimum effort and cost. For example, send out two different price offers to two similar groups of prospects. Measure the response rate and margin to find out which offer is most profitable. Then create a new offer and try it against the best of the first offer … and so on. This is known as “AB Testing”.

You can also consider offering trials, but be sure to get the customer’s credit card details before the trial starts and get them to agree that after the trial is over, you will automatically bill them unless you receive written instruction not to.


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