This is one of the most commonly asked questions we get from new membership site owners. How should I price my membership subscriptions, and why?

I like to answer this with 3 major factors:

1) What kind of content schdeule are you committing to?

If you plan to create/offer content with no consistency you should consider annual subscriptions. For example, you may build out various content each quarter in batches. This kind of content schedule is most compatible with an annual subscription so customers know NOT to expect weekly or monthly updates.

Whereas, if you plan to create/offer content every month you should consider monthly subscriptions. Consistent content is the main driver for most purchase decisions and your members will come to expect this.

We’ve seen the most success with monthly subscriptions from MemberDev clients who put out new content every week. Period. You can’t fake this til you make this. Members who purchase a monthly subscription will see the monthly charge on their statement and correlate that with whether or not they saw any updates from you.

2) What are the supply/demand economics for your product offering?

The next factor is supply and demand for content you’re creating. This plays into the relative price points you can demand based on TAM (total addressable market) and supply. This is important because there is an inverse relationship between TAM and supply. Larger TAM and more supply results in lower membership prices. Whereas smaller TAM and low supply results in higher membership prices.

For example, there is a BIG variation in an online yoga membership vs a bitcoin investment membership. Let’s compare the differences:

TAM
  • Online yoga is huge with low demand.
  • Bitcoin investment is still small with high demand.
Supply
  • Online yoga has many providers with high competition.
  • Bitcoin investment has few providers with low competition.

Given these basic factors, an online yoga membership should be priced much lower (ex: $10/month) than a bitcoin investment membership (ex: $100/month).

3) What kind of member do you want to attract?

Lastly, it’s important to set your prices at levels that attract your ideal customer. Your price points essentially serve as your filter.

For example, MemberDev doesn’t offer any platform subscriptions for less than $99/month. This immediately filters out the “price shoppers” and/or people with extremely low budgets. We set this minimum price point intentionally to make sure we’re only working with serious customers who have some means to invest in a membership platform. Our prices allow us to target and cater to small businesses and startups.

That said, if we were to raise our minimum subscription to $999/month, we’d be targeting a whole new [enterprise] demographic, since small businesses typcially can’t afford this price point.

So it’s essential to figure out who your target customer is, and what price points would appeal to them.


In summary, here are your key takeaways for how to price your membership subscriptions:
  1. Figure out the content schedule you can commit to.
  2. Determine where your product offering lies in the suppply/demand curve.
  3. And then narrow in on the type of customer demographic you want to target.
Ali Jafarian

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09/28/2019

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