A membership site is a great way to run a successful Knowledge Commerce business. Not only can it be quite profitable but you can foster a strong community of like-minded people.
We’ve covered what should go into creating a membership site but many people ask “What price should I set for my membership site?” Let’s go over what to consider when setting the price for your site.
Setting a membership site price that meets your goals
You have financial goals you want to hit as a knowledge entrepreneur. Your membership pricing should reflect those goals.
For example, let’s say you want to generate $10,000 a month in revenue from your membership site. One way to think about pricing is doing simple math about how many members at what price it would take achieve that:
- 1,000 members paying $1 a month
- 500 members paying $2 a month
- 100 members paying $100 a month
Admittedly, this is basic math that doesn’t account for things like churn and operating expenses. But, it’s a great starting point for figuring out what you want your pricing to look like.
If you’re just starting out, your financial goals can change as you receive more information. And that’s okay. It’s important to be flexible as you gather new information. But, you should still keep your financial goals in mind as you’re setting your price.
Set membership site pricing that’s profitable
Membership sites, like most digital products, are typically very profitable. Unlike a physical good, digital goods can be created once and serve thousands of new customers with limited additional costs.
Still, it’s vital to price your membership site with profit in mind. Ideally, the financial goal mentioned above incorporates profit, too. That means your pricing should cover:
- All your software expenses, including membership software
- Your other operating expenses like office rent, acquisition costs
- Your time: the hours you work on the site is valuable and should be accounted for.
It’s fine if you’re not profitable to start with. Sometimes, your costs to get members will outstrip your monthly revenue. But, it’s a good idea to set your pricing so that it can consistently produce profits after a reasonable amount of time.
Membership site price that’s affordable for your niche
Successful pricing also involves what your customers will pay. I could set a $1 million dollar pricing for a membership site about underwater basket weaving but it probably won’t attract customers.
Set your membership fee at a level where you can attract enough customers to hit your financial goals. You can research this a couple ways:
- Ask your potential customers: send surveys to your existing email lists asking about pricing. If you don’t have a list, reach out to your ideal customers on LinkedIn or through Facebook Groups.
- Do competitive research: what are similar membership sites pricing at? What are they offering for that membership fee? You don’t have to mirror them but this gives you a good signal on what the market will pay.
You can then factor this in with your financial goals.
Set your membership pricing for the value you deliver
It’s important to remember that you don’t have to charge what your competitors do. You should price according to the value you will deliver to the customer, even if that’s much higher than the competition.
This can be challenging for many of us who suffer from Imposter Syndrome. You may not feel like your content or services are “worth it” but they probably are. Besides, you’ll never get what you deserve if you don’t ask for it.
You may miss the mark sometimes and have to lower prices. But we encourage you to give your customers a lot of value with your membership site and to price accordingly.
One-time fee or recurring payment?
You can charge a one-time fee for your membership site or you can have customers pay on a recurring basis (monthly or yearly). Let’s go over the pros and cons of each.
One-time fees can lower the barrier of entry for your service and give you more enticing offers. For example, you can say that a customer gets years of value for just one payment. Who doesn’t like getting the most out of their money?
A one-time fee does mean you’re constantly looking to acquire more customers. That can get pricey or challenging over time as your marketing channels get saturated. One potential solve is to provide a one-time fee for membership but also offer members upsells. That way, your revenue isn’t dependent on constantly finding new members.
A recurring payment is often great for your bank account because you can rely on steady income every month or year (depending on how you bill). It’s easier to project your future monthly financials with recurring membership fees. With that projection, it’s easier to make bets around advertising channels or new office space or a new employee.
Recurring membership pricing presents its own challenges, though. Your customers will likely demand more and more offerings every month or year to get the value out of their subscription. Additionally, if you bill annually and automatically renew without notice, that can upset many people.
Other pricing options for your membership site
There are a couple of other ways to set the price for a membership site:
- Variable pricing: You can vary what you charge based on your audience or acquisition group. For example, you can offer corporate memberships at a higher price than you offer your individual consumer membership. This can get complex but may work depending on what you’re offering.
- Lifetime membership: This is typically a large, up-front lump sum for lifetime membership. We define this as the lifetime of the membership site, not the person buying it. This is often used as a way for early adopters and superfans to contribute at the beginning of a site. Make sure the math works out on this when you’re pricing. You likely don’t want the lifetime membership to be the cheapest over the span of a year or two.
Using Kajabi for your membership site
Kajabi is designed to provide all the software tools you need for a wildly successful membership site. With our all-in-one business platform, you can use one tool to:
- Create your membership website
- Create the content for your members
- Market to your members and prospects
- Analyze your performance
- Adjust your membership pricing to whatever model you prefer
- And much, much more.
Whether you choose Kajabi or not, be sure to choose a membership site software that empowers you to choose the pricing model you want.