Membership Pricing Strategy: 4 Ways to Price Your Membership Site

Membership sites are a great way to set up recurring revenue for your business and give you financial stability as a creator. 

The first step in setting up a successful membership website? Create a solid membership pricing strategy.

Let’s go over what to consider when determining your membership pricing strategy and a few pricing models to follow if you want to set up recurring revenue for your business.

What is a Membership Pricing Strategy?

A membership pricing strategy is a plan for how much you will charge for your membership website. Before you can start charging members, you must have a strategy for how much you want to charge, how often you want to charge, and what members will receive in exchange. 

For example, let’s use basic math and say your goal is to make $1,000 per month from your membership website. You want to offer exclusive content and a community for members to engage with one another. You decide to charge $20 per month, which means you’d need 50 paying members to reach your revenue goal. This would be your pricing strategy. 

Your membership pricing model is based on several factors such as the value of your content, how many members you plan on having, and any exclusive perks you want to offer.

Types of Pricing Strategies

Let’s go over the most common pricing strategies to use when coming up with the best pricing model for your business.

Market-based pricing

Using a market-based or competitor-based pricing strategy takes into account what competitors are charging and how much the market is willing to pay. You don’t have to mirror your competition, but this offers a good starting point by giving you a sense of what membership fees the majority of people are willing to pay.

Start by conducting competitive research. What are similar membership sites pricing their memberships at? What type of content is included in that membership fee? 

‍A recent report on membership pricing revealed that 47% of business-to-consumer (B2C) membership sites charge between $25-49 for their monthly membership fee. The next most popular price range was less than $25 per month.

You can also ask your prospective customers what they’re willing to pay. 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.

Value-based pricing

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. That’s where a value-based pricing strategy comes into play. 

Value-based pricing takes into account what members receive as a result of subscribing to your content or services. You can add up all of the costs and time it takes to produce your digital products, but at the end of the day, your offerings are more valuable than the work you put into them. 

For example, if you have over 20 years of experience in your industry, you bring immense expertise and value to your members. Know your worth, and price accordingly. 

Consider the value of the price and what members receive in return for a higher price point. That same report found that memberships priced over $100 per month usually included premium offerings such as masterminds or private coaching. Memberships that are under $100 typically focus more on content and community features. 

You may not land on the right price right away and may even have to lower membership prices to find the sweet spot. But you might also find that people find your content extremely valuable. If that’s the case, capitalize on the positive response and use social signals to prove your value to potential customers.

Also, consider the value-add members receive with a paid membership. If your site helps your customers get a certification or adds skills to their resume, then your membership pricing strategy should reflect that added value.

4 Membership Pricing Models

The pricing strategies we shared above are meant to help you understand what you’re going to charge for your membership business. Next, let’s go over how to charge by breaking down a few common membership pricing models:

The most common membership pricing models include:

• Fixed pricing 
• Tiered pricing 
• Subscription pricing 
• One-time fee

1. Fixed pricing

This is probably the most common pricing model for membership and subscription websites. Fixed pricing involves charging a fixed, recurring fee. The fee can be charged on a monthly, quarterly, or even yearly basis. Flat rate pricing is a straightforward way to sell your offerings to members and generate a consistent cash flow for your business. 

If you’re going to offer varying fixed price packages, consider breaking down the pricing like entrepreneur Jacquelyn Umof does with her membership business Barre Definition. While each membership option is a fixed price and offers the same contents, the pricing tiers show the discount members receive by paying yearly versus quarterly or monthly.

Pro tip: If you want to build trust with prospective members, offer free trials like the Barre Definition does. Giving customers a chance to experience your offerings with a free trial before fully committing helps them understand the value of your membership packages.

2. Tiered pricing

Tiered pricing involves setting up different pricing packages. A tiered pricing model is different from fixed pricing in that each pricing tier includes different features. Think of the way SaaS companies structure their pricing. 

Let’s take Kajabi, for instance. Here's Kajabi's tiered pricing model designed for a range of budgets and business goals:

You can also use tiered membership to offer different types of content like kidYOUniversity does. The education program founded by online educator Gahmya Drummond-Bey offers three tiers of content for members to choose from depending on their goals and desires.

Finally, consider offering variable pricing when it makes sense for your customer base. This is when you vary what you charge based on multiple buyer personas. For example, you can offer corporate memberships at a higher price point than you offer your individual consumer membership. This can get complex but may work depending on what you’re offering, especially in the B2B space.

3. Subscription pricing

The subscription pricing model is similar to fixed membership pricing in that it requires signing up to receive something on a recurring basis. The main difference between a subscription pricing model and a fixed membership pricing model is that a membership focuses more on community while a subscription is designed for a product or service. 

For example, if you want your membership site to include a community forum for your members to engage with one another, then you would set up a monthly fee to access the community. 

On the other hand, if you’re a life coach and you offer a mix of products and services such as private and group sessions and exclusive content, then it may make more sense to set up a subscription pricing model.

4. One-time fee

One-time fees can lower the barrier of entry for your service and allow for more enticing offers. For example, you can advertise that a customer gets years of value for just one payment. Who doesn’t like getting the most out of their money?

This type of model also works as a 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 want to make sure you’re striking a balance between value for the member and the customer lifetime value so it makes sense for your business long-term. 

One potential downside of one-time fees is that you’re constantly looking to acquire more customers. That can get pricey or challenging over time as your marketing channels get saturated. One potential solution is to provide a one-time membership fee but also offer members upsells. That way, your revenue isn’t dependent on constantly finding more members.

How to Set Membership Prices

Now that we’ve gone over the different pricing models and strategies, let’s break down a couple of numbers-focused considerations for your membership pricing.

Consider your expenses

If you’re still unsure what your membership price should be after conducting market and competitor research, you can also calculate membership pricing based on potential revenue. 

Membership sites, like most digital products, can have a high ROI. Unlike physical goods, digital goods can be created once and serve thousands of new customers with limited additional costs.

To set membership prices that will make your site profitable, you’ll need to charge more than what it costs to create and maintain your digital product offering. That means your pricing should cover:

• All your software expenses, including membership software or website hosting fees
• Operating costs like office rent and equipment 
• Your time: the hours you work on the site are valuable and should be accounted for.

For example, let’s say: 

• Your initial software costs were $100 a month. 
• You work from home but paid $1200 for a new computer, so your monthly operating expenses are $100 a month for the first year.
• You’re putting in 100 hours a month at a self-valued rate of $25/hour. 

This means you have $2700 in monthly costs. If you estimate you’ll have about 100 subscribers, you’ll need to charge each of them at least $27 per month to turn a profit.

It’s fine if you’re not profitable right away. 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.

Establish financial goals

You have ambitious financial goals you want to hit as a creator. 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 by doing simple math of how many members at what price it would take to achieve that:

• 1,000 members paying $10 a month
• 500 members paying $20 a month
• 100 members paying $100 a month

Admittedly, this is basic math that doesn’t account for subscription metrics like churn and operating expenses. But it’s a great starting point for figuring out what you want your membership pricing to look like.

If you’re just getting started, 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 prices.

3 Tips for Your Membership Pricing Strategy

As you scale your membership business, you’ll realize that membership pricing is something that grows and changes with your business. 

Whether you’re just getting started or are considering adjusting your pricing, here are some best practices to keep in mind for your membership pricing strategy.

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:

1. Test different price points

Once you’ve launched your site, you can always monitor and adjust your price point. While your initial pricing research should have eliminated any major miscalculations, it may serve your business to test out different prices over time.

For instance, maybe your initial price point is selling much better than expected. That could be a sign that there’s room to increase the price of your membership.

On the other hand, you may dig into your analytics and find that many people start the sign-up process but leave when they get to the pricing options. That could be a sign that you need to lower your prices a bit.

Just remember that your membership pricing strategy isn’t set in stone. Evaluate how to price your membership site on an ongoing basis to keep your business on a forward path.

2. Evaluate your offering

Another consideration when thinking about your pricing strategy is the actual content that members receive. Make sure you’re always evaluating whether or not the value of your offerings matches the price. 

You can gather insights from current paying members by asking them to fill out a survey. Ask them questions that will help you understand how they feel about the benefits they’re receiving for their membership. You may find out that they wish they had more opportunities for one-on-one coaching or mentorship sessions. If there’s demand for something that would require more of your time and expertise, then you could increase your membership pricing, add another subscription pricing package, or offer an add-on service. 

Use customer data to refine your offering and membership pricing to meet demand and fulfill your members.

3. Gather social proof

Social proof is a crucial part of setting the right membership pricing. People assume something is worthwhile when they see that others have enjoyed the product as well.

For your membership business, this means gathering testimonials. Ask existing members to share a testimonial that you can display on your membership site landing page. When asking for testimonials, encourage members to share real results that came out of being a member — the more detailed the better. 

Strong testimonials will promote the benefits of your membership package more than your own marketing will ever be able to do. This testimonial for Jenni Gritters’ online community and membership program for self-employed creatives is a great example:

Showcasing the clients you’ve helped will not only build community but also communicate the value of a membership to potential customers.

Wrapping it Up

The best membership pricing model is the one that makes the most sense for your business. Start by researching the market and industry and figuring out what your competitors are charging. Then, determine the pricing model that best fits your customers' needs and communicates your value. 

From there, you can come up with a price that aligns with your financial goals and accounts for your business expenses. 

Just remember that your membership pricing strategy is fluid — evaluate your pricing and membership packages regularly to ensure that you’re offering what your members need and you’re charging what it’s worth.