Membership Geeks

Are You Undercharging For Your Membership Site? Probably Not…

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How do you know if you're undercharging for your membership website? 

This question is one that regularly comes up in our Academy and Facebook communities…

And that's because pricing itself doesn't always make sense…

Especially when it comes to memberships…

Because it's not an exact science where you punch some numbers into a machine and it spits out the perfect price…

There are a lot of subconscious elements to take into consideration….

Things like perception, positioning and so on…

And with so many factors in play, it's no wonder that you can be left questioning whether or not you're pricing your membership right.

While you aren't likely to stumble upon a one-size-fits-all solution for this dilemma…

There are some typical price ranges for membership sites.

As a rule of thumb, memberships that serve a business-to-business market typically fall between $30-60 per month…

While for business-to-customer markets, it's usually between $15-40 per month.

If your membership falls on the lower end of those ranges, then you're justified in thinking that you’re potentially undercharging…

But if you're in the mid to higher level of the typical price range and think you're not charging enough, then it’s wise to ask yourself one vital question:

Why do you think you’re undercharging?

Let's explore this in more detail…

Common Reasons Why People Think They are Undercharging 

1. Comparing a membership to a course

Thinking about this in a technical sense,  yes a course is a type of membership…

But besides that categorization, it's like comparing apples to oranges.

On the one hand, courses are a finished product with defined outcomes from the get-go. 

So, once they’re published and the payment is processed, the transaction is over.

With memberships, the expectation is that a person will be a member for months and even years to come with the premium content on offer constantly evolving…

And there’s no lump sum involved, but there is the promise of a rising baseline of income that's not directly tied to sales…

If you want to make money from a course, you need big ticket sales…

Memberships and courses are two very different products

Agreeably there are trade-offs between the two…

But you can't have the upsides of running a membership site while charging the premium price point of a course.

What your members might say if you charge them the price of a course…

So if you're comparing them in terms of pricing, then maybe you need to go back to the drawing board and think about what you want to achieve…

You can do this by asking yourself one simple question…

Should you create an online course or a membership site?

2. Comparing a membership to a consultancy

“I would normally charge $xxxx an hour for consultancy so I should be charging X amount to my members”…

We hear this a lot…

But unfortunately, that's not how it works…

Think about it like this…

Imagine you’re splitting taxi fare with three other people…

You’ll be sacrificing space, comfort, and perhaps even the convenience of arriving at your destination on time…

However, you would expect to pay less based on that sacrifice…

It’s the same with memberships… 

You’ve struck this unspoken deal that since you’re serving more people, the distribution of your output is balanced by a wider distribution of their financial input. 

Yes, your knowledge and skillset are worth more than $50 a month…

But limited access to you comes at a cost.

Consultancies don’t have this problem as they operate on a one-to-one basis.

3. A little bird whispered in your ear

Often, people give advice without having a clear picture of the matter at hand…

And this leads them to compare oranges to apples on your behalf. 

You can’t completely blame them…

They probably see the extent of your knowledge and believe that should translate to more zeros in your account balance…

They aren’t wrong in sensing that you’re worth more than what you’re charging…

But that doesn’t translate in the world of memberships.

Be careful when taking advice from people…

Where it gets tricky is when you hear it from members as well…

However, you shouldn’t let that switch on a light bulb in your head.

It’s their way of saying they’re getting value from your content.

But charging more could potentially lead to a loss of members, which still leaves you with less money. 

4. You want to attract people willing to pay a premium fee 

If you're looking for members who are willing to pay a premium fee, then you need to understand is that it takes more than money to have skin in the game. 

Charging more won’t necessarily attract people willing to pay top dollar for your membership…

Once you reel them in, they also have to buy into what you’re teaching…

And if you can't compel them to take action inside your membership, that's your shortcoming…

It's not because they haven't given you enough money.  

However, a case can be made for memberships that charge low fees…

For instance, a $5 dollar monthly membership fee may take away that financial incentive that makes members feel it's worth their time.

Factors that make up your pricing

One thing that is very clear is that pricing your membership is a complex decision…

So when asking yourself the question ‘How much should I charge for my membership website?'…

You should consider the following factors that affect pricing…

Pricing factor 1: Target Market

Who is your target market? 

If you have your eyes on multi-millionaires then there’s a chance that they won’t be impressed by a membership that costs just $30 a month. 

This is where perception comes into play…

Even if the offering is the same as if you were to stick a $300 a month price tag on it, the nature of the market will affect their perception of value...

It's about perception, not reflection…

So if you know your market is going to think your price point is too cheap, that can certainly be a reason to charge more than is standard.

Pricing factor 2: Exclusivity

There’s something about not being able to get a reservation at a certain restaurant that makes you want it more…

In other words, people are willing to pay good money when there’s the promise of being part of a select few.

Exclusivity is a good reason for increasing your price…

So, if your membership is deliberately small…

Then that exclusivity is a justification for higher pricing.

Price factor 3: Competition

If your membership is lost in a sea of similar ones, then your pricing is going to be directly affected by what other people are pricing.

If you still want to try a steeper price anyway, ask yourself this:

Can you give a legitimate reason why your membership costs more?

If the answer is yes, then bump that price up a few notches…

However, the story changes when you’re the only person in a market capable of solving a particular problem through your membership.

Because in this case you’re guaranteed a willing audience from the get-go.

As such, you can price higher without worrying about competing on price. 

Price factor 4: Facilitation

Providing some sort of facilitation with elements of your membership is certainly one way to go if you want it to cost more.

Basically, if your members can’t DIY every aspect of your membership, that justifies a premium.

Price Factor 5:  Direct Access

One aspect of memberships is that you’re mostly locked into a one-to-many model…

But if you can create avenues to tap into the one-to-one model, it could turn things around. 

If your membership is built around your expertise or skill set, people will pay more for direct access to you.

Price Factor 6: Proven Value

Results speak for themselves…

Let’s say you’ve provided skills that doubled the monthly income of a handful of your members, that’s a valid reason to raise your price. 

However, the type of results matters.

You can’t compare double income to something like improved calligraphy.

Higher impact results are more justifiable.

Do you still think you’re undercharging?

If the answer is yes, then you’ve found one or more reasons to justify increasing the price of your membership…

However, if you simply want more money then that's not a compelling enough reason to charge more…

That being said, if you do want to make more money from your site but can't realistically justify charging a higher price point then there are a few paths you can explore.

You can:

  • Change your product: Going in a different direction can do wonders for your membership. You could equally justify charging more by changing one of the above pricing factors. That point of differentiation could make all the difference.
  • Change the perception: This involves a lot more than slapping some lipstick on a pig. You need to create a brand that’s perceived as premium and high value. It’s not the easiest thing to do, and it may hurt your profit margins temporarily, but it will justify raising your prices in the long run.
  • Just charge a higher fee: Just do it. A few members are bound to jump ship. And when they do, embrace it. A small membership is not necessarily a bad thing if you put your own spin on it.

It's important to note that I'm certainly not being critical of your desire to charge a higher price point…

At the end of the day, it’s your membership and how much you charge for it is your decision…

I just want to make sure you aren’t deluded about what will follow.

The aim of this post is to crack that mindset of people who massively want to hike the price up of their membership because they're looking at things the wrong way, are taking bad advice…

Or are struggling to wrap their head around what a membership site actually is and how to price it.

Hopefully after reading this, you're not one of those people. 

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