Are You Underpricing Your Memberships? (4 Factors to Consider)
In this blog, we'll cover why you may be undercharging your customers. Then we'll discuss four factors that can help you offer fair prices. Let's begin!
Why You May Be Underpricing Your Membership
Online memberships may offer some physical products including printable content or branded gear however, these are usually minor perks. The website, therefore, can be described as a general service commodity.
A few business owners on the internet suffer from the imposter syndrome. The insecurity of these business owners can lead to overpricing. If you're new to the business world it is possible that you are fumbling your plans by undervaluing yourself as well as your membership website.
The virtue of generosity is admirable. However, if you want your business to thrive it will require a long-lasting business plan. In addition, the structure of an enterprise is always changing. This is especially true for membership websites since they're fully digital.
We know that charging higher prices or increasing your current fees can be challenging. But, a fair pricing of your services can benefit your company in the long run. In the end, charging higher prices will give you the flexibility to enhance your service and give the best service possible to your clients.
Four Factors to Take into Account When setting new membership prices
Let's look at four aspects to help you determine fair membership prices!
1. What is the value of your Services
After the outbreak and more of the world moved to digital platforms, member communities have become more frequent. The communities allow members to connect and even learn new skills.
Popular groups include The Lab and Find What Feels Good (FWFG):
It is important to remember that these well-known membership websites provide stellar information and products. These offerings may include exclusive content such as video, newsletters and events and much more. These valuable offerings allow member sites to charge premium prices and entice new members.
If you are deciding on your fees for membership you should carefully evaluate the work you're doing. Reflect on the ways in which your membership offerings are evolving so that you can account for the variation. Or, if you're just getting started, consider the actual value of your current offerings.
Additionally, remember that underpricing could be a deterrent to your members. There are many people who will pay for a quality item or service. They might be skeptical of buying a membership because they think it is expensive.
Finally, we'd advise getting familiar with the notion that the worth of your membership is likely to change. So, it's wise to consider regularly assessing the impact of your growth on your pricing.
2. The Business Costs of Your Company
For example, you may overlook the cost of certain digital software or tools that you employ. Perhaps, you've fallen into the age-old mistake of not paying yourself' for reasons of enterprise.
If that's the case, you may want to consult your business manager or financial planner to review your expenses. Seeing every cent you spend on your company can make a huge difference when you're making the decision on what you should charge your members.
As an example, when reassessing its services, the exclusive offshoot of Digital Nomad Girls, The Lab, had an increase of nearly 50% in membership fees. Do not be shocked if your audit also inspires you to bump your pricing:
This kind of drastic shift could be a bit scary. But, keep in mind that carefully examining your business expenses can help you establish reasonable membership costs. The pricing system can act as the foundation of a strong financial plan for a long-lasting service.
3. The buying Power of Your Audience
If you've developed a sound business plan, then you must also be aware of the people you want to reach. But, it's never late to establish your persona of the customer.
For instance, you might think about the disposable income for your participants. Also, you should consider your values for your members as you make this decision.
In the case of example, if you serve high-earning venture capitalists familiar with paying the highest price, you may consider charging higher. Members may have the option of deducting their fees for membership into company expense:
If, on the other hand, activism and equity are core principles of your membership site, you may want to provide multiple payment options based on member income:
If you have a large enough number of visitors and your website is a database site and you have a database, you could even provide discount programs based on equity. For instance, Study Hall is a resource-focused community to writers and offers much lower prices for "Media workers of color'.
4. Your Competition
In the case of pricing, researching your competition is vital. However it is important to remember that the research should not be to find the median price but the subsequent charge lower.
Consider the rates of your fellow members to get a broad idea of the value that is achievable for your membership model. You can then decide how the value of your site compares. Keep in mind that competition doesn't have to be negative.
There are, for instance, several apps for astrology that cost little or nothing and have subscriptions for a month. But, The Chani App, which costs slightly above average, remains successful because of its superior quality of the content it offers:
We've already mentioned that underpricing can backfire, sending an alarm message to prospective members. If you're hesitant over the price you discover, you may be able to provide discounts to new customers that sign-up for an entire year.
In the end, it is important to consider pricing fees in relation to the value of your product, its expenses and your audience's buying power. But, not doing enough research on your competitors could cause your membership site to stick out like a sore thumb.
Conclusion
We know that asking people to pay for something is not always simple. This is especially true for communities-based services like subscription sites. However, instead of feeling like your prices are holding you back it is possible to use the services to increase your revenue for the long haul.
Take into consideration the following aspects when setting your membership prices:
- The value of your services
- Business expenses
- The buying power of your audience
- Your rival
Are you having any doubts regarding setting reasonable prices for your members? Tell us about it in the comment section below!
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