Pricing Your Membership: How Much Is Too Much?
Setting a price for a product usually means coming up with a number that’s both as high as possible and one that attracts as many people as possible. When you’re setting a price for a club membership, the philosophy is a little different.
You want a price that puts people off.
Obviously, you don’t want to put everyone off. An empty subscription site isn’t going to make a great deal of money for you. But you want a price that’s high enough to keep out people who aren’t completely serious.
That amount is going to vary. According to Forbes, when Sebonack Golf Club opened in 2006, the initiation fee for new members was said to be a record $650,000. Today, it is rumored to have reached seven figures. Those prices guarantee that the person sitting next to you at the eighteenth hole is equally important, equally successful, equally interesting ... and equally rich. If you have to ask how much membership costs, then it’s probably not for you. Other golf clubs might not require that their members hand over checks for $1 million, but most have fees that are designed to strike a balance between attracting new members and putting off people who might cause current members to head for the door.
On the other hand, even a small fee can be effective. Elance extracts a service fee of between 4 and 6 percent on every job outsourced on the site. With over $235 million already earned by providers, even at 5 percent, the company would have pulled in almost $12 million. But Elance also requires that providers pay a monthly subscription fee that ranges from $9.95 for individuals to $39.95 for businesses.
Surely it would be in Elance’s interest to have as many providers listed as possible. The more providers the site has bidding for jobs, the greater the choices for buyers.
That’s the problem. Buyers don’t want to choose between hundreds of applicants for a job they post. They want to choose between a handful of highly qualified and experienced professionals. Providers want to make clear that they are professionals who take their work seriously. That 10-buck fee keeps out people who have no qualifications at all and who feel that they have nothing to lose by writing a pitch. It helps to maintain the quality of Elance’s providers—and it also gives the site some additional revenue from providers who are too busy to bid regularly or who rarely win jobs.
So how do you set a price for your membership site?
There are a number of factors you have to consider. As always, competition will be one, but subscription sites are an underexploited opportunity. Unless you’re creating a club for singles—in which case, you’ll have lots of company—there’s a good chance that you’ll find that your site is the only one of its kind in your field.
That means you’ll need to think about value, and you’ll need to think about the services you’re offering. Most important, you’ll need to think about the return that your members are going to be receiving for their monthly subscription. They don’t have to get that return every month—and you don’t have to charge every month if you don’t want to. Newspapers and magazines often take an annual fee. New subscribers are at their most enthusiastic when they first sign up. As they see the money dripping out of their account every month, there’s always the chance that they’ll cancel. They are less likely to do that in the middle of an annual subscription period, and they are more likely to renew at the end of it, too.
But if your subscription site supplies information, contacts, or services worth $1,000, for example, then demanding $20 a month looks like a steal.
Of course, measuring those returns is never easy, so review the information products in your field. Think of your subscription site as offering the equivalent of one relevant e-book per month and try charging a rate similar to the price you’d charge for that e-book. There’s no scientific formula here, but if buyers in your field are known to pay $70 for an e-book that they understand will deliver solid returns, then there’s a good chance that they’ll pay a similar amount for membership in a club that promises similar returns from the same kind of information.
If you find the price is too high, it’s always easy enough to lower it. Declare that you’re slashing the price for a limited time, and not only will you be able to adjust the subscription fee downward until it reaches the right level, you’ll also have the chance to create the kind of time-limited offers that bring quick results.
Creating Your Membership Site the Easy Way
Subscription sites look fairly complex. They’re filled with all sorts of valuable features: content pages, members’ profile pages, groups, internal messaging, and all sorts of other useful things that help members to network and learn. You can even include multimedia content and training videos.
Consequently, they have to be hard to build, right? They have to be expensive to create, difficult to plan, and a real challenge to design, launch, and put together, don’t they?
Not a bit of it.
At the beginning of this book, I pointed out that the Internet has now developed to the point where proven revenue generators have become automated. Web site publishing can be done by picking a domain name, choosing a template, and filling in the gaps with your own pictures and text.
Blogging is even easier. Automated programs let you go from user to publisher, posting your first online blog in less than five minutes. The next day, once Google has approved your AdSense application, you could even be seeing your first advertising income.
Creating membership sites is now just as simple. A bunch
