Trying to figure out how to price your membership or subscription business? Well that’s great! Getting the pricing right is one of the most crucial components of your business and can make-or-break your long term chances of success.

Quick Start Guide: (Click to Jump)

When considering how to price a membership site, you have two main options, one time payments for lifetime access or a recurring monthly or annual recurring payment. The problem with one-time payment is that you will only get paid once by each customer, so you will want to select a higher price. This higher price point can make getting new clients more difficult and many people may not be willing to pay a large amount up front. 

On the other hand, a recurring payment model is most often the better option for membership sites and subscription services are by nature better suited for recurring payments. Some businesses include courses, coaching, and any other training service. 

As an industry average, recurring businesses can usually earn 4 times more in total income per client as opposed to single transaction business. This is because subscription businesses provide continuous value to the client but they also make it easier for people to afford the service for longer periods of time. 

Example:

One-time Payment: You charge 120 for lifetime access to your course and you sell 10 memberships, which comes to = $1200.

Recurring: On the other hand you charge $50/m and you are able to sell 15 courses now at a lower cost. 

• The first month you will earn $725 
• Second month 2 people leave and you make $650
• Third month 3 more people drop off and you make $500
• Total after 3 Months: $1875

As you can see with the lower priced subscription model your potential earning power is much higher. (Keep in mind this isn’t a 100% realistic example because you would be adding more clients while some percentage of past clients will drop off. Meaning you would be making $725 or more every consecutive month) 

Before you decide how much to charge for subscription website, let’s take a look at the subscription industry as a whole:

Business to Consumer (B2C)

• 43.04% of memberships charge $25-$49 per month.
• 22.78% of memberships charge $15-$24 per month.
• 21.52% of memberships charge $1-$14 per month.

Business to Business (B2B)

• 44.64% of memberships charge $25-$49 per month.
• 23.32% of memberships charge $50-$99 per month.

Keeping this in mind we can see that recurring payments range mostly from $10-$100/m.

There are businesses charging more per month, but most often those businesses sell software services.

Considering these Industry averages, the next things to consider for picking an optimal price:

• Value: how much value does this provide to the customer? What is your offer worth to them and how big or difficult of a problem does it solve?

• Competitor Comparison: What are your direct competitors’ pricing?

• Audience Testing: Consider how much money your specific audience or niche has and is willing to spend. (A good way to find out is to ask in facebook groups, forums, or directly to potential customers)

• Your Market Positioning Decision: Think about how you want to compete, do you want to be the exclusive top tier option, or do you want to reach more people at a lower price entry point.

• Income Goals: How much money do you want to earn from this business. If your goal is to make $5,000 a month. Charging 400 members $5/month = $2000/m. Alternatively you can charge $20 and only need to acquire 100 members.

If you are an expert in your field and provide a lot of 1 on 1 support you can obviously charge more than a subscription where the member is added to a group and given access to the video training without much personal assistance. 

Secondary Elements: These are aspect to consider that may be related specifically to your niche or subject: 

1. Customer Retention Rates:How long does someone usually need your service? The industry average for retention can vary from 1-2 months to 6-12 months based on the industry. 
2. Price Point Testing: Launch your subscription already! One of the best ways to find out what your ideal pricing is by testing the market. You can always adapt and change your product. Maybe you can get more total clients at $20/m, but you can still make more income at $39/m with fewer total users. 

At the end of the day, you want your pricing to be able to pay for the operating expenses of the business while also having a price point that your members would be willing to pay. 

In our personal experience with subscription services, we fluctuate our pricing from $19/m to $23/m and we finally settled at $49/m. This price point ended up giving us the highest total income over the long term.

HERE IS THE PRICING FORMULA FOR SUCCESS

• Member retention is steady 
• You know how many people will leave on average every month
• You know how many people will join on average every month
• The addition of new members along with retention outpaces the percentage of drop offs. 

Once you reach this point, your monthly income will become much more steady and you will add a small percentage of growth to your monthly income.  

This ecosystem of stability and growth is what we strive for in our businesses and what we help our own members accomplish with their subscription businesses!

If you need anymore help on how to price a membership site, download our in-depth Subscription Business Start up Guide right below. You can also read our detailed guide on how to create a membership site here.