Did you know that it's possible to make a six-figure income by launching a membership community? You can see why there is an allure to building your own, but it raises the question of how much you should charge.
Despite the many benefits of creating a membership, many membership businesses live or die depending on the pricing structure. Charging too much can turn off members, and charging too little will leave you paying more of the expenses yourself.
Here are a few essential tips to help you choose an appropriate membership price.
Think about Your Business Financials
It can be tempting to set your membership price low enough so that everybody out there will be able to afford it. But make sure that you don't sell yourself short. If you have something of value to offer to your ideal community members, then you should charge accordingly.
If you don't price your membership so that it is profitable, it's going to be a challenge for you to cover your expenses.
This is why experts say that if you cannot make an income with your membership community, it is a hobby and is not actually a business.
The first thing to do if you want to figure out the best membership pricing model is to calculate how much it costs to acquire new members. To find this out, it's necessary to keep track of how much money you're spending on social media marketing and advertising.
The next step for figuring out your membership prices is to identify what your other business costs are. This includes things like sending out welcoming materials to new members, compensation for guest speakers and presenters and paying your team members.
Once you figure out all of your various overhead costs, it will be easier for you to know what you'll need to charge to at least break even. Next, make a decision about what kind of profit margin you need to have so that you'll have an idea of how much to charge beyond the break-even price.
You should also not forget to take into account the taxes that you'll need to pay on your profits.
Assess Your Products and Offerings
People who join your membership will probably choose to do so because of the value that you're offering them instead of because of the price that you charge.
This means that you need to assess how much value your product offers to your customers if you want to find out what your membership dues should be.
For example, most people don't have issues with paying the Costco membership price or the YMCA membership price because they both offer lots of value to their members. Customers know that whatever they pay for the membership, they will get back in value.
If your membership is highly valuable to your clients, then they are not going to question whether or not your monthly price is too high. This is why millions of people have no issue with paying AA membership prices in case of a vehicle breakdown, for instance.
It also won't be a problem for you to charge high membership prices if you offer lots of exclusive content or one-to-one coaching sessions.
If you don't charge enough for these kinds of services, customers might doubt the value of your offer. This is because they'll recognise the disconnect between the value that you offer and the price that you are charging.
On the other hand, if you're still in the process of launching your community and don't yet have a lot of high-value content, you should set your prices lower or make them free until you have plenty of material to offer. If you set it too high that early on, people will be less likely to join and stick around.
Take a Look at What Your Competitors Are Charging
Make sure that you take the time to research what your competitors are offering and what they are charging. Pay attention to what kinds of courses they have, whether or not they offer private coaching sessions, and if they include books and extra resources in their membership bundle.
After doing this, assess how your value proposition stacks up to the value propositions of your competitors. It's also a good idea to look at how effective or ineffective they are at community building. If you already have a large community within your membership, you should be charging more than your competitors.
If they are offering less value to their customers but charging more money than you are, this is a sign that you need to increase your membership prices.
For example, many gym membership prices are often set too high for the value that they offer to their clients. If you were to open a new gym that offered unique perks to its customers, you should consider charging more than your competitors.
Pay Attention to Your Market and Audience
Every membership community has a financial barrier to entry. For example, if the goal of your membership is to teach people how to film videos, community members are going to have a financial barrier. This is because they'll need to invest in expensive videography gear and video editing programs.
People who take part in these kinds of activities will typically need to have more money to spend. This means that it's going to be possible for you to charge a little bit more for your membership. Dishing out money for their hobbies is nothing new to them.
On the other hand, if you're helping people to improve their bird watching skills, there is not a large barrier to entry. All that people will need to do is invest in a pair of binoculars. People who take part in inexpensive hobbies might be less willing to spend lots of money for memberships related to these hobbies.
Finding the Magic Number for Your Membership Price
If you've felt uncertain about how to set your membership price, the first thing you should do is assess the value of what you're offering. You should also research what your competitors are charging. Make sure that you charge enough to generate an income.
Failing that, when you sign up to Ugenie we’ll give you all the advice you need to make sure your membership business is a success.
So, if you are looking for the perfect platform for hosting your course or membership and valuable advice to help you along your journey, Ugenie is here to help.
Start your free trial today and see for yourself.
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