Are you underpricing your memberships?

Membership pricing notepad beside laptop

We get it -- pricing is hard. In fact, one of the questions we get most often from customers is “How much should I charge?”. There are lots of different options for pricing structure, and it can be an overwhelming decision. On top of that, you probably have a voice in your head saying, “Am I really worth that much?” so in this post, we’ll kick imposter syndrome to the curb and show you how to properly price your services.

Make it sustainable

It’s hard to hear when you’re first getting started, but even if you fear you’re just a novice, you absolutely cannot, I repeat cannot, charge too little for your services. If you don’t charge enough:

  1. Your offering will be perceived as less valuable by your potential subscribers.
  2. It will be much more challenging to hit your revenue goals. Memberships are a multiplication problem (more on this later), and small increases in price make a big difference.


With that in mind, we recommend keeping things simple with two plans: $9 per month and $99 per year. If that seems like too high of a price, start thinking about how you can add more value to your memberships.

It’s always better to increase your value to meet your price than to decrease your price to meet your value. If charging that much still scares you -- which we completely understand! -- we suggest an absolute bottom of $5 a month and $50 a year. Why? Any lower and it's going to be extremely hard to build a sustainable business without massive scale.

How to price your membership: work backwards

Get real about revenue and ask yourself how much money you actually want to make -- or better yet, how much revenue you need per year to make your business sustainable. Working backwards not only informs how much you should charge but how many subscribers you’d need to be comfortable charging that much.

how to price membership

Let’s say your revenue goal is more than $100,000. You can use the following equation: Total number of subscribers x Desired price of membership = Desired yearly revenue

For example, if you want $100,000 in yearly revenue you would need to charge $9 a month, or $99 a year, to at least 1,000 subscribers.

Key pricing factors

The Membership Guys Podcast recently shared what they believe are the most important factors in figuring out your membership pricing. You can (and should) hear the entire podcast, here, but here’s a high-level summary of some of the pricing factors you should be focused on.

1. Business cost

Basically, what expenses are involved in running your business? This can include everything from how much you’re spending on advertising to whether or not you send out a welcome gift to subscribers. This will help you calculate a baseline of how much you have to be making per member to cover your overall cost.

2. Quality over quantity

Teachable’s Morgan Timm, recently shared an informative post and video on how to best price online courses. In the video, she discusses two payment strategies to help educators reach their revenue goals.

The first is charging less and aiming to sell a lot of courses. This strategy seems fine at first, but it may leave your subscribers with the impression that your knowledge is cheap. Morgan’s suggestion, like ours, is competing on value: focus on charging more for your course knowledge instead of just selling more courses.

3. Competitors

This doesn’t just include other online subscriptions but the cost of similar tuitions, books, and private coaching in your market. How much are similar services being priced, and are they offering more or less value than you? Remember, at the end of the day there’s always someone willing to charge less, so it’s more important to compete on value, not price.

4. Know your market

Who are you selling to? Are you selling to businesses that can write off your courses, podcast, and email subscriptions as an expense or are you selling to individuals who may have less disposable income?

how price membership

A successful example is the subscription-based technology and media newsletter, Stratechery, written and managed by Ben Thompson. His audience is made up of investors, venture capitalist, and tech industry professionals that generally have more to spend on memberships, and his pricing and messaging fits that audience. If you want to know how to sell to your customers, it’s important to first understand who your customers are.

Conclusion: Pricing your membership - evolve as you go

When you’re growing your membership business, it’s important to evolve as you go. That means making changes that focus on what is working and eliminating what’s not. If you find that your audience isn’t interested in paying your current fee, you may want to look into different tiers of pricing for different services.

For example, if you’re running an online publication, you may offer higher tiered pricing to subscribers who want to join a forum, but lower tiered pricing for subscribers who just want to download your content. Remember, the most important thing is not to underprice yourself, and to provide as much value as you can to your subscribers.

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