Membership Fees, hmmm…
Pricing membership fees for your membership site isn’t always easy. The price depends on numerous factors, including perceived value. However, if you aren’t careful, your membership site could be costing you money.
The first thing to figure out is the actual cost of running the site. This does not include building the site and launching it, although that cost does need to be covered as well at some point. Mainly what you are looking at right now, is the actual cost to operate and maintain the site after it has been launched.
Some costs to consider include:
- Web hosting fees
- Domain name renewals
- Any membership fees that you must pay in association with the site
- The cost of adding content to the site on a regular basis
- The cost of services associated with operating or maintaining the site
- The cost of payment processing
- The cost of your autoresponder
- The cost of ongoing marketing
Take note of how often such expenses are paid out. For example, a domain name only has to be paid for every year or two years, depending on how you set it up. That needs to be averaged out monthly. If it costs just $10 for the domain name, and it is good for one year, it should be figured at $10 divided by 12 months.
Once you have a dollar figure for operating and maintaining the site you need to determine the cost of building and launching the site. This may include:
- The cost of membership site software
- The cost of having content created
- The cost of developing bonuses
- The cost of all associated services
- The cost of setting up various services (not ongoing monthly costs – just the setup fees)
- The cost of marketing the site during the launch period.
- The cost of all testing campaigns
You don’t want to have to hit members up with higher membership costs to recoup your startup costs right away. Add it up, and divide by twelve. It shouldn’t hurt you to spread the recovery of those costs over twelve months.
Add the monthly cost of operating and maintaining the site to the monthly cost of starting the site. This is your total monthly expense.
Now, set that number aside, and look at the actual value of the site. Don’t pay any attention to the perceived value at this point – just the actual value. Note that this is the hardest part. How much are pixels worth? Instead, you have to consider what the content on your site is worth to your intended audience.
For example, if your audience is highly interested in organic herb gardening for medicinal purposes, it would be worth a great deal to them. On the other hand, if they only have a passing interest, it would be worth less.
As you can see, determining this may be an impossible feat. So instead, let’s go back to your monthly cost. Ideally, you should hope to earn a profit of at least 100%, and hopefully more. For example, if your monthly costs are $100, you would hope to make at the bare minimum $200 from the site per month. Of course, this is an extremely low number, and just an example.
You must also consider the number of members that you will have. This number cannot be easily determined, unless you have placed a restriction on the number of members that you will have.
You need the cost of membership to be affordable. Few people have the means to pay hundreds of dollars, month after month, for a membership. Although, if your information is very specialized, and targeted to professionals, they will pay it.
Remember that the average membership site brings in about $20 per month, per member. If you have just ten members, you’ve achieved your goal of 100%. Hopefully, you will have closer to 100 members or more, which would bring in about $1900, after you subtracted the operating costs.
Nobody can tell you exactly what price you should set, but you do have to set a price that is affordable and competitive. What are your competitors offering, and what price are they charging for what they offer? This is a good starting point for determining what you will charge.
The most important thing is to know what the cost to you is, so that you can set prices that will at the very least cover those costs. Again, you won’t have any idea of knowing how many members you will have, until you have them. Furthermore, if you start out with a price that is too high, with a membership site, you will find that it is difficult to lower that price for future members, after your current members have already paid the higher price!
Think about your pricing carefully – and be prepared to stick with the price that you choose later.
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