Pricing is always a tough calculation for any content product. Charge too much, and you may not sell anything. Charge too little, and it may not be worth your time.
When it comes to pricing for a membership-based product, Jay Clouse, founder of Creator Science, is your go-to entrepreneur. It’s one of the reasons he was named the 2023 Content Entrepreneur of the Year. Jay’s community launched in March 2022. He capped membership at 200 (and has a waiting list). The annual fee is $1,999 for the standard membership and $2,999 for the VIP. It has a 93% retention rate.
At the Creator Economy Expo, he shared some things to consider when setting prices for a paid community. “One of the biggest issues with failing memberships is unintentional pricing,” Jay explains.
To be intentional about your pricing, do these five things:
1. Know your promise: At the core of a paid membership is your promise to the members. That requires knowing why you’re creating the community for you (i.e., the business) and your audience (i.e., the targeted members). Jay suggests completing this simple sentence to pull it all together:
[Membership] is for [type of person] who wants to [accomplish thing].
2. Determine the total number of desired members: You may think the answer should be “as many members as possible.” That thinking is akin to saying your content is for everyone. Be realistic and get specific.
Jay advises setting two membership numbers. The first is the total number of members you want at the end of year one. The second is the total number of members you expect at the end of month three.
Doing this helps you understand the annual earning potential and the near-term earning potential. Does that meet your expectations? Will it motivate you to keep going in the short term?
3. Set your prices. There is no wrong price as long as it fits within the design of your community. “Pricing is a lever for customer selection,” Jay says.
What type of member do you want to attract? What type of member do you want to filter out?
An accomplished millionaire won’t join a $10 monthly membership. A beginner won’t pay for a $20K annual membership. Set a price that will attract your target member.
I realize that advice doesn’t give you an exact monetary figure. That’s because it varies so widely. Do your research with your audience and industry, and read on to the next thing to do for some help.
4. Decide how often to charge members: Hand in hand with setting your price is determining how frequently you’ll ask members to pay that price. You could make it a monthly, quarterly, biannual, or annual subscription.
Among the questions to answer: Is there precedent for your customer to pay for similar experiences? Does your customer value savings upfront (by paying annually)? Do you want to create multiple decision points throughout the year? How many members do you expect you can reach? How much does this need to generate to be worthwhile to you? Don’t underestimate asking your target members.
Jay chose to make his community an annual fee. He says that upfront fee filters for progress and commitment. It also reduces churn (members don’t have to “decide” to purchase every month) and works well for cash flow.
5. Consider pricing tiers: By offering at least two levels of pricing, you can attract two segments of your audience. The lower tier also can act as a lower commitment test for the customer to see if you can provide the value they seek.
Jay says distinguishing each tier is essential. Potential customers should be able to clearly identify what they will get (and what they won’t) when reviewing the options. If it isn’t clear, they will be confused and often won’t take any action, he says.
“Make it a simple calculation. Complexity is not your friend,” Jay says.
About the author
Ann regularly combines words and strategy for B2B, B2C, and nonprofits, continuing to live up to her high school nickname, Editor Ann. An IABC Communicator of the Year and founder of G Force Communication, Ann coaches and trains professionals in all things content. Connect with her on LinkedIn and Twitter.