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We get it, pricing is hard. In fact, one of the most frequent questions we receive most often from customers is "how how much do I have to charge?". There are lots of different ways to structure pricing which can make it an overwhelming decision. On top of that it is likely that you have a voice in your head that asks "am I really worthy of that amount?". In this blog we'll throw imposter syndrome out of the way and show you the proper way to value your products and services.
It should be sustainable.
It's difficult to tell when you're first getting started however, even if fear you're just a novice, you absolutely cannot (I say it again) be charging excessively for the services you provide. If you're not charging the right amount:
- Your offer will be viewed as less valuable by your potential subscribers.
- It'll be more challenging to hit the revenue targets you set. Memberships have a tendency to multiply (more on this later) And even small increments in price make a big distinction.
Working backwards
It's now time to get real about the revenue you earn and consider what amount of money you are looking to earn or, even more important, what income do you require per year to ensure your company is viable? The process of working backwards doesn't only tell you how much you should be charging, but also how many customers would you need to consider offering that price. Let's say your revenue goal is more than $100,000. The following formula: total number of subscribers multiplied by your desired cost of your membership is equal to the you'd like to earn a yearly income. If, for instance, you wish to generate $100,000 per year in revenue you would need to charge $9 a month or $99 annually up to at most 1,000 customers.
Key pricing factors
The Membership Guys Podcast recently shared what they consider to be the most important factors in figuring out your membership pricing. It is possible to (and should) hear the entire podcast, here, however, here's a quick overview of the key pricing factors you should be focusing on.
- Business Cost : Basically, what expenses are involved in running your business? It could include anything that you're paying on advertising and whether or not you give welcome gifts to customers. This can help you establish an approximate amount you'll have to earn per member to cover your total cost.
- Quality over quantity : Teachable's Morgan Timm, recently published a revealing blog and video tutorial on the best way to price online classes. In the video, she talks about two ways to pay to help instructors reach their financial goals. One strategy is to lower the price and trying to sell a lot of classes. The strategy may be appealing at first, but it could give your customers the impression that your knowledge costs a lot. The suggestion of Morgan, just like ours is based on value: focus on charging more for your course knowledge instead of just offering more courses.
- competitors: This doesn't just include other online subscriptions as well as the costs of comparable classes, books, or private coaching in your market. What is the price at which similar services are being priced, and are they providing better or lower value? Keep in mind that at the end of the day, you'll always find someone who will cost less. Therefore, it's important to be competitive on value, not price.
- Be aware of your market: Who are you selling to? Are you selling to businesses who can claim your course, podcast and email subscriptions as an expense or are you selling to consumers who may have lower disposable income? One example that has been successful is the subscription-based technology and media newsletter, Stratechery, edited and written by Ben Thompson. The audience he serves is comprised of venture capitalists, investors and professionals in the tech industry that generally have more to spend on memberships, and the pricing and content corresponds to that group of people. If you want to know the best way to market to your clients It is important to be aware of who your potential customers are.