9 Membership Pricing Models That Maximize Revenue

Establishing the best pricing model is one of the most important parts of selling a membership – especially when it’s time to scale your business. The pricing structure lays the foundation for your marketing and sales strategy and impacts your students’ experience with your brand. And most obviously, your pricing model determines how your membership website will drive revenue.

Here are the nine best membership pricing strategies creators are using today.

1. Fixed-Price Model

A fixed-rate pricing model offers members a particular program, online course, or package of educational materials for a set price. Unlike a recurring membership or subscription model, this simple structure involves a one-time payment. If you offer a premium program at a high price point, the fixed price could also be divided into a series of installments.

The pros of a fixed-price offer center around its simplicity for both the creator—you!—and the member. An upfront, non-recurring charge is a straightforward model that gives members precisely what they expect. It also gives you a clear idea of how much profit each sale brings to your business. A flat rate is a great choice for creators with a simple business model and limited ability to produce new content quickly. 

A major con of a one-time fee is that each new program or course you develop will require significant marketing efforts to encourage new purchases. You essentially have to start your sales cycle over again since you don’t receive recurring payments. Once a potential customer converts to a client, they may or may not purchase again.

2. Membership Model

There are a couple of different types of membership models. A lifetime membership model is similar to a fixed-rate model in that it involves an upfront fee or payment installment plan. However, instead of a one-for-one transaction, the membership model provides access to a variety of courses, materials, events, or any other content or services that you include. A term membership is another option that establishes parameters for this access. Term members would be granted access for a set period of time but would need to renew their membership for continued use of your platform. 

A membership model encourages clients to become loyal followers of your brand instead of convincing them to make a particular purchase. It also allows you more freedom to create dynamic programs—as you update educational content, make improvements, and add new content media, paying members benefit from continued access to these materials without making separate purchases. 

The downside of a membership pricing model is that your operating costs may outpace the price of the program or course as your business grows – leaving you with students whose membership dues are too low for the features they have access to. If you adjust the pricing, it can then be complicated to manage multiple categories of members who signed up for your courses at different price points.

3. Subscription Model

A subscription plan is one of the most popular pricing models for online programs and courses. It’s less commitment than a paid membership or a fixed charge, and it offers more flexible payment options – such as an annual or monthly plan. Best of all, collecting a recurring fee gives you a steady stream of income.

The main difficulty of a subscription model is that it requires content creators to continually produce more content to maintain user interest. Subscriptions are based on the expectation that annual or monthly fees will give users ongoing value that is worth their regular investment. And while subscription pricing can be very profitable for a business owner, you’ll need to monitor the impact of churn rates on your customer lifetime value and work to keep your retention rate high. For every member who cancels the subscription, you’ll need a new member to take their place. 

4. Tiered Pricing Model

The flexibility of tiered pricing makes it another popular approach to membership pricing. A range of membership offerings at different price points creates appeal with a broader variety of clients. Tiers can also help content creators have a stronger revenue stream by marketing certain features or courses as a premium option worth paying more for. Not every client will want the most expensive membership tier, but the ones who do will boost your revenue and be rewarded with the highest level of access.

A downside to multiple pricing tiers is that it can be complicated for a small business owner to develop and manage separate membership levels. Tiered pricing necessitates testing and adapting to land on the most strategic divisions for different audience types. You’ll also need to ensure that students at each tier get the right value from your membership according to the plan they chose, which is more labor intensive as you gain more students or offer more tiers.

5. Freemium Model

A freemium isn’t a free trial but a basic version of your program that is free to all members. This strategy is popular with online course creators. A zero-commitment, free membership makes it easier to onboard new users, gives you a chance to prove your worth to your audience, and places leads into a sales funnel where they can choose additional paid features. A free course can be a strategic means of setting up a sales funnel with upsell sequences leading to your paid content.

The obvious downside of a free version is the cost of producing free content that may or may not result in a sale. Converting free customers to paid customers will take a strategic sales and marketing plan. A counterintuitive downside to a free version is that you can actually discourage users from signing up for your course by making it too accessible. Depending on the subject matter, your competition, and your target audience, a free course may come across as low-value. Many students subconsciously prefer a paid course based on the perception that their money will buy them a more valuable experience. 

6. Build-Your-Own Model

A build-your-own membership starts at a base price but lets students adapt their plan with individual add-ons. This a-la-carte pricing model allows for a more personalized user experience and could help your business stand out from the competition. Plus, setting individual prices for features instead of a bulk price may increase the profit margin of each offering.

The disadvantage of an add-on model is the complexity of developing and managing a wide range of clients and features. If you end up restructuring certain offerings or changing your prices, this can complicate things even further. And in terms of user experience, your students may or may not want the responsibility of picking and choosing add-ons. Sometimes a comprehensive plan provides a smoother customer experience – especially if your students aren’t aware of all the features they might need.

7. Usage Based Pricing

A usage-based pricing model charges members based on how much they actually use your content or services. This could mean paying per course completion, per download, or based on the number of times they access specific resources. This model is particularly effective for specialized educational content where students may want to pace their learning according to their schedule and budget.

The primary advantage of usage-based pricing is its inherent fairness – members only pay for what they use, which can make your offering more attractive to potential customers who are uncertain about committing to a larger package. This model also provides valuable data about which content is most valuable to your audience, helping you make informed decisions about future content development.

However, usage-based pricing can be challenging to implement effectively. It requires robust tracking systems to monitor member activity and calculate charges accurately. The unpredictable nature of revenue can also make it difficult to forecast income and plan for content development. Additionally, some members might feel pressure to restrict their usage to manage costs, potentially limiting their learning experience.

8. Competitor Based Pricing

Competitor-based pricing sets your membership rates based on what similar creators or platforms in your market are charging. This pricing option requires thorough market research and a clear understanding of how your offering compares to others in terms of quality, comprehensiveness, and unique value proposition.

The main benefit of competitor-based pricing is that it helps ensure your rates are aligned with market expectations. If your pricing is significantly higher than competitors, you’ll need to clearly demonstrate superior value to potential members. If you price lower, you can potentially capture market share but need to ensure you’re still profitable. This model also simplifies the pricing decision process since you’re working with concrete reference points from your market.

The downside of competitor-based pricing is that it can lead to a race to the bottom if not managed carefully. You might be tempted to undercut competitors without fully considering your own costs and profit margins. Additionally, this model doesn’t account for unique aspects of your content or teaching methodology that might justify higher rates. There’s also a risk of basing your pricing on competitors who have different cost structures or business models, leading to unsustainable pricing for your specific situation.

9. Valued Based Pricing

Value-based pricing sets rates according to the perceived value and tangible benefits your membership provides to students. This approach focuses on outcomes rather than inputs – considering factors like potential income increase, career advancement, or personal development that members can achieve through your content.

The strength of this model lies in its alignment between price and actual student benefits. When you can clearly demonstrate how your content transforms lives or careers, premium pricing becomes easier to justify. This approach also encourages you to continuously improve your offering to maintain and increase its value proposition.

A challenge with value-based pricing is accurately quantifying the value of your content, especially for subjects with less tangible outcomes. You’ll need to invest in gathering success stories and metrics to support your pricing structure.

Tips for Assessing the Value of Your Membership

The value of membership is a fluid metric – subject to change based on your competition, consumer demand, and brand perception. And if you’ve been selling online courses or programs for a while now, it’s likely time to reassess how much you charge for them. Valuing your membership correctly is the first step before landing on a specific pricing model.

Keep in mind that as your business grows, your operating costs will, too. It typically takes more resources to break into new audiences and launch subsequent programs than to create and distribute your first one. Here are three important cost categories to re-evaluate as you choose the right price point for your services:

Customer Acquisition Cost (CAC)

Your customer acquisition cost is the average expense you incur to convert a prospective member into a paying client. This includes all sales and marketing costs, such as social media advertising, discounts, or sales tools. Comparing your customer acquisition cost (CAC) to the customer lifetime value (LTV) helps you understand the profit you get from each new client based on your current methods for obtaining clients. (Customer lifetime value is the revenue you receive from someone over the whole length of time they are an active customer.)

Cost of Content Creation

Developing a membership program involves a number of hard costs – from the video equipment for filming material to the software you use to upload, edit, and publish content. Expenses related to working with third-party vendors, such as website designers or video editors, also fall under the cost of program creation. As your offerings grow, these expenses will likely increase.

Membership Delivery Costs 

Getting your content into the hands of members is its own category of expenses. Membership management software, marketing, shipping costs for course materials (if you are printing), and other aspects of course delivery quickly add up! Take inventory of each step you go through to publish course content, and be sure to itemize any additional costs involved. 

Tips for Implementing Your New Pricing Model

Updating the pricing structure of your membership will require shifting aspects of your business operations. Here are three tips to keep in mind after you decide on a new pricing strategy:

Re-align your marketing strategy

Membership pricing plays a significant role in your marketing plan, and even acts as its own marketing tactic. For example, positioning an online course as a premium educational experience at a higher price will attract a very different audience than promoting one as an affordable monthly service. Or, if your program has a time-sensitive aspect to it, such as a membership with a term expiration, you’ll need to time your sales funnel accordingly – offering discounts for early sign-ups, promoting renewals, and using a sense of urgency as a sales tactic. 

If you update your pricing model, you’ll need to update your marketing plan to align with this new approach. Your pricing strategy and marketing strategy should target the same audience, send the same message about your brand, and integrate seamlessly with your sales funnel. 

Don’t leave loyal members behind 

As you grow and scale your business, don’t forget about existing members who have been following your brand since the beginning. Changing pricing models can alienate some of your most loyal followers if there isn’t a courteous process in place for bringing them into the new system. Some companies make a practice of grandfathering previous members into the new pricing model, allowing them to continue with their original, lower price. If your new model involves significantly improved features, consider how you can keep your customers educated and informed so they can see how the increased payment corresponds to the increased value they’ll receive.

Streamline membership and marketing software 

As you assess the value and structure of your membership, take stock of the software and/or third-party vendors you use for creating, delivering, and promoting your course. These expenses add up over time and might complicate business operations more than you think.

Kartra’s all-in-one software offers a streamlined solution, letting creators develop, market, and manage their membership all within one single platform. This integration makes sure no one falls through the cracks, improves data analytics, and allows you to build a more consistent brand image. Plus, once you’ve consolidated your tools membership and marketing platforms into one powerful platform, you’ll be able to cancel all those extra software payments! 

Streamlining processes is a critical part of growing your membership business. Your time will only become more valuable as you produce additional content and engage with growing numbers of students. Spending less effort on day-to-day business operations helps maximize your schedule as well as your resources. If it’s time to establish a new pricing model for your course, consider how an all in one platform can help you scale your business with ease.