Sales is all about psychology. How you price your membership will impact how you market and your sales overall. Pricing is one of those things that so many businesses overlook. Your cost positioning can make a huge difference, even with tiny changes.
£95 versus £97 might be the difference between a sellout launch and a flop.
How come? Why can something as small as £2 have a huge impact on your sales?
It all comes down to the psychology of pricing.
In his psychology of pricing techniques, Nick Kolenda points out how important reference prices and even font sizing can be for your sales. Every aspect of how you put forward your marketing, your product and the cost itself is important. So how can you navigate this minefield of pricing slip-ups?
Discover a strategy that works for your unique membership offering, of course. Depending on what you include in your membership and your audience, one of these three strategies from Nick Kolenda might work better than the others.
1: Mention the Daily Equivalence
A daily equivalence may sound like mathematical acrobatics, but it’s an incredibly simple strategy to use when displaying your pricing. Once you have a cost that you’re ready to try out on your prospective audience, the way you present that cost is just as important as the figure itself.
When you put forward your membership price in any marketing or on sales pages, do it in terms of a daily price. This means breaking down the total value as if it were a daily cost. For example, you may have a membership offer set at £50 a month. Below this clear pricing, you can also show how much that would be as a daily equivalence, so £1.60 a day.
The obvious reasoning for this is that, while a lump sum of £50 might seem like a considerable amount, once the cost is broken down into what would be paid daily, you can see that it’s much more manageable and enticing.
According to research, presenting your costs in this way has what’s called an ‘anchoring effect’.
When your customers compare the daily price to the overall cost, it seems like a better deal through and through.
2: Distinguish the Most Expensive Option
This one’s all about the order in which your subscribers evaluate your pricing options. First of all, having more than one membership option with varied pricing is a good tactic if you want to offer more value but don’t want to put off your entire customer base with an outright price hike.
The presentation of your pricing is crucial, and the visual way you show off your cost options can be the barrier between your membership and a sale.
Emphasise the most expensive cost option in a visual way.
For example, a fitness membership could have bronze, silver and gold membership levels priced differently. The gold membership, the most expensive, could be highlighted in different colours, with a special graphic, or with the text emboldened.
By putting the potential subscriber’s attention on the most expensive option first, it makes the other cost options look a lot more enticing and comparably more affordable.
The way this works is by using the priciest option as a reference point for the other costs. Doing this in a visual way keeps it simple whatever order you put your options in.
3: Offer a Similar (More Expensive) Version
The phenomenon of decoy options is frankly pretty interesting. It does tie into the last strategy too, because it involves having more than one price. In fact, membership is one of the best ways to explain what a decoy option is.
A membership site could have the following subscription options:
£35 – Online Course
£120 – Weekly Webinar
£120 – Online Course + Weekly Webinar
When you first take in these numbers, they don’t seem like they work out. How could the weekly webinar cost the same as the online course and the weekly webinar combined?
The answer is that no one is ever really supposed to be drawn to the £120 weekly webinar only option. It’s only there to make the third option look like a no-brainer. Would you really choose to pay more and receive less?
Obviously not, and that’s the conclusion your subscribers would come to as well.
Adding in a similar but more expensive pricing option makes your other, main option seem like a much better choice.
Making good choices for your membership is a difficult process, but not impossible if you have the right information. If deciding on your price feels too intimidating, take a look at our previous blog on whether evergreen or closed-door content is right for your membership. Or book a free demo call to see how we can help you make your membership profitable.