Monthly Memberships: Friend or Foe?

You're trying to grow your business or organization and you think to yourself, If we could just appeal to more people, we could grow our revenue. 

Indeed, there are two ways to grow revenue and I've pursued them both: 

  1. More customers
  2. More dollars per customer

The problem is when your customers are falling off the back of the boat as you bring new ones in. I'm not just talking about the capacity of your organization, I'm speaking directly to maximizing the revenue of each and every new member or client. 

In most cases where you're considering monthly payment options and monthly memberships for business organizations, you know you're not maximizing the revenue of each new member, but you've given up the fight. So in order to appeal to the marginally interested, you lower your price point. 

Your logic is sound enough: I'm not interested at $300, but I'm interested at $30. 

What if pricing is relative? (It is, by the way.) 

This logic could also be sound: I'm not interested at $1,500, but I'm interested at $600. 

I spoke with a foundation director today who tells a tale of no interest at introductory price, but sold out by tripling the price. Counter-intuitive? Not necessarily. 

When you build a premium pricing model for your business or organization, the highest package price is there to (a) appeal to a premium buyer and (b) put a focus on the next-highest package price, allowing the consumer to exercise some restraint. Good-Better-Best puts the focus on the Better package.