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Picking THE PURCHASE PRICE That Maximises Profit
Choosing the right subscription price will determine how profitable your website is.

Get the price too low as well as your costs.....marketing in particular.......will eat into your margin. You might put people off if the purchase price point gives the perception of low value.

Get the price too high......particularly in comparison to alternative resources of information.... and you may put prospects off.

Before giving you some guidelines it is vital to remember:

There is nothing to avoid you from changing the price to test the market.

Many subscription site owners pluck a subscription fee out from the air when they launch their site. Often it's based on only a hunch. They never test whether it's too high or too low to increase their profit. It is difficult to change the purchase price for a print publication, however, not for an online website.

Test! Test! Test!

There are no solid rules about how exactly much you need to charge for access to your website, but here are 20 guidelines to help you work out the perfect price for your subscription:

The monthly subscription could be anything from �1/$2 up to �1,000/ $1,800. The most frequent subscription charges fall in the range �4.99/$4.95 - �19.99/$19.95.
A website with just 1,000 members charging $9.99 per month will generate about $120,000. If this business is run from home, even after costs it might generate a net income of over $100,000 for the average person publisher.
It is strongly recommended that publishers offer a selection of payment plans with discounts for members willing to commit for longer periods of time, for example:
9.97 /month, or
24.97 /quarter, or
87.00 /year
If you offer three pricing points, you tend to get most subscribers choosing the middle one. It's a psychological thing
You will probably have observed on charity collection forms a choice of three donations. They do that because they understand that most people will go for the middle one, that is usually set at a level greater than people would normally give:
"Please tick the donation you intend to make:
5.00
25.00
50.00
Other"
If you provide a monthly price point, be sure that it is higher than 1/12th of the annual. You need to encourage people to subscribe for for as long a period as you possibly can, whilst not postponing people who want to test the water before fully committing themselves. E.g. Monthly 19.97, Annual 149
Offering just an annual subscription will greatly reduce your conversion rate as you are increasing the perceived risk for prospects signing up. This is still the case in case you offer a 100% money back guarantee
Be aware that many payment providers will not let you charge an annual subscription because if the web site closes down they are liable for refunding members the outstanding balance for the rest of the 12 months. Consult with your payment provider before signing up. Also make sure that they can take automatic monthly payments if you are supplying a monthly subscription. This is called 'Recurring Payments'
Generally speaking, sites aimed at consumers charge significantly less than those targeted at businesses Consumer sites typically 30-120 per year Business sites typically 120 - 700 each year
What are the competitive resources of information for the potential audience? Just how much do they charge? If Manchester United charges �100 a year for membership of the official fan club, a competing online independent fan club should probably charge forget about.
The more exclusive the content, the more it is possible to charge. A very successful share trader, Vince Stanzione, charges �100 /$180 per month for a newsletter reporting what trades he is going to make or has just made. Jay Abraham charges $300 a month for usage of his website that provides his personal advice on growing a business (www.abrahaminsider.com)
Study magazines in your sector. Just how much do they charge? What is their circulation? How do you want to compete? There is no rule about charging more or less than them, but you have to make sure your value proposition is more compelling when trying to attract new members. Do remember as an online site you offer huge advantages over print. These benefits have a value you can charge for.
People love a deal! Set your price a little higher than you would like to charge and discount it back. check here has two benefits:
People perceive the value of the content is at the higher price
Prospects feel they are getting a bargain
There are psychological barriers in pricing. It is better to charge $4.95 per month than $5.00, or $9.97 is preferable to $10. Additionally, there are opportunities to push pricing up towards these barriers. For instance if you charge $385 per year, you can probably getaway with lifting the purchase price to $397 without the impact on sign up rates. Just don't break the $400 level as this is actually the next psychological barrier and can result in a fall in subscriptions.
Don't give discounts to loyal members! If a member returns year after year they perceive that the purchase price they pay is equal to the worthiness they receive. You should reward their loyalty with bonus information, like a free ebook or a research report, but don't decrease the price. This is usually a very common mistake.
Offer promotional charges for one year, but don't drop the overall price. If you believe that you are missing out on a large market group because they're more price sensitive, offer them a promotional code/discount on the standard price. Don't drop the purchase price for all subscribers. An example is in the event that you decide you would like to attract students who are usually very price sensitive.
DON'T ever consider, even for a moment, charging a one-time fee for lifetime's access. This was common in the early years of the web, but I haven't seen a single site which has survived with this strategy
Test, test and test again! One of the greatest benefits of the internet is it is possible to change pricing, offer discounts or promote free incentives with minimum effort and cost. For example distribute two different price offers to two similar sets of prospects. Gauge the response rate and margin to learn which offer is most profitable. Then create a new offer and check it out contrary to the best of the initial offer...... etc. This is known as "AB Testing"
You may also consider offering trials, but be sure to get the customers credit card details prior to the trial starts and get them to agree that after the trial is over you'll automatically bill them if you don't receive written instruction never to.
I hope that you find this advice useful. It has been put together from the experience of helping a large number of online publishers decide on the subscription fees for his or her membership websites. Please take the time to research and choose the best price. It is probably the most important decisions you'll make in determining how successful your organization will be.

Miles Galliford may be the co-founder in SubHub - www.subhub.com . The business is a world leader in assisting individuals, small publishers and organisations to set up paid memberhip websites. For huge amount of FREE information and resources visit www.subhub.com .
Website: https://writeablog.net/lassenlynge8/picking-the-purchase-price-that-maximises-profit
     
 
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