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QuoteHi John,
I'm in the process of having a password protected online community with an annual fee for my fans - basically as an opportunity to generate more income from my super fans.
My intention was to set a "real" price eg. $77USD, and then have a 40% sale (say, down to $47) to use as an upsell, and also as a limited time offer maybe later on down the funnel to get customers in. My assumption would be that the majority of the customers I would get would purchase when it's on special.
From recollection, I believe you do this with the insider circle - offer a limited time discount after doing the MMM course?
I mentioned my idea to some friends who are in different fields (but all small business owners), and they were adamant that membership programs should never be offered at a discount - devalues product, sales are for smaller items etc.
What are your thoughts on this, and are you aware of any research/studies suggesting either way?
Cheers,
Rachel
5:36 pm
June 9, 2011
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Hi Rachel,
Steve here. While the idea of a discount on a membership devaluing the content is an interesting perspective, content either has value or it doesn't. People are willing to pay for the perceived value, or they aren't. Our job as the marketer is to communicate the value effectively, at any price.
Discounts used as a one-time offer is a direct response marketing technique. The one-time nature of the offer is often the difference between people deciding to spend with you or not. In other words, one-time offers inspire action when perhaps the full priced offer doesn't. Also, because memberships are a longer term commitment, people sometimes want a look behind the curtain, to see if the membership commitment is worth it. Offering a discount will help you get those people in to take a look
If your only motivation is money, then don't offer the discount. If your goal is to steadily grow a long-term community, then discounts can help get you there and people will be inclined to stay longer, when the membership is affordable.
John does use a discount offer on the Insider Circle, both as a one-time upsell offer, but occasionally as a stand-alone promo, to boost membership. The discount has been found to effective. I can't say for sure if it means that people stay longer, but from my perspective here in support, it appears to do so.
9:54 pm
June 7, 2011
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Hey Rachel, thanks Steve.
I have heard that perspective from people before. My personal feeling is that it's one of those things that people say, but which doesn't hold water. I have been running my membership program for over 5 years now and discounts have been a regular part of getting members into the IC. They not only entice people, but they lock people in as well. Many MANY marketers use the same tactics successfully.
It does depend a bit on your model though. As direct response marketers we tend to need an incentive to get people to take action now, rather than later (which usually never comes). In my experience discounts are the most effective ways to motivate people. Especially when they stand to lock in the discount for life. But I think this especially true with information marketers (which technically musicians are as well) who's brand is not the product. We pull people in because of our content, and then entice them to spend money periodically. If I was selling phone plans, or some other traditional product that was in itself the brand, I might structure things differently.
In terms of the rest of your plan, $47 is on the high side. I think you start to find a new level of price resistance over $29.95. That said, I think $47 is doable if you have a solid relationship with your fans. If you are not sure if you do, then I would start low and increase as demand warrants it. But I also tend to be a fan of lower price points. Not everyone feels the same.
Good luck with it and let us know how you do.
Having trouble with your marketing? Wish you could have an experienced direct-to-fan marketing expert look over your actual campaigns, music, or content and offer feedback? Or perhaps you’re just looking for a little one-on-one assistance so you can ask questions that pertain to your specific goals and get a second, more experienced, perspective? Click here to book a session with me now.
11:06 pm
June 19, 2015
OfflineHi Steve and John,
Thank you so much for that feedback. My gut feeling was that a limited time offer was a good idea, so thank you for verifying that!
In terms of price, again I've had people encouraging me to charge more rather than less because of implied value, and have read that $50 is a bit of a magic number. (It must be the next price resistance level after $30). I do have a very good relationship with my fans (lots of long fan mail etc.), and I intend on it being more than a fan site - also a creative hub with guest interviews, book reviews, creative sharing forums etc.
Essentially, I'm hoping I can charge $47 because I would like to generate some income from my music, and my $10 album sales only really get me to break even level. Thoughts?
Rachel
8:31 pm
June 9, 2011
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Hi Rachel,
Steve here. I'm not sure about $50 being a magic number. I have read a lot from various marketers over the years who prefer odd number pricing. I personally think $47 would be more magical and not just because it's 3 dollars less.
Let us know how you make out.
8:34 pm
June 7, 2011
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Hey Rachael,
Weather or not you can pull off the $50 price point is all going to come down to the relationship you have with your fans. It sounds a tad high to me, at least for the average artist, but I'm not at all saying you can't do it. My biggest concern is just the fact that if it doesn't work it will be hard to come back from. It's easy to raise your prices, but lowering them can really piss your most loyal customers off. So it's a bit of a gamble.
I am very familiar with the old argument of charging higher prices to create a perceived value, and there is something to it. But in my somewhat cynical perspective this tends to be something I more hear from internet marketers who can't figure out how to make the numbers work unless they charge $1000 for their courses. The validity to the concept is more in the financial reality for certain individuals. Many will simply make more money if they charge $1000 for a course and sell 3 of them then they would if they charges $100 but only sold 15. I don't personally believe your fans will perceive your offer to be less valuable if it was half the price. The question remains though... will you sell twice as many if you lower it. And don't get me wrong, I have no problem with premium pricing. I just don't think it's a perceived value issue. To my mind it comes down to balancing how we can make the most money while having an impact on the most people. For example, with MMM I think I would likely make more money charging higher prices. But I would impact less people. For me that is important, both creatively and in regard to my long term business goals. But I don't believe that it has in any way hurt my perceived position in the market. know what I mean?
As I see it you have a few options.
1. You can take gamble and go with whatever price point feels right to you.
2. You can run a small test to a segment of your audience to see which offer sells better. You would need at least 300 - 500 people in each segment. More is better. Then take the winning offer and go wide with it.
3. You can literally send out a survey to your list telling your fans what you are planning on doing and ask them if they would be willing to pay $50 for it. You would position the survey is market research of sorts and explain that you are trying to gauge fan interest.
Steve is also correct about the $47 figure vs $50. There has been a lot of testing with variations on numbers and adding a 7 apparently boosts sales, as apposed to $49.95. My hunch is this becomes less crucial as the price gets lower. IE, $17 vs $19.95.
Let us know what you decide to do and how it goes for you.
Having trouble with your marketing? Wish you could have an experienced direct-to-fan marketing expert look over your actual campaigns, music, or content and offer feedback? Or perhaps you’re just looking for a little one-on-one assistance so you can ask questions that pertain to your specific goals and get a second, more experienced, perspective? Click here to book a session with me now.
2:57 am
June 19, 2015
OfflineHi John and Steve,
You're both certainly starting to wearing me down about the price.... Perhaps $27US as a discounted price ($47 can be the official full price perhaps) would be more likely to sell. Making money is definitely one of my goals - I have trouble making a profit selling albums for only $9.95 without a decent upsell (I have only a $4.95 downsell at this stage), and would like my music to start paying for itself. (And as I'm sure you know - recording the albums in the first place is expensive too, so I lose lots of money there!) But I don't want the new upsell to be so expensive that no-one buys it - that would defeat the purpose!
And I could experiment with notching the price up later - I hadn't thought about that, but I guess that's rather easy to do!
I do wonder as well whether $37 would be as easy to sell as $29.95 if $30 is a point of resistance, seen as the first digit is a "3". Thoughts?
Rachel
10:56 pm
June 9, 2011
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Hi Rachel,
Steve here. Keep in mind that price is one of those things that can be tested. Split traffic to differently priced variants of the same offer and see what actually works better, as opposed to relying on the theory of it.
Being able to test and see your results, really takes the guess-work out of things.
Let us know how you make out.
12:27 am
June 7, 2011
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Hey Rachel,
When I said that $30 seems to be a major price resistance point, I was more talking about $27 or $29.95. I would think $37 would create some additional resistance. That said, I have seen many people use that price point, I assume with success.
As Steve echoed, the best way to know for sure is to run a limited split test. This will take all of the guess work out of the equation.
Having trouble with your marketing? Wish you could have an experienced direct-to-fan marketing expert look over your actual campaigns, music, or content and offer feedback? Or perhaps you’re just looking for a little one-on-one assistance so you can ask questions that pertain to your specific goals and get a second, more experienced, perspective? Click here to book a session with me now.
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