Business Model: Membership Model vs Selling Products

Adam...

Obviously it varies but people are almost always going to prefer a one-time payment over a monthly subscription.

My 2 cents - membership works better if you offer significant upgrades/advantages month on month so your customers feel they are getting something new every time they part with the monthly fees.

But then, it depends a lot on the product and how exclusive it is.

One time payment options are more preferred by people because that gives a feeling a "completely owning" something.

Both subscription or one-time may work here. Why don't you offer them to choose what they prefer? Do both methods together. I know this is a double work but I think only this way you will find out what is the best model for your project.

The Membership route is great because of the monthly income but you need to keep pumping fresh content out to the members, otherwise they won't stick around for very long. Unless you're in a very unique niche that no one else is in, your members will jump ship as soon as they realize that your competitors will sell them the whole course as a one-off.

A full blown product funnel. A low end entry product (one time payment), with a larger upsell (one time payment), combined with a free month to a membership site.

Want some stats ... (not meaning to sound like a jerk here) ... how about you test it out yourself. Get your own stats from your own customers. My stats in my markets don't matter.

The reason I say that is HOW you build your list, with what kind of offer and the kind of language greatly depends on the kind of people that end up in your list and therefore the price points you can sell at, what kinds of offers they are most likely to respond to and so on.

However very nearly without exception, a product funnel like I talked about above sells better than doing just a single product whether one time payment or recurring membership.

Some ideas for you.

You can offer payment options, for example say your site site is $9/m you can offer a discount for a year.. ie $90 so they save by making a larger upfront payment.

You could also position it as a 6 month payment plan, with lifetime access after this. Given the average retention rate is around 3 months, this gives members a fixed goal for payments and can reduce drop outs after this typical 3 month period.

You can also sell your site on a low cost monthly fee and offer an upgrade once bought in to unlock everything for one cost.

Also think about a very low cost fee to join a site and then single one off products that can available. Perhaps at a discount to those paying the monthly fee.

Plenty of ways to combine benefits of membership sites with one off products.

Adam,

If it is a membership site where they pay every month then you will want to give them new value/content each and every month.

That is the obvious way.

If you were going to allow them to pay once, I would not even consider to post new content for them.

If you're dealing with total newbies then either one is an option. If your sales material is conjuring up a healthy level of skepticism (and it may, given the niche) then I would go with a no to low risk entry point and let the content prove itself to get them fully on board (whatever that means.... rebilling for months or a one time fee). If the content is just so-so (or I should say perceived that way) then you'll probably end up doing a one time fee since they won't rebill.

If your target is existing marketers who just don't know video yet, nobody is going to pay you a monthly fee. Nobody in the game already wants to be drip fed content over multiple months. You could possibly have an alternative option for these people.

why not offer both thing.. monthly subscription and product sales.. for visitors to choose

I would say its easier to start with a one-time product, eventually build some follow-ups for it, and then convert the whole thing into a monthly membership when you have enough content.

Otherwise starting with a membership right away might be too challenging.

Agree with Steve's thoughtful answer. I start all of my niches with at least one product, sometimes roll out a couple, then *may* move into membership model where there is significant pull from my customers to do so.

Worst thing in the world is jumping into a membership model before you have the customer demand to warrant it...membership content updates, communications, forums, etc...can be significant work, so you definitely want critical mass before you jump in.

In my case, evolution is: Product 1 --> Group Coaching/Consulting (until reach multiples that indicate solid demand) ---> Membership ---> High End Consulting/Coaching

Not all niches move through all 4 phases, but the ones that do become full-time ventures.

Jeff

If you choose a membership site, you should know you will get a lot of customers, which will need high amount of support, which will take a lot of your time, and some of them angry, which attitudes which ruines your days :0)

Ok, there are two parts to this:

1. It depends on exactly who you're marketing, to, but...

If you're offering video marketing info, then your target audience is primarily going to be online entrepreneurs. Business owners. (Or aspiring entrepreneurs anyway.) So your price is way too low. Any kind of business-building info is way more valuable than that.

If you're offering your info to complete business newbies, the price will be lower than if you're targeting existing business owners. But it's still worth way more than $30.

But even if you choose to keep it at that price, offering monthly payments of $7 versus a one-time payment of $30 won't move the needle very much. $30 is pocket change for most people. You can easily drop that on dinner and a movie -- if you're going to McDonalds, that is. Payments on a $30 price is rather ridiculous.

Now, if you're pricing your offer at $300, you might consider offering payments. But if you're going to offer your info at $30, just offer it for a one-time payment of $30, period.

2. Don't offer an ongoing, monthly membership. That's called continuity and it's usually a hot topic because of that magic concept known as "recurring revenue."

However, there's always attrition with ongoing, never-ending monthly payments. A certain percentage of people are always cancelling their membership and you always have to find new customers to replace them.

Worse, it means you have to always find and provide new info to your membership to justify the fees.

What is better is to create a program for a flat fee which goes for a specific length of time. Even when making monthly payments, people are much more likely to stick with you if they can see an end to the payments. If they're never-ending payments, people are much more likely to cancel.

Put a price on it. Then offer it for 1) a single payment of that price or 2) monthly payments, either for 2-3 months or for each month the program runs. So, if your price is $300 and the program runs for 3 months, you can offer a payment plan of $100/month for 3 months.

Actually, you'd charge slightly more for monthly payments: say, $120/mo for 3 months, for a total of $360. This allows someone to get into your program for less than $300, yet it compensates you for offering monthly payments. It also gives your peeps an incentive to make full payment since it's the best deal.

With this setup, about half of your peeps will pay in full to get the best deal.

It's also in complete price integrity: 1) It makes sense to charge a bit more for offering the convenience of a payment plan, yet 2) you're making it easy for anyone to access your info even if they don't have $300 right now and 3) you're offering a deal to those willing to pay in full (which is great for your cash flow).

This is in complete alignment with the way people think. Everyone wants a deal, yet people will accept a small extra charge for convenience. It's why people are will to pay high prices, even for bad products.

(Just look at McDonalds. Their food is awful. It's not even real food. But they're not in the business of selling food. They're in the business of selling convenience. And THAT is why they stay in business.)

Yet, you will still enjoy recurring revenue. Just take a look at these actual projections:

Running the Numbers on $297

Sell 10 Information Products Per Month
(Payments of $99 per month for 3 months)
Month One $ 990
Month Two $ 1980
Month Three $ 2970
Month Four $ 2970
Month Five $ 2970
Month Six $ 2970

Running the Numbers on $495

Sell 10 Information Products Per Month
(Payments of $99 per month for 5 months)
Month One $ 990
Month Two $ 1980
Month Three $ 2970
Month Four $ 3960
Month Five $ 4950
Month Six $ 4950

Running the Numbers on $997

Sell 10 Information Products Per Month
(Payments of $199 per month for 5 months)
Month One $ 1990
Month Two $ 3980
Month Three $ 5970
Month Four $ 7960
Month Five $ 9950
Month Six $ 9950


Hope that helps!

Michelle

I have been debating which is better my self for my dog training website, at the moment I am just selling products. I always feel like with training sites people would just pay for a month, view the content, then cancel it.

Have a bunch of SMALL TICKET products. (Like $7)...

Then have ONE UNIVERSAL upsell which is your membership product.

Could work very very well.



Good luck.

What's it matter. Where is your traffic coming from? How much is it going to cost you? Should you also sell products to make up for the cost of signup (cost per lead).

If done right the 2 could complement each other. As a Gemini, i like the dual option.