Membership Pricing Models

This club is for members only. But once you join, membership lasts for an eternity.– Ellen Schreiber

Running a membership-based business is a mammoth responsibility. You need to keep your regular customers happy and show them that what you charge is worth it. That’s where your membership pricing model becomes important.

So, how do you come up with a price point that is fair to your members?

A pricing model that appropriately represents the value you’re giving, and covers your organization’s operating costs is the best.

Moreover, you have to figure out how to charge member dues for the first time or re-evaluate your present pricing plan.

In this article, I’ll cover key factors for setting a good membership price and various pricing models for memberships or subscriptions. Let’s get started!

What Is a Membership Pricing Model?

You provide benefits to your members in exchange for membership dues as a membership organization. The payment structure that determines how much and how often your members pay dues is known as a membership pricing model.

what is membership pricing model

Your membership or subscription pricing model can get highly advanced depending on the perks you provide – you can include numerous tiers, payment schedule options, and discounts. Your objective is to get as many people to not just join up for membership, but to keep it year after year, therefore your pricing model should reflect their wants and preferences.

Why Is the Membership Pricing Model Important for Your Business?

average value of a member lifetime value

[Source: MG Membership Report]

Membership pricing models are crucial for business success, as they directly impact revenue and profitability.

Correctly implemented pricing models can lead to business growth, while incorrect ones can have long-term negative consequences.

Pricing excellence goes beyond product cost and includes strategy, goals, positioning, governance, tools, and company culture.

Experts with a deep understanding of customer segments and product value-to-customer are needed to determine the right pricing model.

In competitive markets with price pressure, a well-designed pricing model helps maintain competitiveness, secure value for products and services, and generate revenue for growth.

While cost-cutting and sales efficiency are important, equal effort should be invested in developing a Membership Pricing Model as a revenue generator.

Types of Membership Pricing Model

1. Lifetime Membership

lifetime membership

Many subscription-based businesses can benefit from incorporating a “lifetime” membership option into their pricing models. This option is particularly attractive to early adopters and loyal customers who prefer a one-time payment over regular subscriptions. To offer a lifetime plan successfully, consider these strategies:

Limited-Time Offer: To incentivize early adoption, consider offering a discounted lifetime package for a limited time. This entices customers to commit to your product or service for the long term.

Pricing Strategy: Calculate your lifetime plan price by using a multiplier of your standard monthly or annual fees, such as 30 times the monthly rate or 2.5 times the annual rate. This ensures equivalent customer lifetime value between lifetime and periodic plans.

Market Perception: A higher-priced lifetime plan can be a strategic tool. While not widely chosen, it can make your regular pricing seem like a better deal, prompting more customers to opt for standard subscription plans.

Bonus Revenue: Occasionally, when someone chooses the lifetime option, it can provide a bonus boost to your revenue. This can be especially beneficial for businesses with lower-volume, higher-priced lifetime plans.

With the standard Membership plugins, this model is quite simple to set up. Simply arrange a one-time initial payment on the membership level with no recurring subscription or expiration to do this.

2. Utility Pricing

Users are charged depending on some form of usage statistic in this pricing scheme. Most email marketing businesses that charge depending on the number of subscribers in your list follow this strategy. Companies that provide cloud hosting services may charge based on the amount of disc space and/or bandwidth used.
For example, AWS(Amazon Web Services) is Amazon’s complete cloud computing platform, which comprises infrastructure as a service (IaaS), platform as a service (PaaS), and packaged software as a service (SaaS) products.

Membership for WooCommerce Pro offers utility pricing in the main plugin or any of our add-ons, we wanted to integrate this price model. If the cost to you as a business is based on a member’s consumption, it can be a smart strategy.

Some payment systems, such as Stripe and Braintree, allow you to change a user’s subscription amount at any time. Others, such as PayPal, allow you to make modifications within a specific range.

You may also track the statistics you need to determine the monthly/annual total using some custom coding, build an order for it, and then try to resolve it against the customer’s credit card information at the gateway.

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3. Installment Plans

installment pricing plan

Installment plans are similar to front-loaded memberships, but they don’t require a monthly payment. This technique is excellent if you need to charge a high fee but you know your consumers won’t be able to pay it all at once. This paradigm has been employed in executive coaching, training programs, and the sale of physical commodities, among other things.

With the standard Memberships for WooCommerce Pro plugin, this model is quite simple to set up. This can be accomplished by establishing an initial payment and recurring payments for the duration of your membership, as well as a “payment limit.” You can also set a membership expiration date if you like.

4. Add-On Pricing Models

add on pricing models

Users may be charged a base price. And then given the option to select extra membership benefits in this “build your own” membership model. These elements might be extra interest groups for a newsletter or blog category subscription, or a la carte membership options like an annual resume review service, a phone consultation, or other “one-off” products. This strategy has already been employed for traditional newspapers that provide both an online and a physical printed version.

5. Fixed-Term Membership Pricing

fixed term pricing models

The membership level has a predetermined term with an expiration date in this pricing scheme. To keep their membership, members must renew. This price model is frequently utilized for a calendar year’s worth of service (January 1 to December 31). This is a common pricing model for traditional associations and organizations, as well as benefactor organizations. Both report membership on an annual basis and demand members to “renew” their membership each year.

With this pricing model, you can do things like offer a discount for early renewal. A discount for purchasing a multi-year membership in advance or even prorate membership for customers who sign up in the middle of the term.

6. Pay What You Want Membership

pay what you want

When contemplating a donation-based membership model, it’s important to manage your expectations wisely. This approach often appeals to creators who are passionate about their craft and would pursue it regardless of financial incentives.

For instance, if you’re a dedicated product reviewer or produce your own digital music simply for the joy of sharing your work, implementing optional donations can be an excellent way to earn a modest income without the complexities of a traditional membership system.

Rather than setting fixed fees, adopting a “Pay What You Want” concept can be highly effective. This approach is particularly compelling when combined with a touch of social pressure to encourage potential members to contribute. Another strategy is to offer enticing bonuses for contributions above a certain threshold, thereby maximizing revenue per sale.

While it’s essential to keep your expectations realistic, the “Pay What You Want” model can pleasantly surprise you with the support it generates.

7. Recurring Subscriptions: A Reliable Pricing Model for Membership-Based Businesses

recurring subscriptions


The recurring subscription model is widely adopted by various membership-based businesses, offering the stability of a fixed price charged at regular intervals, such as “per month” or “per year.” Many payment gateways even provide the flexibility to charge customers on a weekly, quarterly, or other customized basis, making it adaptable to a variety of business needs.

Numerous businesses and platforms leverage recurring subscriptions to their advantage. Here are some examples of industries and entities that benefit from this pricing model:

Recurring subscriptions find wide application:

  1. Newsletters: Regular content delivery ensures a steady income.
  2. Expert Platforms: Subscribers access exclusive advice, maintaining predictable revenue.
  3. Social Networks: Premium features sustain online communities.
  4. Listing Sites: Premium subscriptions enhance platform quality.
Want to set up a WooCommerce Subscription?
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A recurring subscription model ensures stable income and fosters loyalty. It enables long-term planning and growth. Success requires ongoing value, effective communication, and seamless payments, creating a win-win for subscribers and businesses.

8. Tiered Membership Pricing

In a tiered membership pricing model, you offer different levels of membership with varying features, benefits, and pricing. This approach is often used when you want to cater to a diverse audience with different needs and budgets.

For example, a software company might offer a basic membership with limited features at a lower price, a standard membership with more features at a moderate price, and a premium membership with all the bells and whistles at a higher price.

Key points to consider when implementing tiered membership pricing:

Feature Clarity: Clearly define each tier’s features so customers grasp their value.

Price Reflects Value: Set tier prices based on included benefits, with higher prices for more features.

Upsell Opportunities: Encourage upgrades by showcasing added value. Cross-sell other products.

Member Choice: Allow customization—some prefer basic, others want premium.

Continuous Optimization: Monitor and adjust tiers for revenue and satisfaction.

Tiered membership pricing is versatile and can be applied to various industries, including fitness clubs, streaming services, software providers, and professional associations. It allows you to cater to a broader audience while maximizing your revenue potential.

9. Freemium Membership Model

The Freemium Model is a popular pricing strategy frequently employed in the software and online services industry. It essentially involves offering two tiers of membership to users:

1. Free Tier (Freemium)

Access to Basic Features: Users can sign up and use the service or software for free.

Limited Features: The free tier provides access to a limited set of features or functionalities. These features are often enough to give users a taste of what the product or service can do but may not provide the full range of capabilities.

2. Premium Tier (Paid)

Enhanced Features: This tier, which users pay for, offers a more comprehensive set of features and benefits.

Advanced Functionality: Premium users typically enjoy advanced functionalities, additional tools, or content that significantly enhance user experience.

No Ads or Restrictions: Premium members may also benefit from an ad-free experience and fewer usage restrictions compared to free users.

Examples of Freemium Model Applications:

Software: Mobile apps often offer free basic versions and paid versions with advanced features.

Streaming Services: Spotify and Pandora have free versions with ads and limits; paid versions remove ads and offer more control.

The membership pricing model requires consistent value delivery. Whether it’s monthly or another term, you must provide fresh, valuable content regularly. With Membership for WooCommerce Pro, setting this up is straightforward—just create an initial payment and a recurring subscription for the membership duration.

10. Group Pricing Model

Family or Group Pricing is a pricing model designed for multiple individuals seeking access to a product or service together. It’s commonly used in industries like fitness centers and educational platforms. Here’s a concise overview:

In fitness centers, family or group memberships encourage multiple individuals to exercise together at reduced rates, fostering a sense of community. In educational platforms, schools and organizations can benefit from group pricing, making it cost-effective to provide access to courses or resources for multiple users.

Key features include discounted rates, customized access for each member, and administrative controls for group managers. Plus, the members avail benefits like cost savings, improved collaboration among group members, and simplified billing and administration.

Considerations may include tiered pricing based on group size, privacy, and security measures, and clear policies regarding renewals and changes. Family or Group Pricing offers a cost-effective, convenient, and collaborative way for multiple users to enjoy the benefits of a membership or subscription.

Final Words

I hope this article has given you some ideas for pricing your new membership or a subscription-based business. Both are traditional and unconventional.

It takes some effort to set up a suitable price scheme for your membership. It necessitates extensive study and open communication with your members – if you’re unclear about how much to charge. You can also survey your members. A survey will help you to see what they’d be ready to pay for the value you provide.

Try and Try Again Until You Succeed!

Same as the above statement, try a different model and see whether it works or not. The optimum price strategy for your organization will be unique to you. So experiment and see what works best for you and your member

About the Author: Geetika Dayal

After Completing Masters in Arts of Mass Communication, Geetika is innovating her writing skills in strategic content marketing and her creative mind helps mobilize thoughts to words. Making it to the ground, a human being with a dynamic verve, always seeking adventure.
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