Should I use the same product pricing for different membership plans that I offer to simplify my pricing to make users less distracted?

For example, I currently have 2 different membership plans that customers can select from (e.g. Silver, Platinum). In addition to the product pricing being cheaper for "Platinum" members due to these members paying a monthly fee there are also other services I offer at this level that the "Silver" members don't receive. So my question is, should I just "simplify" the product pricing and make it the same for both membership plans and entice users to join my "Platinum" plan based on the other services I would offer at this level?


As you likely know, people make a lot of decisions based on price. Having different pricing points isn't distracting, it's often the driver for making a decision - as people compare value of an offering to the price of its offer. So no, I don't think you should set all your prices at the same level.

But I do suggest you put prices on them (not just free), as studies on membership sites have shown that even a $1/year price will see 15-25% of previously "free" users leave - meaning that they never had the intention of spending money with you.

Answered 10 years ago

Your problem is typical of a start-up that treat product pricing as a quantitative problem, or an afterthought. As a matter of fact, product price is directly related to marketing and consumer psychology. Your intent to use same pricing for different membership plan speaks volume about the conundrum in your mind.

If you're a technology company then you need to look at it beyond the economic theory of supply-demand. Because, over time your cost of production approaches zero. Ideal way to get started is to benchmark it against your competitors. And, while you do that, ensure that you benchmark your product in first hand than pricing.

But, what if you don't have a competitor to benchmark against? In that case data would be of no help. You would need to get started with setting an hypothesis. The rule of thumb is to create a gap between price and perceived value large enough to pull customers.

Secondly, price is often traded as proxy for quality. In your case, it could be quality of customized service or additional features.

Thirdly, keeping price similar, you may lose on creating an entice point for your market. You lose that and you lose an opportunity to understand the embracing price point. Something, larger segment of market will embrace you at.

I hope this proves to be of some help!! Thank You.

Answered 10 years ago

Your question really boils down to one fundamental question: are there different segments?

Undoubtedly the answer is yes. I have never seen a business that doesn't have different segments.
So what you are really asking is have you done your segmentation properly?

Answered 10 years ago

I would recommend that you simply test this. And track the results. Your answer will be different for every product and target group one may have. So always faster and better to just do a test.

Answered 10 years ago

I'd bounce a question back to you: do you think that "less distracted" users are more likely to subscribe to your SaaS? Your answer to that question will form the basis of your marketing funnel. I have used lower pricepoints for entry-level products that were meant to get people into my funnel (usually in the form of an email address). And then, as I gain trust, I can sell my new customers higher-priced products and services. At the very least, three different subscription tiers/prices can offer something to price-conscious prospects (the cheapest option), something to value-conscious prospects (the middle option), and the "Rolls-Royce" option for prospects who always want to buy the best. Most people will go for the middle option because it seems safe. Offering only one price may simplify things, but you'll also lose the powerful psychology that drives the best marketing funnels. Hope this helps, Austin

Answered 10 years ago

I've performed hundreds of pricing page tests in the past. It's hard to tell in advance what will work.

There are a few things I'd recommend to generate ideas for tests:

1. Talk to users who have visited the subscription page and converted. Ask them what made them pull the trigger and what made them almost decide not to subscribe.
2. Talk to users who visited your sub page and did not subscribe. Ask them why not.
3. Study the best pricing pages in your industry and outside it for ideas.

Once you have a queue of ideas, I'd test copy, design, plan features, pricing, term lengths, payment options, incentives (trial, discounts, etc.) to find out the order form that makes the most sense for your users.

Simplicity is a great goal, but there are so many factors at play that testing is critical to understand the business impact of various membership plan designs.

Answered 10 years ago

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