The Membership Guys

Should you charge a one-off fee or a recurring payment for your membership site?

Deciding on the pricing for your membership site can be one of the most difficult and frustrating things to figure out.

It’s not just trying to work out how much to actually charge; but also what sort of billing method to go with too. Should you charge a one-off fee to access your membership site, or is billing people monthly better?

There are a number of things to consider when weighing up those options, so we’ve put together some pointers to help you figure out the best approach.

What membership model are you using?

One of the first things to consider when deciding on your payment structure is the actual membership model that you’re using.

If your membership essentially revolves around one core course, then you may have a hard time selling the idea of paying a recurring fee for access, since once people have finished then they’ll often have very little reason to stick around.

Often people will choose to drip-feed their course content as a means of justifying a recurring payment, but eventually you’ll run out of content and thus, out of reasons to keep people around.

Managing member expectations

The payment model that you use directly influences your members expectations in terms of the content they’ll receive as part of their membership.

Someone making a one-off payment will be more inclined to accept that what is available to them as a member on day one will not change much – if at all – throughout their membership; whereas people paying a monthly fee will expect you to continuously deliver value.

Of course this isn’t the case for all situations – particularly if you’re positioning your product as a “lifetime” membership in exchange for a one-off fee in which case expectations will be higher.

Speaking of which…

How long is a lifetime?

If you charge a one-off payment, how long does that grant access for? Is it simply a fixed-period fee that doesn’t repeat or does it give someone lifetime access to your product?

If it’s the latter, then how long a period does “lifetime” refer to, and do you have a plan for what you might do should you ever need to close the doors?

Or if it’s the former, then…

Non-recurring annual options may be better than recurring…

If you are planning on having recurring billing, but your billing period is annual, then you may want to consider the potential pitfalls of that option.

A year is a long time, and it’s entirely possible that when signing up someone either doesn’t realise or ends up forgetting that their annual payment will automatically rebill.

This could lead to very unhappy members who are taken by surprise by being charged – that is if the payment actually goes through… it’s entirely possible that if someone isn’t expecting to be billed that they simply may not have the funds available –  leading to a potentially messy situation dealing with failed payments.

Even if funds are available then there’s every chance that your members payment information has changed over the course of the year too, leading to the same sticky problems.

Recurring revenues vs perpetual launch mode

Obviously the big plus point of monthly billing is that you’re earning recurring revenue; so providing you keep your members happy then you’re getting paid over and over again for months and years on end – continuously building your income.

Whereas with one-off payments you’re always going to be in ‘acquisition mode’, so if you have a bad month, you don’t have the recurring element to fall back on. You basically rise and fall according to how many new members you can recruit month to month.

Of course if your retention rate is poor then you won’t get that benefit, it really all comes down to…

Member Lifetime Value

A key goal for any membership site owner is to maximise the lifetime value of your members. If you’re billing monthly, then this means making your offering so compelling that people will stick around and continue paying for a long time.

With a good member lifetime value, the benefits of continuously building monthly revenue can massively outweigh one-off payments; however if your members are disappearing after just one or two months then the benefit of recurring billing is negated.

That’s why it’s crucial to have a solid member onboarding, engagement and retention strategy.

Monthly options are often easier to sell

By the very nature of offering monthly billing, you’re giving people an “out”. This can be huge from a ‘risk reversal’ point of view; as if someone pays one big one-off fee and after a few weeks thinks they may have made a mistake, their options are limited; whereas if the same happens for someone who is paying monthly then they can simply choose not to continue their membership.

Of course the fact that a monthly payment will almost always be cheaper than one big one-off payment is a major factor too – even though, assuming you have solid strategies in place to maximise your member lifetime value, people will likely end up paying more long-term.

Best of both worlds?

If you’re still stuck for which billing method is better, then you might want to consider offering both options and letting people choose whatever suits them better.

You’ll need to be smart in terms of figuring out what to charge for each option in order to make sure the numbers add up – it shouldn’t be cheaper to pay 12 monthly payments than it is to pay 1 annual payment; and if you’re offering a lifetime option then it needs to make sense in the context of what you’re charging month-to-month.

You want to avoid having too many payment choices and overcomplicating things; but it’s certainly feasible and, in many cases, advantageous to offer both a one-off fee and a monthly billing option.

How did you decide what approach to take with billing for your membership site? As a customer, do you prefer paying monthly or just paying a single fee? If you’re offering both, which has proven most popular amongst your members? Let us know your thoughts, experience or questions in the comments section below…

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