A question to consider…

Do you raise membership prices to generate growth or do you generate growth so that you can raise membership prices?

Everything in today’s email (and your membership program) hinges on this important question.

Let’s dive in.

Why the overall effectiveness and associated risk of a price increase is determined by its design.

Without a doubt, raising prices can feel like a daunting task.

If you raise too much, then members may churn. If you raise too often, members may churn. If you don’t raise enough, your business might leave significant revenue on the table. The list goes on.

Let’s face it: Price increases are downright risky. But they’re also essential for any operator aiming to build a successful long-term membership business.

The secret to an effective price increase lies in its design.

At the end of the day, price increases fall into one of two categories:

Having a price increase that’s designed as a feature is a proactive strategy.

A price increase that’s designed as a lever is a reactionary strategy.

In my experience, the risk associated with prices increases doesn’t correlate to either of the above design choices. Rather, its the absence of design that introduces the risk involved with raising prices.

The most successful price increases aren’t those that are sprinkled on top of a product. Instead, they’re the ones that are baked in from the start.

And the only way to ensure the long-term effectiveness of your price increase strategy is to design it with clear purpose and know its role within your membership.

📌 Resource: Use this guide to raise prices effectively and efficiently in your membership.

When members know where you’re taking them, the entire game changes.

In membership, transparency is vital when communicating with members, especially when you’re raising prices.

And how you communicate your price increase is just as important as the price increase itself.

I’ve seen a 10% price increase trigger significant churn. I’ve also seen a 50% price increase be successfully executed with hardly any resulting churn.

The difference?

Communication.

📌 Resource: Use Part 4 in this guide to effectively communicate your price increase while minimizing churn (template included).

Longstanding price barriers are rapidly disintegrating. Is it a race to the bottom or a marathon to the top?

Recently, there’s been a significant rise in entry-level offerings of long-term (annual) subscription products in the market.

Annual offerings of subscription products have been steadily climbing since 2021, but promotions involving rock-bottom prices for a year’s worth of access have exploded in the past year.

You’ve probably seen it: Discounts in excess of 70% for the first year of service are everywhere.

At first glance, it may seem like a race to the bottom as companies compete for sheer volume and scale at lower prices.

However, a shifting consumer mindset could be a more significant driver of the types of long-term pricing structures and incentives we’re seeing in the market.

With subscription fatigue likely here to stay, consumers are speaking clearly: They want more access for more time before fully committing to a recurring product. It’s a “show me first” mindset.

What’s more interesting: The economics of one-month trials simply aren’t as productive as they once were given high month-to-month churn rates. But heavily discounting an entire year’s worth of access in order to win over a long-term customer on an annual plan is proving to be productive from a revenue standpoint.

Membership is a marathon- one where operators who are able to serve members with quality over the long term will be the beneficiaries of such market dynamics.

The Takeaway: As an operator, your program’s positioning as a long term asset for the members it serves can help create lasting, predictable value in your business for years to come.

My goal is for this email to be the most valuable thing that comes across your inbox each Tuesday. If I’m hitting that mark, share this newsletter with your staff, a team member or friend (just copy and share this URL).

See you next week.

-Michael