Offer a Payment Plan Or Not?
Any time somebody teaches membership sites, you always see the question come up, "Should I offer a payment plan or should I offer some kind of a trial?"
And while it seems like a lot of fun, and while it seems like you might get a lot more subscribers and customers into your funnel by offering a payment plan or a trial period, I recommend you stay away from them, for these three reasons:
You are always training your subscribers (whether you realize it or not); you are training your buyers as well; and trials just plain suck and attract the wrong kind of customer that you do NOT want to be a part of your business.
How Do You Train Your Subscribers?
Even if somebody doesn't see everything that happens behind closed doors within your membership site; even if they have not bought a lot of things from you, they still see the way you market your stuff.
If you are always offering a payment plan, or if the reason for you offering a payment plan is because no-one is buying, you look desperate! If you are not emailing to your subscribers enough, then they get the feeling like you are not much of a marketer.
If you keep dropping the price or keep piling in more bonuses without actually marketing your product, you look like somebody who will simply pile on more "stuff" in order to get a sale; and not really marketing and not convincing people and giving real good REASONS for them to join.
And let's say somebody does join. You are training those buyers as well. If someone is used to only paying you $1 or $5, and they have been doing it for years, it might be a little bit of a struggle to get them to the $100 or higher mark.
It might take a little bit of time - but if you can get your buyers to pay you more money to get more stuff, instead of paying you less money to get less stuff, they will be used to dedicating a larger portion of their monthly budget to getting your solutions. And that includes payment plans and membership sites.
I am totally for having a membership site where with every payment they get some new kind of concern. But too many times I see launches happen where someone is offering a product for $100, and people split it up over five payments: they pay five times but they only get one thing at the very beginning! How much sense does THAT make?
And the reason why many marketers offer payment plans like this is to claim a high number of sales. They get a lot of people to pay them $20 and then they claim that every sale was a $100 sale, when really it was only a $20 sale, and many people canceled along the way - because after all, why should somebody continue making payments if they already got the product they paid for?
Payment Plans Are Good If There Is Ongoing Content...
But they are not good if there is just a single-time delivery and you are doing it to inflate your sales numbers.
And finally, payment plans, and trials, and low barriers of entry just suck! I have tried membership sites with and without a trial - and with the trial there were lots more dropouts. There were a lot more people not logging in and not using the material because they didn't really have any motivation to; the price was low enough that it didn't really hurt their pocketbook, and they didn't have a good reason to make their money back - because there was so little to make back.
Trials really do suck. The new credit card laws are moving everyone slowly away from trials. And I would definitely recommend you TRY marketing your site without a trial. If you are having difficulty, it might be because you haven't trained your subscribers or your buyers enough. Tell them why you are not offering a trial, and turn it into a good selling point.
For example, there is no trial because you want to reduce the number of people who get access to this information; there is no trial because you want them to take action on what you show right away; maybe certain bonuses are worth a certain amount of money and a trial would cheapen that.
And that is why you should only offer a payment plan for ongoing content, not for a single-time product: because it trains your subscribers, it trains your buyers - and trials draw in the worst kinds of customers.
Do you offer a payment plan or not on your website? And what is the reason? Please comment below telling me.
Filed in: Membership Sites • Price Training
Subscribe
If you enjoyed this article, subscribe to receive more just like it.
I don’t, but my husband do, because I told him so 😉
It’s in French, but on his site, he offers a free introduction video of a few minutes lenght. Then people have to click to see Lesson One, and there they are told that this lesson costs 1 euro, and that there are 22 lessons in all, drip feeded, and after 3 days, they’ll be charged 47 euro, if they like the first video.
So far, everybody has paid both the 1 euro and the 47 euro three days later. And some has chosen the OTO, forum access for another 30 euro.
Do you think (yes, I know – split test…) that it would work even better, if we asked for 47 euro at once?
I don’t, but my husband do, because I told him so 😉
It’s in French, but on his site, he offers a free introduction video of a few minutes lenght. Then people have to click to see Lesson One, and there they are told that this lesson costs 1 euro, and that there are 22 lessons in all, drip feeded, and after 3 days, they’ll be charged 47 euro, if they like the first video.
So far, everybody who paid the 1 euro also paid the 47 euro three days later. And some has chosen the OTO, forum access for another 30 euro.
Do you think (yes, I know – split test…) that it would work even better, if we asked for 47 euro at once?
NO trials. Like Yoda says, “There is no try, there is only do.”
Interesting, I am not sure about training a subscriber, I like the idea of appealing to your clientele, finding a path that resonates with the people you want as a customer.
For one thing, I can tell you that QVC has millions of customers, and naturally a physical product lends itself more to the payment plan, it does make it more available, but only if two things exist.
one, the customer really wants what you have to offer.
Two, the customer can afford to pay a higher price for the payment option.
Usually this is a nominal fee, ( I think that is regulated at least in the US)
Still it could be a good option, and not simply to be abandoned, because of the sour grape theory, see aesop’s fables
Thanks to your help, I just launched my first membership site…a 10-week class, 3 payments of $99, total $297.
I will be offering new content every week, and I made the schedule very clear from the beginning. I also made a point to have an especially hot topic for the last lesson.
I’ll let you know when it’s over what the retention was like. I checked PayPal’s policies, and it doesn’t seem like you can easily cancel a recurring payment (as opposed to a subscription which can be easily cancelled anytime).
I do agree with you that we get the visitors we attract.
Once I learned that lesson I found that I should never be discouraged about people not buying. But I do make it clear that there is a price on valuable information such as e-books. Whether people buy is their choice.
I can show food and water for a donkey, but whether it drinks is totally out of my hands. The one thing though that definitely changes, inspired by your blog in June is the fact that when the sale runs out on July 9th on one of my danish sites, I will never again run any firesales, summer sales or other seasonal sales.
People can buy if they wish. But the price stays.
I have hurt my business by not being principled on that, and payment plans are not an option. If people can’t afford thirtysome dollars for a video series or seven dollars for an e-book, they can go look for freebies elsewhere.
I think a hard line is in order, and you are helping us establish (and understand) our businesses from new perspectives. Even though it takes time to become fully concrete with all the details. 🙂
I agree you do have to train your subscribers/customers to click on links in your emails, and to take action on the content in your membership site, etc. but…
In my humble opinion, this article is about building a brand. If people associate a trial period with your business or personal brand, you may have a hard time moving away from that. As you mention if people associate you with cheap products, you may have a problem scaling up. It is possible that training your customers in the manner you are suggesting and building your brand is a matter of semantics in this instance.
I am currently working on a membership site and I will not offer a trial period or offer payments for a single product or sell something for $20 and claim the sale was for $100 or do anything else that will lessen the value of my brand and hence my products.
I agree with your message. Great Post!
Hey Robert,
Great topic! Thank you. Here’s a question: I run a few recurring membership sites where I drip content over 10-12 weeks. I’ve done launches where I’ve offered a payment plan AND a one-time payment (at a bit of a discount), and I’ve also ONLY offered a payment plan. Both were almost identical in sales, so…do you think having two payment options works or not?
I saw Jeff Walker offered a one-time payment of $1997 or 6 payments of $397. I know you teach very different things from Jeff, but I’d love to hear your take on it.
Thanks!
Joe
Hmmm, so you never offer any freebies? I can’t remember quite how I got onto your list in the first place…
I suppose it might have been through Jason, and/or a very low cost product of some kind. It’s been too long ago.
Anyway, I guess I’ve been having way too many fire sales. What’s the best way to change that without losing my current list?
Thanks.
Elisabeth
The reasons for breaking down the price into multiple installments, free trials, trial memberships, and money back guarantees are all the same. To eliminate perceived risk to the point a prospect feels free to become a buyer.
In my experience these risk breakers are weighed against the price of the product and the perceived value of the product.
If a product is priced within a perceived value range, a money back guarantee should be enough.
If the product is priced too low, it may require a free trial.
If the product is priced too high (relative to perceived value) it may require a trial membership.
Only if a product is outside of the impulse price range (individual around $100 or corporation around $1000) there may be a need for a trial membership. This is definitely part of the thinking behind the “Software as Service” or “Buy the Drink” pricing of Software from larger companies.
I am not sure if this holds up for smaller companies. The effort to sell, and administer a trial membership doesn’t seem worth it to me. I would think you would be better off to sell a subset as one membership and a super set as another at two different price points.
This is similar to what Britt described. However I would not price at 1 dollar or euro. 7 to 14 would be my bare minimum. When have you ever seen anything priced at $1 or euro that was worth more? And if it were worth more, wouldn’t you be training your prospects to expect the same low price for future offerings.
It is far better to give them a similar sample to show you have value to add, and then sell them your product for what it is worth.
Robert,
I have enjoyed reading much of what I have already learned from you these last few weeks.
We are about to launch our first membership site, a 3 month, fixed term site. Our original idea was to offer it with only a 3 payment option since there would be new material each week and we are looking for the recurring income. We hope to have a second level ready to go by the time our first members finish the 3 months available now.
Our decision was not to give a multi pay option but to give a one payment option for a slight discount. We will see how it works out. EVen if they choose the single payment they will still receive the information dripped every week.
Thanks for keeping me on the right track. See you Thursday.
Clyde
Robert,
I hear what you are saying. However, I’ve done the $1 trial thing for prospects that have never bought anything for a client. It works like gangbusters for digital access that can be taken away. The product was offered in a membership system and could not be downloaded. So if they cancelled they lost access. We did have drop outs but the profit was very high because these were people who never bought anything that this offer was sent to. However, if a person does not have the ability to send to people based on how long they’ve been a prospect that has never purchased, they may get different results.
Also, we ran a split test in Google Website Optimizer for a payment plan vs. no payment plan and for a choice of digital only, physical only and digital and physical. We found that we sold 30% more product with the three options. And not only that but 20% more revenue. Google’s Website Optimizer said it was over 90% confident that the improved results would last.
However, the way we structured these offers are based on some proven psychological principles. For how to structure the physical and digital offer see the book “Sway: The Irresistible Pull of Irrational Behavior” by Ori Brafman.
Rodney
Hi Robert,
I dis initially price my membership site at low dollar installments and it did’nt pay off.
I decided to offer the club access for a higher one-time-single-payment price point even though the content is the same and is delivered over 12 weeks. The result was a 200% increase in members.
Thanks for the reminder.
I like this.
It allows you to minimize the price at almost any level.
Education in customer mind set, and should all most always be used.
Robert,
I’m about to launch my first membership site and your tips regarding the payment plan really helps me making my decision.
Thanks!