Jason Coleman is the founder of Stranger Studios and the creator of Paid Memberships Pro, a membership plugin for WordPress. He is the co-author of Building Web Apps with WordPress. Jason enjoys playing Minecraft and Super Mario Maker with his kids.
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Transitioning from Services to Products
- What is the most important thing you can share about pricing?
- There is not one magic formula to price something.
- Find as many methods of pricing as you can and use all of them.
- Take what you learn to come up with a price.
- If you are using different methods, you will notice that certain prices become a sweet spot.
- You will learn about your market, your customer and the prices that do not work by using the various methods.
- Do not get discouraged by competitors' prices, but rather learn how to educate your customers on the value to justify your price.
- How did you get started developing websites for WordPress?
- He has been making websites in high school.
- After college, he worked at Accenture and then left to do freelance development with his wife.
- They started making blog sites with WordPress.
- In 2010, they started using WordPress for site development, pushing it to its limits.
- They used a custom plugin they built for 5-7 e-commerce customers in 2011.
- They had a couple of customers who needed membership functionality, and they built Paid Memberships Pro as open-source from the ground up.
- How did you make the switch from consulting to selling a product?
- After creating the product, they started attracting membership-based consulting customers and established a niche.
- Over time, they went from WordPress developers to membership site developers.
- The switch helped their consulting business by attracting leads through the plugin.
- They were able to charge a higher premium based on their expertise in the membership niche.
- Is “repeatable” work more valuable than custom work?
- Focus on a niche and try to do a repeatable engagement.
- If you are doing the same kind of work, you get faster at it.
- If you charge a fixed price, your effective rate goes up.
- Your customers become more confident in signing up with you.
- Products can include a consultation call.
- During that consultation, you can qualify customers for future work.
- He thinks of it as simplifying his business to allow him to do more of what he wants to do.
Selling Service As a Product
- What are the advantages of selling service as a product?
- “Do It For Me” was a product that included them installing the plugin for customers.
- It was priced almost at a loss so they could become educated on use-cases from customers.
- If you upsell consultant work to those customers, you guarantee that it is someone who can pay you.
- The “product” lets you work on small, low-risk projects to feel out the customer.
- What was the result of your recent price change for Paid Memberships Pro?
- Before July 2015, they had one paid level, at $97/year, providing access to the support forums and advanced tutorials on the website; otherwise, the plugin was available for free.
- In July, they added a second tier at $197/year, providing automatic updates for add-ons to integrate.
- They knew the $97/year price was low; the higher price has worked.
- They were going after market share and didn't want to hinder its initial growth.
- By adding the higher level with additional value, they are selling more and getting a higher average revenue on sales, without any pushback from customers.
- By introducing the higher price level, they were able to capture $100 more from most customers.
- What are some pricing experiments you have planned in the future?
- The one-week sale drove more people to purchase the product.
- Jason learned there was room to increase prices when adding more value.
- Time and materials analysis showed that it costs more than $47 to service a member, so having more paying customers is not the best thing for the business.
- The current experiment will determine if a price increase to $297 will change who buys.
- The reason stores show the original price vs. the sales price is to set the benchmark for value.
- The current experiment will determine the conversion rate for different pricing while charging the customers the same amount.
Pricing for Membership Sites
- What is the pricing add-on you are creating for Paid Memberships Pro?
- Jason created an add-on to run A/B pricing tests.
- You can set up an experiment to determine which price converts better.
- That information is stored in the order to compare the experiments.
- A customer is testing different landing pages to do A/B tests to see which converts better.
- What have you learned about pricing membership sites from your customers?
- In a lot of cases, simpler is better.
- You can get creative about how to price the memberships, using the plugin.
- He discovered that if things were difficult to code, they would be hard to explain to the end customer.
- If you limit the number of options, it is better.
- There is a psychology to drive people to one membership level by positioning three levels of value.
- More than three options paralyzes people.
- Episode #64 also discusses how to simplify options.
- What is one of your best stories about creating value for a customer?
- A lobbying organization for a branch of the military had an application process for membership.
- The paper application was replaced by an online application.
- Immediately after implementing it, their enrollment increased three times.
- As an advocacy group, they not only got more people involved, they also increased revenue.
- They were able to find more services for their members and were able to stay true to their mission.
About Jason Coleman
- Website: paidmembershipspro.com
- Twitter: @jason_coleman
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