495 - This Is The Worst Way to Handle a Membership Price Increase
Membership Geeks Podcast with Mike MorrisonSummary
A recent discussion highlights the critical considerations for membership businesses when contemplating price increases. Memberships often evolve over time, gaining more features and content, which can justify a price hike. However, it is essential to communicate these changes effectively to existing members, who should be honored with their original pricing. This approach not only fosters goodwill but can also serve as a promotional strategy, encouraging new sign-ups before the increase takes effect.
The conversation draws attention to a controversial price increase by Vimeo, a video hosting service popular among membership owners. Following its acquisition by Bending Spoons, Vimeo implemented a staggering price hike from approximately $900 to $4,500 for annual subscriptions, catching many customers off guard with minimal notice. This abrupt change, coupled with poor communication, has led to widespread dissatisfaction among users, many of whom felt trapped by the short timeframe to switch services.
The discussion emphasizes the importance of ethical business practices, particularly in maintaining customer loyalty and trust. It warns membership owners to avoid the pitfalls demonstrated by Vimeo, advocating for transparency and fairness in pricing strategies. The episode serves as a cautionary tale, urging businesses to prioritize their members' needs and to handle any price adjustments with care to avoid alienating their customer base.
Show Notes
At some point in every membership's journey, you'll have to decide whether to raise your price. That's a good thing! It means your membership has grown more valuable since you launched. But there's a right way and a wrong way to do it, and this week I'm on my soapbox about the very, very wrong way. My video host took my annual renewal from about $900 to $4,500, with less than one months notice and a single email that was easy to miss... If it isn't obvious to spot, I break down exactly what they got wrong, why I only raise prices for new members, and what you can take from it for your own membership. If you're thinking about a price increase, please make sure you never handle it like this. In this episode: Why considering raising your price is a healthy sign for your member How an upcoming price increase becomes one of the most profitable promotions you can run Why legacy pricing is a silent retention tool that gives members more reasons to stay What Vimeo got wrong, and the communication, clarity, and fairness lessons you can apply Where the line sits between a smart save offer at cancellation and rubbing it in
Want a clear plan for doing it the right way? Grab the free Member-Centric Guide to Raising Your Prices. And if you'd like tailored advice and support on where the gaps in your membership business actually are, join Membership Academy here. Key Quotes & Takeaways: "That price increase promotion is phenomenally successful. It's always one of the most profitable, the most successful types of promotions that I see other members in the academy running." "Because if they do, they obviously lose that legacy pricing. So it becomes really good for member retention." "When we're doing price increases, communication, clarity, fairness is absolutely paramount." "Putting existing subscriber prices up should be the absolute last resort. It's unfair. It's difficult to do." You might also find useful: The Hidden Costs of Legacy Pricing (And What to Do About It) Should You Increase the Price Existing Members are Paying? 11 Signs That it's Time to Increase the Price of Your Membership How to Deal With Member Cancellations
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