Pricing & Membership Models: Part One – The Structure

It’s almost time to launch that product that you’ve been working on for months (maybe years?!) and you want to ensure that users will not only sign-up in droves, but also fork over the cash. Thoughtful pricing models and a solid membership structure will let you make it rain in dollars and users.

This is the first in a three-part series for product owners, UX designers, and business strategists on how to frame membership models, explore value propositions, and build responsive layouts for membership and pricing of digital products.

As we make our way through these posts, let’s pretend I’m building a lesson plan sharing product for teachers and students called “Planly”. Thanks to a thorough research and development phase, I know these groups have some similar and differing motivations and very different ethnographic profiles.

Who, What, Where, How

Start by outlining the Who, What, Where, and How of your product.

Who – What types of users will be engaging with my product?

This is a great time to reference validated user personas. How many distinct groups are there? If they share similar goals and motivations, they will most likely want access to similar features. If they don’t, place them in separate membership categories.

For Planly I’ll be catering to three persona types: Student, Teacher, and Administrator.

What – What will drive users to sign up for my product?

Review their motivations and goals. These should align with the features you’ve built into your product. Then there are a couple ways to organize features:

  • Broken into groups or limited by user type.
  • Feature expansion with in-app purchases.
  • Tiered, each level providing more features.

The trick lies in the fact that you may choose one of these feature models or create a combination.

Also begin to think about ways to showcase or explain these features to users in a way that will clearly detail how your product will improve their lives, workflow, etc. We’ll dive much deeper into this exercise in part two of this series.

For Planly, students need different access and features than teachers and admins based upon their needs. Therefore, we’ll most likely end up with anywhere from 2-4 plan types.

Where – Where will users select a membership plan?

There are two parts to this step.

a. Determine the devices the plan will be accessed from.

If you are able, take a look at analytics. I’d argue that we’ve arrived to a point in time where building for all devices is a given. Though we want broad screen-size coverage, analytics can help target which devices are most commonly used. If you’re having a hard time convincing stakeholders that a holistic, responsive approach is best, analytics can help strengthen that argument. Don’t have analytics? Reference cool stuff like this from the Pew Research Center.

When reviewing my (fake) analytics for Planly, based upon internet usage of teachers and students, I determined that a majority are accessing internet via smart phones even though the app will be used mainly on laptops. Therefore, I’ll build a marketing site with mobile friendly content for pricing plans.

b. Determine where in your product the plans will be located.

Create a journey map. By creating and reviewing the cycle of how a user will sign up, pay, and upgrade you’ll know where to optimize sign-up experiences. For example, if a user first signs up via a “Pricing” page on the marketing site with a “Free” plan, where in the app will they be encouraged to upgrade later on? What features might be locked to them (with call-to-actions for upgrade)? Having a map of the entire flow on hand for reference and deep understanding of your pricing model will be key to optimizing membership workflows.

For Planly, I’ll create 4 offerings, free or paid for students and free or paid for teachers/admins with the ability to upgrade in-app for users who selected the free account.

How – How will they pay?

The dreaded payment gateway. Dun! Dun! Dunnnnnnn!

This step is crucial as it can be where users most often bail. First, you’ll need to select a payment processor that will fit your needs from a management perspective and also be as quick and easy-to-use as possible for your users. Stripe, Flint, and PayPal are always solid options. Take your time to research best fit and where you’ll need to customize.

Once you have your solution selected, begin sketching out how the user will flow through that experience. Will you funnel them through a special series of pages devoid of navigation to keep all attention on payment? Will you throw payment up in a modal or incorporate it into their user account after they’ve already signed up? Reference your journey map during this time, and be mindful to keep this step as simple and straightforward as possible.

(Side note: For a worst-in-class example: order a set of business cards from Vistaprint and have your mind blown during checkout. So. Many. Distractions.
Side side note: Forget cash. Accept payment in the form of selfies.)

Planly will integrate with PayPal, a payment processor I found to be already widely adopted by both the students and teachers in my target market.

Additional Research & Testing

There are a few other supplementary things you could do to better understand your market and users.

  • Benchmarking and evaluating competitor’s pricing models and feature offerings.
  • Create a quantitative survey, using an easy tool like Survey Monkey or Google Forms, to help determine pricing structure.
  • Quickly review paper prototypes of different membership plans and pricing structures with users.

Wrap It Up

Once you’ve taken time to work your way through each step, create a summary for the product. For example, the Planly summary could look like this:

  • Who: 3 Membership Models (Student, Teacher, Administrator)
  • What: Features will be broken into groups based on each member’s needs/goals
  • Where: Sign up and initial payment will occur on the mobile-friendly marketing site and any advanced upgrading will occur through the desktop application.
  • How: I’ll be integrating with PayPal, a service that a majority of my users already use.

Each part of WWWH could be broken up into deeper, richer exercises, and in the second part of this series I’ll be exploring more of the “What” in which I break down how to discover and develop the best approach for voicing value propositions. Stick around!