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I was just talking with Harlan about things that go into the decision making process of whether or not to launch a particular site, and one of the items included figuring out your expenses to both launch and maintain a site, and then the price you have to charge to make it a profitable venture.
I'd like to hear just what things you bring into that "formula" to arrive at a price point.
We tested a few different levels and decided that 29.95 was the way to go. I highly recommend you test levels before you set your price too!
This may sound too simplistic, but I think the easiest way to decide what to charge is look at your major competitors. What are they charging? Does your site offer more or something better?
So is everyone just charging according to what similar sites do?
I'd think there'd be some stuff like, I spent this much to launch, will be spending xx amount to update for a year, and doing some calculations on the membership figures, rebills, affiliate payout %, processor fees, hosting and so on to get some estimate of when you'd actually turn a profit using different membership prices.
I think its important to check out the competitors, see what they have to offer, and if your content and updates match then match point or a bit cheaper, also ad in your monthly expenses and roll that into the dice too:)
I charge for memberships based on how much *I* want to make from the site in question in the space of a year.
I broke even on Condom Cash within the first 3 months using this method of setting the price points up.
Regards,
Lee
Did you include expenses or how did you boil it down to what you wanted to make? Was that gross or net?Quote:
Originally Posted by Lee
Anything i made over the cost of design and Visa processing was pure profit.Quote:
Originally Posted by Teaser
Regards,
Lee
I'm assuming you added in content charges as well.
Pure profit is a word I love to hear over and over as I head to the bank;) I'm sure you do as well *eg*
The content paid for itself when it was first purchased, therefore that wasnt added in to the equation because i already owned it at the time of launching the sites.Quote:
Originally Posted by Teaser
Obviously since then there has been new sets/movies added but still, two members and that content is paid for for the next update ;)
Regards,
Lee
Ahhh ok. I get it now.Quote:
Originally Posted by Lee
Interesting, I hadn't thought of it that way honestly.
I can see the forumlar now, thanks for the insight!
We looked at what similar sites we charging, determined to do it better, offer more and charge a slightly higher price. We then caculated the set up costs, content costs and amortized these costs out over two years. A substanial cash investment made it all happen. It seems that there are at least two very different game plans for exclusive sites and non-exclusive content sites. My research says the niche and competition somewhat determine what the market will carry. I have been told more then once to stop trying to reinvent the wheel, but fresh approaches are certainly paying off here. We are seeing direct responses from our competition. They are making substantial changes for the first time in a long time. Sites are being redesigned, content is being upgraded and new markets are being sought out. Competition is a good thing for the best sites and for the customer. It is also the death of sites that take advantage of the customer. Every market needs fresh blood. Work a business plan, establish the budgets needed to meet your goals and then you can determine if the standard market costs will allow you to get where you want to be in an acceptable time. If they will, then its GO FOR LAUNCH!
I was a customer long before I was a site owner.
Thanks Alex, I really liked how you broke that down!
I love to hear how things are broken down and what people are thinking great thread Bec. I'm learning a lot from the people here!
I totally agree with that. I'm seeing the same thing with sites that have been around for years where they're finally taking notice that they need to redo their designs, clean up the content, and stop screwing the members once they're inside the site with tons of upsells and very little content.Quote:
I have been told more then once to stop trying to reinvent the wheel, but fresh approaches are certainly paying off here. We are seeing direct responses from our competition. They are making substantial changes for the first time in a long time. Sites are being redesigned, content is being upgraded and new markets are being sought out. Competition is a good thing for the best sites and for the customer. It is also the death of sites that take advantage of the customer. Every market needs fresh blood.
Well, you could always charge much more to quickly earn back your investment. But that is assuming that you will get as many joins/rebills charging $50 than you would at $25.Quote:
Originally Posted by Bec
If you can buy a loaf of bread for a dollar at Bob's Supermarket or pay $2 for the same bread in a different package at Sam's Grocery, which one are you going to buy?
Sure, your content may be better or you update twice as often as you main competitors, but being able to charge a huge premium over the usual price is going to be tough. Finding the point at which sales start to drop as the price goes up... that's the magic bullet!
Indeed!Quote:
Originally Posted by Xstr8guy
You also have to take in to account rebills, upsells and also if you get more multi-month joins over single month recurring sales, etc, all of this can have an impact on a program owners bottom line profits, in addition to how much bandwidth it costs to make a sale and once you have made a sale, how much bandwidth the average member uses once inside the members area.
Regards,
Lee
Oh you and your bandwidth costs! Lol.Quote:
Originally Posted by Lee
Someone said recently (I wish I could remember who or where) that once they stopped worrying about being cheap with the bandwidth, that is when they started making the big money. Don't get me wrong, I cringe everytime our hosting bill goes up. But then I remember that profits are growing much faster than expenses. So it's all good. :)
Jim,Quote:
Originally Posted by Xstr8guy
1000 members pulling 1000+ 300MB movies IS a lot of bandwidth usage, remember, most hosting plans only give you a set amount of bandwidth until you need to upgrade the server itself, not just the 'amount' of bandwidth packaged with the existing server, that can equate to thousands of dollars with some hosting companies.
Plenty of sites have closed down because the owners didnt factor in how much bandwidth was burned before they even made a sale and, once the sale had been made, how much bandwidth the average member will burn through in a month ;)
Making $13 on a revshare sale is great, so long as bandwidth costs, content updates, scripting and processing can all be factored in for that $15.
Dont forget, a lot of webmasters are running paysites on hosting that will charge them $5+ for overages, 3 movie scene downloads could cost those site owners all the money they made on that single join.
Media files are getting bigger and whilst bandwidth prices are getting lower, it should still be an issue for anyone running a paysite and definately an affiliate program, not to include those in your cost analysis' would be crazy.
Regards,
Lee
Oh wow - I totally did forget to factor the BW usage in based on membership times content. This was the sort of thing I was hoping for as far as what things to factor in on overall costs. Thanks!