Should a membership or service have a high-priced anchor tier and a minimum contract?

How you lay out prices matters almost as much as the prices. Here's what I do on my own pricing pages.

Why show a tier you don't expect to sell?

"anytime you set something at a really high price, occasionally you get like 5% to 10% of people will buy it. So really what we're trying to sell is this one, right?"

The expensive tier does two jobs. It anchors everything next to it so the middle option looks like a deal. And a few people buy it.

I use the same move at the low end. For a business membership aimed at $49 a month, I put a $333 option next to it. Short term we're not really selling the $333. It's a price anchor to make $49 look cheaper. For a paid community, a $1,500 VIP tier makes a $200 main tier look amazing.

How many tiers should you have?

In my community plan, two: a regular tier and an application-only VIP.

Monthly or a contract?

A contract. For my bigger programs, you don't get to sign up for a month. Month to month invites people who pay for a month and quit.

My current setup is simple:

• Every tier has a six-month minimum.
• Pay for 12 months upfront and you get 10% off.

What if they can't pay a year upfront?

Give them financing. For a $900-a-month program, a year is about $9,000, and most people won't want to pay that upfront. A buy-now-pay-later option on the pricing page lets them pay monthly while we get the money annually.

"We'll give him the whole 12 months today. You pay us monthly with a small little interest on top."

The customer gets the monthly payment they wanted. You get the full year and the commitment.

How do you make more from the same customers?

Sell seats. A peer pointed out that real estate agents and lots of other businesses work in teams. Here's the upsell that came from that: the base membership, around $50 a month, covers the owner. If they want employees in there, it's something like $20 a month per seat. We'd build employee-level trainings and employee office hours, segmented so employees only see their own section of the community.

That's added value for the owner, and it also makes more money without finding a new customer.

What's the low-price door for?

Getting people in who can't buy your main thing. A lot of businesses want to be in my newsletters but don't have $250 for an ad or can't sign a three- or six-month deal. They could pay $49 a month. I want that offer to be so much value you're stupid not to take it. It's a funnel.

An advisor gave me a fair warning on that one: don't over-promise. Stuffing a $49 tier with organic placement, hundreds of dollars of promotion and newsletter spots is unrealistic, and a crowded newsletter hurts the reader. He also said to pull anything that costs you per use, like two-way texting, out of the low tier.

For how this plays out with ad packages, see how to tier local advertising offers. For community pricing, see how to price a paid community.