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Paysite Owners’ Big Challenge — Optimal Pricing

Paysite Owners’ Big Challenge — Optimal Pricing

May 27, 2016
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Will virtual reality boost the paysite market?
Yes, it will soon
  40.56%
Yes, but in a few years
  37.06%
No
  22.38%
Out of 143 votes. Results based on votes submitted by members of XBIZ.net social network.

" If a cheap trial is too generous, no one will upgrade or have a need to pay for more. But on the flip side, if not enough is offered, people will cancel instantly and/or chargeback and never return to the site. "

I’ve been writing for adult industry magazines for nearly a decade and have somehow managed never to touch on a topic that every paysite owner has to content with — the pricing conundrum.

It’s one that every business owner faces. Unless you’re operating solely on charity, you’re forced to decide how much to charge in order to have anything left over as profit while still being attractive to potential customers.

For the purposes of this article I’m not going to touch on VOD or pay per view pricing since that’s an entirely different animal and not a paysite model most producers can make profitable unless run as a hybrid or alongside a membership site. That said, it’s a great revenue stream and on demand purchasing is something we will be re-introducing as a standard feature in the Elevated X CMS in the coming weeks.

If you surf a few dozen paysites it seems simple — just throw up a join form and charge between $19.95 and $29.95 per month and call it a day.

But what about the people who don’t want to pay monthly but will still pay a one-time fee? What about people who won’t pay $29 up front but will pay $3 for a trial then once they realize they only have limited access to all the content are willing to pay $25 to upgrade? And what about the people who will pay $54.95 or more one time for a few month non-rebilling membership and then come back several months later and do it again and spend as much as they would if they rebilled for most of the year?

And how do you present such options without creating so many choices that you introduce what’s known as “paradox of choice” where so many choices are presented that a person becomes so immersed in the decision making process that they become overwhelmed and end up not buying anything at all?

One of the biggest challenges paysite owners face from a price perspective is finding the line between leaving money on the table and making enough to cover costs. After all, if a cheap trial is too generous, no one will upgrade or have a need to pay for more. But on the flip side, if not enough is offered, people will cancel instantly and/or chargeback and never return to the site.

Although I contradict this point often with a disclaimer by saying not to copy big sites because you may be copying something temporary that they were just testing — it’s safe to assume that the largest, most heavily promoted sites are doing the most testing.

Based on this and all the research that’s been done on paradox of choice in other industries, we can safely present consumers with a maximum of 4 or 5 clearly differentiated payment options.

Usually this means presenting one monthly recurring membership option in addition to 2 or 3 non-recurring one-time payment options and possibly a trial option.

The caveat to all of these is that your site must have enough content to where you can justify charging and people don’t feel ripped off the moment they’re inside your site. If you have less than 100 updates and/or are not adding content multiple times per week, I suggest you charge a one-time fee for limited access or make use of limited trial functionality that allows incremental access to content over time.

The current payment option trend is to offer a monthly recurring membership alongside a 3-, 6- and 12- month one-time membership that allows you to collect a higher fee up front to offset the lack of rebill potential. This is smart since for most sites the days of members rebilling for several months or years are ancient history. Most site owners would be happy to get $50-100 per sale and then have the person come back in several months to a year to do it again. There’s nothing for them to cancel and no surprise bill or buyer’s remorse to set in 2 or 3 months later to prompt the random chargebacks typical of monthly rebilling charges.

How much to charge is the second part of this. Unfortunately, this one requires more testing and less reliance on simply going with trends based on what the proven, successful sites are doing. The reason is, there are several factors that influence what each site’s customer base will tolerate and where the cost/value threshold lies.

For example, an exclusive niche site with a ton of content and a long term fan base (think Wasteland.com) can charge a lot more than $9.95 or $19.95 per month and probably get a healthy number of members to rebill to months 2, 3 or beyond. A site the same size but with non-exclusive or more generic BDSM content might get the same results with a price ceiling of $19.95. And now, where logic goes out the window.

If you have a site far newer than Wasteland and a fraction of the size, you might think you would need to charge a lot less but often that’s not the case. A much smaller site with very specialized, granular niche content with little to no competition can charge even more — as long as its updated frequently.

Advertising pioneer David Ogilvey, aka "The Father of Advertising," did studies decades ago on buying behavior. In one famous experiment he went into a grocery store’s deli display and put two identical blocks of cheese next to each other. He placed a sign on one of them with the type of cheese and the price per pound. He placed the same sign on the other but added one word, highlighting the cheese as premium and increased the price by a few dollars. The same exact cheese sold more and at a higher price simply because people thought it was better. This is why you see more sites charging prices like $29.95, $34.95.

Some believe that odd amounts are strategic to reduce cancellations and chargebacks and if someone sees a charge for $27.81 as opposed to $29.95 on their bank statement they’re more likely to gloss over it. This is probably not a major concern for most sites unless there’s already a problem with chargebacks, but my belief is that site owners should be focused on attracting and retaining customers than getting them to forget they’re still paying and most sites are not doing enough sales volume for these forgetful memberships to make up much of the bottom line.

At the end of the day, price is an experiment. You can use any popular split-testing program to try various price setups, or just run with one piecing setup for a few weeks and make incremental changes until you see sales increase or decrease in an obvious enough manner to draw a conclusion about which is making you more money.

Whatever you do, don’t forget about the cheese. Make sure the cheese you’re selling is believed to be premium and you’ll command more dollars for your hard work.

AJ Hall is a 16-year adult industry veteran, winner of the 2016 XBIZ Tech Leadership Award and CEO of Elevated X Inc., a provider of popular adult site CMS software. Hall has spoken at industry trade shows and written for several trade publications. Elevated X software powers more than 2,000 leading adult sites, has been nominated for more than a dozen industry awards and won the 2012, 2014 and 2015 XBIZ Award for Software Company of the Year.


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