With the right directory business model, your directory listing service can provide an excellent source of income and boost your company’s reputation.
We’ve mentioned this before, but we’ll say it again: having a paid directory is good for business. Unlike a free directory, “paid” means that you charge people to submit listings. Therein lies the ultimate concern for most directory owners: how much do you charge for listings?
Setting listing rates is an important pieces of owning and operating a paid directory. Set your rates too low and you won’t be making enough money to properly run it, but set your listings too high and you might turn away repeat business.
On top of that, you’ll have to decide which pricing structure will bring in the most business. Should you charge per listing? Should you offer a monthly subscription? How about an annual subscription?
Knowing what and how to charge can feel overwhelming, especially if you’re new to the directory game. That’s why we’ve put together a few things to think about that will hopefully help you set the best rates for your business.
People Pay for Value
Before you sit down with a calculator, the very first thing you need to consider when setting your listing rates is what sort of extra value you’re offering people.
Free directories are a great incentive to get new business, but they don’t always offer the same amount of value of a paid directory. In order to make a financial investment, however, they need to know that they’re getting something of equal value in return. This value will help reduce customer churn.
Jon Acuff says this about value:
“I can’t explain it […] but I swear that every dollar you pay for something has roughly 10 dollars of motivation associated with it. A $10 purchase feels like a $100 purchase, a $100 purchase feels like a $1,000 purchase. And we hate to waste money. If we paid for something and then [don’t use it], we feel like we’ve failed. The fear of failure is a powerful force for good in this case. People don’t value things that don’t have value.”
When it comes to having a paid directory, you need to offer a certain level of incentive, even if it’s as simple as a premium membership with a few added features.
In fact, premium memberships (or premium listings) offer a sort of exclusivity that can attract new business. Exclusivity often makes people more curious and encourages them to buy in, because it taps into the principle of scarcity: the perception of what you’re offering becomes more attractive because the availability is limited.
Basically, the more valuable and exclusive you make your listings, the more people will want to pay to get listed. But when it comes to hard numbers, exactly what price gets people into that “exclusive” mindset the easiest?
The Typical Going Rate
Unfortunately (or maybe fortunately, depending on your circumstances), the typical pricing rates for directories varies a lot, which means there’s no industry standard for what to charge. This is both good news and bad news.
The bad news is that it can leave you scratching your head over what to charge. The good news, however, is that you can ultimately set your price at whatever level best serves your needs.
Most paid directories range anywhere between $29 per month up to $199. Why such a drastic difference? Well, a lot of it has to do with value, site traffic, and general reputation.
If, for example, your directory is a niche market that only gets ten visitors a day, having an extremely high priced paid directory is a waste of value for your listers. One the other hand, if your visitor count is relatively high and you offer a good amount of extra incentives for members (say, increased advertisement, multiple listings, etc.), then charging less than $99 would be undervaluing what you have to offer.
When it comes to setting a fee, consider the following:
- How many site visitors will/do you get on a monthly basis?
- What special incentives are you offering for your premium listers?
- What is the associated cost to you – the site owner – to upkeep those incentives?
- How much money do you want to make on an annual basis?
Ultimately, the exact fee is up to you, but if you have a good idea of the amount of business you do, go with whatever seems reasonable compared to your workload.
One thing to keep in mind – especially when considering adding value to your rates – is that people tend to distrust things that are cheap, as they often equate “cheap” with “low value.” While you want to offer something that’s reasonably affordable, you don’t want to set the bar too low or you’ll lose the benefits of “exclusivity.”
Rate Structures
The final thing you’ll need to do when it comes to setting your rates is to determine which structure best fits your needs. Do you want to charge per listing? Monthly? Annually? Different rate structures will have a significant impact on what you charge.
If you’re charging monthly, for example, you probably wouldn’t charge over $99 unless you’re offering something very, very enticing. On the other hand, if you’re charging annually, you shouldn’t really charge less than $99 or you’re losing value.
Here are a few examples of what other directories charge that will hopefully give you ideas about setting your own rates:
- BrightLocal has three different tiers of memberships starting at $29 per month all the way up to $79, but they also offer pay-per-submissions with custom packages.
- EZlocal offers top local placements on sites such as Google, Yahoo, and Bing, as well as relevant local directories, social networks, online maps, and mobile apps. Business listings include syndication to more than 100 directories in total. The service also provides a 10-page mobile-friendly website, one hour per month of updates, custom domain name and email accounts, and Google search.
- Locu is best-suited for use by restaurants, home service businesses, personal care services, and professional services. In addition to NAP information, companies can include items such as menus, a list of services, and photos.
- Moz Local creates and maintains business listings on the sites, apps, and directories that factor most into local search engine results. Businesses can use the service to create and update their listings, manage location information, re-verify listings, and find and resolve duplicate listings. The service sends information to five main aggregators of location data: Infogroup, Neustar Localeze, Acxiom, Factual, and Foursquare. In turn, these send information to local search engines. Pricing is $84 per year.
Final Thoughts
Ultimately, it doesn’t really matter which method you choose for your listing rates, whether it’s monthly, annually, or a one-time fee. What it really comes down to is the value that your directory can offer and how popular you think your directory will be.
If you have a niche market, going with a larger one-time fee might be the best bet, as you’re not likely to get thousands of repeat visitors browsing your site.
If, on the other hand, your directory is on the more popular end of the spectrum, you might consider doing a monthly or yearly fee, where the cost is ultimately up to the value you provide.
Just remember to offer something of value, because value is what will continue to bring in new business no matter what you charge.
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