Determining how to raise prices can be difficult; it’s a charged subject. You don’t want to lose potential members or encourage current members to not renew by charging too much. But you don’t want to lose an opportunity to be more profitable either. We’ve compiled some considerations to help you successfully raise your dues.
Why do organizations raise dues?
While some of these ideas seem obvious, perhaps one of these concepts will help you better justify your price increase to your membership. You’ll find that communicating why the dues increase is necessary goes a long way in maintaining goodwill with your membership.
- Inflation – You want to be able to pay your staff market rates and afford the natural increases in cost you experience with your vendors.
- Investment – Perhaps your group is investing in new technology, real estate, upgrades or something else that will benefit members. In this case, it is important to communicate how they will be better off. For example, if the organization is moving to larger space, will more members be able to attend events or training sessions than before? Will you be able to charge lower prices for events because you aren’t renting private event space? Will members be able to use your facilities to hold their own events or meetings?
- Adding new services/programs – Perhaps you are hiring a new staff member to increase advocacy efforts on behalf of your members or creating a new training program that your members will use to increase their skills? Most members will be glad you are doing this work on their behalf. These kinds of activities are why many associations are created in the first place.
- Cash flow problems caused by poor financial decisions or negative retention rates – In this case consider if an increase in dues will turn off even more members. Look at some of the alternatives below.
How much should you raise your dues?
According to a study by Height Performance group, a dues increase of less than 20% does not create a large drop in overall renewal rates, but going beyond a 20% increase can damage your retention rate. Some considerations:
- How often are you raising dues prices? The more often you raise dues, the less the amount should be. If you wait too long and have to go with a high percentage, you risk member anger. Smaller increases in on a more regular basis can train your members to expect that increases will happen. The same study above reflected that associations which raise dues prices under 10% are more likely to raise dues annually.
- What are your competitors, similar organizations or other chapters charging? Create a spreadsheet to analyze the current dues of similar groups. You might have a column that also includes a list of key member benefits for each association so that you are sure to be comparing apples to apples. Consider if your member demographics are different than those you are comparing your organization to as that will impact the price members are willing or able to pay.
- Create a focus group of trusted members or ask your board. Run your dues increase plan by them to ask for feedback.
What are some alternatives to raising dues or ways to ease the pain?
- Raise prices only for new members.
- Raise prices for current and prospective members, but give current members a discount code that allows them to remain at the same price only for the upcoming year.
- Raise event ticket prices.
- Create premium membership levels with added benefits such as tickets to VIP receptions before certain events.
- Create sponsorship opportunities (events, newsletter, website).
- Add new billing options:
- Add monthly payments if you have only been allowing annual payments.
- Add auto-recurring billing (or make it the only way to pay) if you currently only offer one time billing; you will take in more money if you aren’t counting on members to have to go in and submit their credit card information each billing cycle.
- Add a multi-year payment option if your reasoning behind a price increase is cash flow. Consider raising prices on all options except the multi year option. Note that with MembershipWorks, you cannot enable multi-year subscriptions for Automatic Recurring Billing; it is not supported by the payment gateways.
- Change your membership levels to accommodate economic diversity. For example, you can create student or retired membership levels. Or charge more for larger organizations vs. solopreneurs.
- Change to rolling renewal dates versus fixed renewal dates. Learn how this can bring in more money.
- Allow “affiliate” members to join the organization. These are typically people who want to market or sell to your members and want to be able to attend events and network with them.
- Create a cheaper, basic level of membership with minimal benefits, but which might encourage some people to join who have not before. You’ll grow your email list, which in turn could raise revenue as you have a larger pool of members to market events and services to. If these members see enough value, they could one day upgrade to full membership as well.
- Add on new pay-as-you-go features or functions:
- Advertising opportunities such as placement as a featured member on your website,
- An upgrade that allows members to add additional contacts to their member account,
- Access to special publications or data.
- Allow members to pay to be able to add events to your calendar (you can control approval of these events in advance with MembershipWorks).
How do you communicate a dues increase?
It is better to proactively communicate an increase than to deal with surprised and perhaps angered members. Some tips to smooth the news:
- Always communicate value. If you are only communicating about the value you bring to members at dues renewal time, you are not doing things right. Members need to be reminded all of the time, “What’s in this for me?” Perceived value is the number one metric that determines renewal rates. If you are doing something good for your members, but don’t tell them about it, it might as well be as if you didn’t do it at all.
- Engage key members to advocate. Does your board have informal or formal channels where they reach fellow members? If so, ask them to use this network to spread the word about all the positive things the association does. Writing talking points can help them. This kind of outreach should happen regularly, but at minimum have them begin this effort as much as possible in advance of a dues increase.
- Conduct a member survey in advance of a dues increase. It may reveal some important programming or features members want from you. If you can deliver on any of the themes that emerge from the survey, use that information in your announcement regarding the increase. You can begin with “In our recent survey, we heard from members that you wanted _________. To be able to bring you this benefit and maintain the level of service you deserve, we will be raising our dues as of ________ (date).”
Because you know your organization better than we do, you’ll have to be the judge as to how to approach your dues increase. Ideas that work well for some organizations may not be advised for others.
Have other ideas we should consider? Drop us a line.