Promoting the right membership packages and add-ons to the right people at the right price is fundamental to both member acquisition and member retention. Once you’ve taken the time to understand the needs of your members, you can develop more flexible pricing strategies to generate reliable revenue streams.
It’s important to consider your overall business objectives before setting prices and packaging benefits. Is your goal to capture more market share? Are you looking to expand into new markets? Do you want to encourage your lower-level members to upgrade?
Every association is different, and there is no concrete formula for effective membership structures. The key is to cater to the kinds of members you want to appeal to.
First, you’ll want to compare your organizational assessment with the member profiles you’ve developed. Analyze each member profile, and make a note of where your organization is falling short of delivering value. Then, you should think of ways that you can enhance your current offerings or introduce new benefits to fulfill more of your members’ needs. This is particularly important for members who make a large membership investment but have a low perceived value of their membership.
Look at which products and benefits could be bundled together to match the needs of each group, and then see if you can put a value on the total package. You may just need to tweak your current membership levels, but if you find that your current membership options don’t align with your key targets, overhauling your membership structure might be your best option.
It’s not realistic to make your membership packages meet every last need of your target audiences. Even within your segmented groups, interests and needs will still vary. Try to balance price and perceived value, and leave room for purchasing add-ons separately to account for these variances.
Many associations use a cost-plus pricing model, a simple method in which a markup percentage is added to operational costs to make a profit. This is by far the easiest price structure to calculate, however, it is often not in an association’s best interest. Many associations purposely try to keep their costs low for members, but this thinking has its downsides. For example, in cases of unforeseeable economic downturns, it can cause members to drop off when times get tough.
Value-based pricing has emerged as a much more effective way to set membership prices. It enables an association to set prices based on the value it is offering members, instead of the actual cost.
“Because members and prospects vary in their price sensitivity and preferences, you should consider a variety of pricing strategies to enhance your marketing efforts and sell memberships and products.” (Jacobs, 2014) Here are just a couple ideas to consider …
1. Price for value. Don’t undervalue what you are offering, particularly if it’s a need-to-have product, your competitors can’t match it, or there is prestige associated with being a member. This rule is especially important when determining the price differences between your membership levels.
2. Increase dues by a small percentage each year rather than making infrequent large increases. Many members already expect incremental increases, and they are much easier to swallow than large increases that come as a surprise.
3. Offer VIP options. Add an additional layer to your pricing, and additional revenue, by allowing members of any status to register for events or programs under a VIP category. Added benefits for VIPs might include reserved seating, invitations to cocktail receptions, or special gifts.
4. Build perceived value. You can do this by offering add-ons without charging more. Examples might include free professional advice or free publications for certain types of members. With this strategy, you’ll need to price your other programs, products, and services so that they cover the cost of the “free” offering.
5. Offer monthly memberships and billing. Many associations are already starting to offer monthly installment options on annual memberships. Why not consider taking that one step further and offering a monthly membership option? This strategy could help you attract some of your on-the-fence prospects and eventually sign them as long-term members. To them, it’s a low-risk way to try out the benefits of membership.
6. Create urgency. Think early-bird special. This strategy works well for events and other programs. Combine limited quantities with special pricing that expires at some point to encourage your members to register quickly.
7. Attract with high-value, low-cost products. For example, you may offer a large discount on the price of your annual conference to draw members in, and then subsidize the cost of the event by charging for related events and activities on an al a carte basis.
8. Offer discounts for group members with high participation. If you don’t already have a group membership option for corporate and other industry organizations, now is the time to think about putting one in place. You could offer these members generous discounts for enrolling a certain percentage of their employees.