Member dues are an integral part of the business side of associations. They help fund growth, staff and membership benefits. Yet, when the time comes to make member dues changes, it can become a point of contention. The success or failure of any dues changes hinges on member buy-in and the way you communicate those changes to them.
So what should associations consider when making these adjustments and how do you relay that message? Here are some best practices along with insights from Dr. Michael Tatonetti, CPP, CAE, Founder and CEO of Pricing for Associations.
Put simply, membership dues are what it costs to be a part of your association. They give members access to benefits like learning resources, professional development, and community perks like networking events and conferences.
Unlike fees, which can sometimes be interpreted as a one-time cost, member dues are an annual or monthly expense (depending on your membership structure) that ensures your members have access to these perks.
While all associations are different, their membership models are generally similar. Understanding how these models work is essential when determining how they’ll be impacted by any changes made to their pricing.
Chances are you’ve seen a conference session or webinar discussing how nonprofit is a tax status and not a business model. And while that’s true, associations are still member-centric businesses, which means discussing or proposing member dues changes can be problematic.
But is that the case for all organizations?
“It depends on the actual association and how they've handled it up until the point of communicating,” says Tatonetti. “I meet so many organizations who have not raised dues in eight, 10, 15 years, and if you're one of those, people might question, ‘well, it's been working, so why the change?’”
However, there is likely a range of reasons why your association may be considering an adjustment.
“One reason in the present time is if you didn't (raise dues), and you spent a lot of money during COVID putting on good quality programming without really having much of a financial gain and probably hitting your reserves, now is a good time to try,” says Tatonetti. “We're having inflation as well. And, you know, impending recession, or we are in one, depending on what metrics you look at and how we're quantifying that. But for me, I think that always trying to keep a healthy reserve is important.”
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Member dues are an integral part of the business side of associations. They help fund growth, staff and membership benefits. Yet, when the time comes to make member dues changes,...
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Regardless, it's important to remember that making adjustments to member dues is OK, just so long as your organization continues to add value and makes those adjustments with members in mind.
If you’ve determined that pricing adjustments are needed, then committing to a pricing analysis is an important first step. This process helps “actually determine what value (your) members want so that they're not just throwing things in that the board thinks they should or that the squeaky wheels — the people who are mostly giving feedback — ask for because that may not be what everyone wants in totality,” says Tatonetti.
While associations can experiment with the complexity of their pricing analysis – for example, using segments to better identify who your members are and what they need – most analyses start with a basic survey.
“The three value questions that I typically hit on are, 1) what are we doing that's going really well? 2) What are we doing that's not going well? And how might it look better? 3) And then what's missing? What are other organizations that you're a part of doing that we could learn from that might make your membership even more valuable?” says Tatonetti.
This is also an opportunity to test the waters with some potential pricing structures or, at the very least, allow your members to outline what they would be willing to pay should they get all the benefits they’re looking for.
Now that you know the how and why of member dues changes, it’s time for the most critical part – talking to your members about it. Three simple strategies to get member buy-in include:
Successful changes to member dues hinge on transparency. By conducting a pricing analysis ahead of time, you already know what your members are looking for and what they’re willing to pay. When those adjustments have been finalized, and you have a plan in place, be confident in sending out that communication to members.
“When it comes to communication, just be quick and don't over-explain because then it sounds like you're reaching for a reason,” says Tatonetti. “Just a quick one-page memo of, ‘Hey, so excited that we're continuing to do these three great things. And we're adding these one or two great things, and to keep that going for financial sustainability and not tap into reserves, we're going to this price and we're making these changes based on the survey you did.’”
As we mentioned before, from excess spending during the pandemic to the possibility of financial turbulence, it can be tempting to use that as the reasoning behind your pricing adjustments. However, Tatonetti offers a different perspective.
“Start with the value. Ssay what you have added and are maintaining, so that's a cost. You can talk about what new things are coming down the pipeline. And it doesn't always have to be rolled out immediately,” he says. “It can be, ‘hey, we're working on this in the next six months. And this dues increase for the year is going to help us finish purchasing the technology or hiring the staff member and you'll have this value as a part of this coming year. Always leading with value is important.”
Finally, and most importantly, work to provide as much flexibility as possible. Just like your organization has a budget, so do your members. While you may want to implement these changes as quickly as possible, having a plan that eases your members into a pricing update can be helpful, especially if the responses to your pricing analysis were less than enthusiastic.
This can mean adjusting to tiered pricing, posting a hard date at least six months in advance so members can plan or finding a group alternative that can help accommodate organizational-wide memberships as a way to show savings even when member dues rise.
Thinking about member dues changes can be daunting, however, it may just be a matter of changing the way we think about them in general. According to Tatonetti, the organizations that see the most pushback are the ones making big one-off increases instead of incremental changes every year or two.
“If you've never really raised dues and talked about them, and then you do, it's kind of like, OK, where did this come from?’” he says. “Versus normalizing the behavior and then consumer psychology follows that, OK, there's going to be a raise. That's just a normal part of doing business with this organization.’”