Deciding what to charge for your membership is one of the most important decisions your organization can make.
How do you strike a balance between ensuring that enough revenue comes in to cover all your operation costs, and charging your members a fair price for the value they’re receiving?
Not to mention, there are other questions to answer, like:
- How often should your membership be up for renewal?
- Should everyone pay the same price or should you offer different tiers?
- What should the tiers be named and how should they differ in the benefits offered?
- Is it okay to increase your membership price?
- Is there an easy way to collect member dues?
There are many factors to consider when setting up (or updating) your membership dues structure.
If you’re curious about the answers to the above questions, as well as other decisions you’ll need to make, read on to find out everything you need to know about membership dues.
If you’re just starting your organization, use this guide to help you set up your very first membership levels and prices. If your organization has been around for a while and you already collect member dues, use this guide to help you re-evaluate your membership structure and make any adjustments.
(Or, if you want an easier way to collect dues, contact MemberClicks to learn how we can help you!)
Here’s what you need to take into consideration when it comes to your membership dues:
Monthly, Annual, or Multi-Year Member Dues: Which is Best for Your Organization?
How often your members are asked to pay their dues plays a big role in their member experience and retention. Let’s take a look at some common options and their pros and cons.
Here are the pros and cons of having members pay once a month:
- A lower monthly price tag makes members more likely to sign up
- New members sign up with little hesitation, knowing that they can cancel at any time
- It’s easy for members to switch tiers if they’d like more or less benefits
- You can analyze your renewal rates every month and see what is and what isn’t working for your members
- It’s easy to track monthly revenue
- You make the most revenue because members pay the full price of membership
- Some members don’t like the hassle of making monthly payments
- It’s easy for members to leave at any point, so revenue is less predictable
- If you’re managing payments manually, it can be challenging to track down every member’s payment
Here are the pros and cons of having members pay once a year:
- Many members like the convenience of paying once and forgetting about it for the next 12 months
- Annual membership often comes with a discount, giving new members an incentive to sign up
- Members are unlikely to drop off before their term is done
- Your organization gets a cash boost and a predictable revenue stream
- Tracking down annual payments is much easier than monthly payments
- It’s hard to analyze how well your organization is doing in terms of offering value to your members, since you won’t know whether or not they’ll renew until the end of the year
- You’ll make less revenue if you offer a discount on annual membership
Many organizations are finding success in a multi-year dues option, where members can receive a discount when paying for three to five years at once. The pros and cons of this option are similar to the annual option:
- Paying once and forgetting about it is very convenient for members
- Members have an opportunity to take advantage of significant savings
- Members stay with your organization for multiple years, leading to a very healthy retention rate
- When offering any kind of discount, you must always consider the overall impact to your bottom line. Too much of a deal, and you’re losing revenue; too little, and no one will bite. But if your organization can reasonably stand to lose a certain amount of money per member per year in the spirit of retaining them longer (or getting them to join in the first place), the benefits pretty drastically outweigh the costs.
One other thing to note: paying for multiple year’s worth of dues all at once, even at a discount, may be difficult for some. Consider pairing this offer with a payment plan where members can commit to paying smaller monthly installments over the first year.
Another important factor to consider is whether you want to offer a flat rate for everyone, or have membership levels that vary in price and benefits.
Let’s look at some pros and cons of each.
In this model, everyone pays the same amount and receives the same benefits and level of access. This is a great option for smaller organizations or organizations whose members are pretty similar in the value they’re looking for and what they can afford.
- Managing your finances and keeping track of payments is simple
- There may be members who are looking to get more involved and can afford to pay more, but there’s no opportunity for them to do so
- There may be members who would join if there was a more affordable option
- It can be challenging to cater to everyone’s needs and make sure everyone is satisfied with the value they’re receiving
In a tiered model, members can choose between more affordable options for fewer benefits or more expensive options for more benefits. Tiers can also be created to accommodate members in different stages of their career. For example, many organizations offer free membership to students and more affordable options to young professionals.
This method is often used by larger organizations or organizations who offer lots of different kinds of benefits. Their members also vary greatly in the benefits they’re looking for and what they can afford to pay.
- You receive more revenue because higher tiers pay more for their membership
- There are opportunities to move members up the tiers as they become more involved with your organization and have more disposable income
- Members who no longer wish to pay what they’re currently paying have the option of downgrading, rather than leaving your membership entirely
- There are more opportunities to get to know your members and cater their member experience to their specific needs
- Managing your finances can get a bit complicated
How to Name Your Membership Tiers
If you decide to offer several tiers of membership, you’ll need to differentiate between them.
The most common way to name your tiers is to reflect who they are offered to. For example, you may have a tier specifically for Students, Young Professionals, Regular Professionals and Retired Professionals.
If there’s no way to differentiate between your different kinds of members, you can always name your tiers based on the increasing amount of value they provide. A simple example of this is something like Silver, Gold and Platinum.
You may also choose to offer a tier for groups or family members. Their benefits would be similar to those in the regular tier, but they get a discount for bringing in more members.
Lastly, if you work with companies or other organizations, you could offer tiers for partners, sponsors and affiliates.
3 Real-Life Examples of Membership Tiers
This chamber of commerce has only one membership level. Everyone pays the same price and receives the same benefits. This makes sense for a chamber of commerce, since the businesses that join it are very similar in the benefits they’re looking for and what they can afford to pay.
Although everyone pays the same price, there is an option to purchase an enhanced online listing as an add-on. This is a great middle ground between a single- and a multi-tier membership structure, since it still allows the chamber of commerce to upsell and generate additional revenue.
This association has several different membership levels. Their regular level, meant for registered pharmacists, has the option to pay monthly, annually, or with a joint/family discount. There are also heavily discounted annual memberships for students, residents or fellows, technicians, new pharmacists and retirees.
All members receive the same benefits, regardless of what their fees are. This structure is perfect for a professional association because it allows members to pay what they can afford at their respective stage in their career. As they move up in the ranks of their profession, they’ll start to contribute more to their association.
This society has a similar membership structure, offering free membership to students, and a discount to members who are still early in their career.
There is also a Sponsoring level — these members receive the same benefits, but part of their membership fee is considered a tax-deductible donation.
For people who don’t qualify or don’t wish to join as a member, but still would like to receive the society’s magazine, there is an option to subscribe only to the magazine.
Lastly, they have special membership levels for corporate members. These include different benefits and have their own tiers of pricing, based on how many employees of the company wish to join.
Offering all these different options allows the society to cater to the varying needs of their community and maximize their revenue.
How to Communicate a Price Increase to Members
The great thing about membership levels is that the decision you make about how to price your membership doesn’t have to be permanent. You may start with one structure and set of prices but later find out that it’s not quite working — it’s okay to change things up!
Or maybe you already have an existing membership structure, but as you’re reading this article, you’re realizing that it makes more sense for your organization to try something different or charge your members more.
Here are a few tips on how to communicate this to your members without upsetting them or losing them altogether.
1. Be Transparent
Never hide — or gloss over — the fact that prices are increasing. Let your members know and give them time to process. If it’s an increase in membership dues, don’t announce it to them two weeks before their membership expiration date. Give them a couple month’s notice, if possible. This will allow them to think things over (evaluate cost versus value) and budget accordingly, depending on the significance of the price increase.
2. Explain Why
Your members probably know that you’re not raising prices just to raise prices. Chances are, you’re doing that in response to the increased cost of doing business or because you’d like to offer them more benefits.
That said, explain that to your members. Don’t go into a crazy amount of detail (“Our conference center is raising their prices and we need to hire more staff, etc.”), and similarly, don’t complain. But do let your members know that you want to provide them with the most value and the best experience possible, and to do that, you need a little more funding.
While your members won’t be thrilled that prices are increasing, they’ll at least be pleased to know that you’re still focused on and committed to providing them with value.
3. Re-emphasize Your Organization’s Value
Speaking of value, if prices are increasing, you MUST explain to members what they’re getting in return — why they should pay that increased amount. Remind them of their benefits, and particularly new benefits, if you’re adding any to compensate for the increase.
This applies to membership dues, conference registration, certifications and training, etc. Basically, whenever there’s a price increase, you must respond with “It’s worth it because….”
4. Offer Flexibility
This depends a little bit on how significant of a price increase we’re talking about, but if it’s fairly significant (enough that you think members might walk away), it’s important that you offer a little flexibility.
If you’re dealing with an increase in membership dues, do you have membership tiers in place so that members who can’t afford the new cost of membership have something a little bit more affordable to fall back on? If it’s an increase in conference registration, are you willing to offer a one-day pass or online options (virtual attendance for your most popular sessions)? Giving people alternatives rather than an ultimatum (“Pay this or you’re out”) is always perceived more positively.
How to Collect Membership Dues Easily
Regardless of how simple or complicated your membership structure is and how affordable your prices are, actually collecting membership dues is often the most challenging part of membership management. There are always going to be those few members who forget to pay and then complain that they’ve lost access to their benefits.
To avoid this and make collecting membership dues as straightforward of a process as possible, follow these tips:
1. Start Early
You know just as well as we do that it often takes a few emails to get people to complete a certain action – and that includes paying for membership dues. That said, the earlier you can start reminding people to pay their dues, the better.
How early should you start? Well, three months prior to expiration is a pretty good timeframe. In fact, according to Marketing General Incorporated’s 2020 Membership Marketing Benchmarking Report, three months prior to expiration is the most popular time to begin membership renewal efforts — nearly 40 percent of associations start then!
2. Personalize Your Reminders
The chances of someone reading your email are much better if the email is addressed to them. Personalized salutations help eliminate the notion of spam.
That said, we understand you have hundreds upon hundreds (if not thousands upon thousands) of members to email.
So how do you personalize all of those messages (without losing your mind)?
Simple – use an AMS!
An AMS, which stands for association management system, is a technology solution designed to help you manage your membership. And since it’s tied to your organization’s membership database, you can easily personalize all of your emails – without having to do anything manually!
Check out this article if you’d like to learn more about how an AMS can help you collect member dues.
3. Allow Your Members to Pay Online
This day and age, convenience is K-E-Y. Period. The easier it is for people to pay their membership dues, the more likely they are to do so. And what’s the easiest way for people to pay? Online!
Tip: When sending out your reminder emails, be sure to include a link directing your members exactly where to pay.
4. Be Lenient
Your members are busy, busy, busy, and sometimes, the thought of renewing their membership simply slips their mind. But don’t punish them for that. In fact, it’s better for everyone (both you and your members) if you offer a grace period of some sort. Members are more likely to renew in the grace period than they are after they’ve lapsed completely. (Note: Two to three months is the standard here.)
Many organizations also let their members retain membership for free if they’re unemployed — this allows members who’ve recently lost their job to take advantage of the networking opportunities that your organization offers at a time when they need it most. Once they’ve found employment, you can ask them to become a paying member once again.
Want more tips for collecting membership dues and getting your renewal rates UP? Check out our free guide, Best Practices for Membership Renewals, below!