Few processes are as universal to the association business as determining appropriate price points for membership dues.
McKinley recently conducted a benchmarking study for one of our clients on the policies and practices that associations use to set, increase and monitor this key revenue driver. Here are a few interesting findings from the study, which included 71 association respondents:
- Dues pricing is projected to be flat for 2012: Pricing of membership dues varied widely, but nearly all participants have experienced, and are expecting, very modest annual increases. In fact, most participants (74%) forecast no increase for 2012 dues pricing, with only a handful suggesting modest increases or decreases.
- Membership dues increases are most often informed by multiple analyses; not “mandated” by the bylaws: Most organizations apply a flexible, organic and market-driven approach to determine the frequency and amount of membership dues increases. Many respondents discussed the need to evaluate the overall climate of the economy, the association, its marketplace and its value proposition in determining dues pricing. The timing for evaluating the dues increases varies, as a narrow majority of organizations (54%) evaluate membership dues pricing every year, with approximately one-third having no set evaluation schedule.
- Most associations lack an overall cost-based approach and typically do not correlate membership attrition to dues increases: Less than 20% of respondents indicate that their dues pricing is based on an overarching approach or philosophy to what costs should be covered. Similarly, only a handful of participants have been able to see a direct correlation between dues increases and historical membership attrition. The fact that dues rates often rise by a small percentage, coupled with a lack of real-time point of sale business intelligence tools, means that associations are often “flying blind” with regard to the impact of their membership pricing decisions.
- International dues amounts are often equivalent to, or less than, domestic rates: The survey revealed that while a majority of participants (61%) offer the same pricing for US and non-US membership, nearly one-third (32%) offer lower pricing for international members. The main rationale to offer different pricing relates to different benefits being provided to US members and/or reducing international rates to create a more equitable pricing structure based on standard of living.
With a somewhat bleak economic picture, and dues pricing projected to be flat for most groups, it seems that in 2012 associations will (as always) need to intently focus on acquisition and retention strategies to impact dues revenue.