How to Handle a Membership Price Increase
At some point, most associations will need to increase their membership subscription prices. This could be for a variety of reasons:
- To keep up with inflation
- To increase association revenues
- To support improved services and offerings
- To help support the growth of the organisation
- As part of a regular annual increase
Implementing a price increase is always a risky time for an association, yet there’s not a lot of help out there to guide organisations through this process. We’ve taken our experience working with associations, unions, professional membership groups and other membership based organisations, and put together our advice on how you can best handle this transition.
It's important to remember that increasing prices just to raise additional revenues is never a great idea. Membership prices should be set at a level between increasing membership numbers (low price) and increasing net revenue to the association (high price). There is a balance between these two goals and membership organisations should ensure that they set their pricing at a strategic level with aims to meet certain goals.
If you feel you need to justify the price increase to members, then perhaps you’re not offering as much value as you should be. Members should be acutely aware of the benefits of being part of your association, and ideally shouldn’t be making their decision to renew or not based on price alone.
Price Increase Strategies
Instead of a few large increases in price, it’s a far better strategy to have smaller regular increases. It’s been shown that association’s raising prices by 11-20% overall are most likely to report membership growth of over 10%, compared to those who had lower or higher price increases (source: Dues Increase Survey).
So increasing prices by 11-20% will not normally harm membership numbers or revenue. However, anything over 20% is likely to show a diminishing rate of return. With the greater membership price, comes a drop in membership numbers.
Communicating Price Increases
Membership organisations have a couple of options when it comes to announcing price increases:
- Through the renewal notice (letter or email)
- Through an article published in the associations newsletter or publication
If announcing the price increase through written communication, it’s can good idea to offer some kind of discount or special offer for members wishing to renew at this new price point.
However, if you’ve not had a price increase in a while, or you feel confident that your member feels like they get a high level of value from your association, then you may choose to not say anything about the price increase, other than to detail the increase itself. Sometimes trying to explain the increase in price can be seen as if you’re struggling to justify it.
When to communicate the membership price increase
Generally, the higher the increase, the more notice you need to give your members. For price increases below 20%, best practice is to communicate this within three months of it taking effect.
If you’re increasing prices by more than 21%, then six months ahead is a good amount of time. If increasing at this rate it’s also a good idea to offer an incentive to try and reduce membership lapses. Category: Membership Financials