Main

Why Your Club Or Association Should Be Raising Its Prices In 2024

Date:

Raising the prices of your club's membership fees is easier said than done. You can't arbitrarily double your prices, say nothing to your members, and expect them to renew like nothing happened. 

There are a lot of moving parts to consider when it comes to raising your club's prices, and those moving parts are what we are going to talk about in this article. 

Now, I am not an expert on club pricing or pricing in general; however, like any good writer, I went and found some people who are experts. Before I wrote this article, I interviewed Michael Barwell, Member Jungle's CEO. I read two books on pricing by pricing experts. Those books were Confessions of the Pricing Man by Hermann Simon and Priceless by William Poundstone. 

My brain is now crammed full of pricing ideologies, practices and buzzwords, so let's get into it. 

In this article, we will be covering the following: 

  • Why you should raise your prices 
  • When to raise your prices
  • How to increase your prices in a way that minimises member pushback 

Why You Should Raise Your Club's Prices In 2024

There is one excellent reason you should raise your club's prices in 2024. Running a club is becoming more expensive due to rising interest rates and a cost of living crisis, and almost everything you can think of is becoming more expensive.

As a result, your club's operating expenses are likely to increase, leading to a decrease in profits. If your club is a non-profit organisation running on a shoestring budget, this is not something you can afford to let happen. The best way to address this issue is by raising your club's prices to offset the rise in expenses.

Suppose you charge $35 for your membership fee, but the cost to run the club works out to be $30 per member. In that case, you only have $5 per member in surplus to reinvest into your club, improve your club, or buy Christmas gifts for your volunteers that make it all possible. 

So if the cost of everything your club needs, from stamps to electricity to milk for the coffee, not to mention the coffee itself, is increasing, then before long, you'll see those razor-thin margins get significantly impacted. Raising your prices by $5 a year effectively increases your available funds by 100%. Of course, because of increasing expenses, you won't actually be doubling your club's surplus but covering your increased expenditure. In reality, if you don't raise your prices at this time, you are effectively going backwards. Adjusting your prices a little, like $5 per member, will keep you exactly where you are currently. 

Why Raising Your Prices Now Is A Good Idea

Aside from the increasing cost of operation that we have already discussed, there is a compelling reason to be raising your club's prices now. Everyone else is doing it. If you raise your prices when no one else is doing it, your price adjustment will stand out more and likely get more members questioning why it was necessary. If you raise prices when every Tom, Dick and Harry are also raising prices, it stands out a lot less, just another drop in the ocean. 

Let me tell you a true and weirdly conveniently timed story. While I was writing the previous section of this article, I got an email to my personal account telling me that one of the services I use is increasing its price in 2024. I quickly searched my emails and found about a dozen more emails about price and fee increases that all came through in the last month or two. I had no idea that so many subscription services and businesses I frequent were raising their prices because they all just blurred together. 

In fact, I only noticed the email that came through today because I was literally writing about price increases when it did. Also, I don't even remember what service it was, and I only read the email 20 minutes ago. 

Why Your Members Can Likely Afford An Increase In Membership Dues 

One major concern many people have around raising their club's prices is that it might price their members out of their club. If you raise prices, you may lose a member or two, but the chance of that is slim. 

Think about it this way: if all your members own expensive vintage cars, pay for registration and insurance, and can afford semi-regular cruises to restaurants, vineyards and cafes, chances are if you increase your prices by $10 a year, that will just be a drop in the ocean for them. What is a drop in the ocean to your members could make a huge difference to your club's budget. 

These aren't just my unsubstantiated opinions; I have the stats to back them up.

Commbank iQ's ¿¿Cost of Living Insights Report November 2023 shows that discretionary spending is increasing for those 55 and older. Discretionary spending is defined as nonessential spending that a household does not need to survive. Hobbies, holidays, and luxury goods fall under the discretionary category. 

As you can see on the graph below from Commbank, discretionary spending marked in grey is up compared to last year. 
 

screencapture-commbank-au-content-dam-caas-newsroom-docs-S861-CommBank-iQ-Cost-of-Living-Report-printable-pdf-2023-12-18-08_58_12

 

One primary reason why older people tend to have more disposable income is due to the increased interest rates and rising house and rent prices. This means that people aged 55 and above, who are more likely to own their own houses and rental properties, will not be as negatively affected by the cost of living crisis as younger people. In fact, the rising rent prices may actually contribute to people over 55 earning more disposable income.

So if the majority of your members are 55 or older statistically, they are more likely to have disposable income and be willing to spend it on things like your club. 

How To Raise Your Prices In A Way That Minimises Member Pushback 

No matter how you raise your prices or how much you raise them, there will be pushback and complaints from members. However, there are a few strategies to minimise the number of complaints you get and make this whole thing go as smoothly as possible. 

The Compliment Sandwich

It is a straightforward technique for giving feedback, breaking bad news or, in this case, telling your members that prices are increasing.

This is extremely simple: Say something positive, say the negative thing, and say something positive. This helps the person receiving the bad news take it in and view it in a positive light. 

In practice, this could be as simple as emailing all your members. In the first paragraph, talk about all the significant improvements you've made to the club and the Member experience over the past year. In the second paragraph, let the members know that prices will increase, why they are increasing, and how it will help the club. Then, in the third paragraph, talk about all the great events you held during the year and all the amazing events you are planning for 2024. 

Justify The Price Increase

Whatever you do, don't just raise your prices and say nothing about it; you need to explain your decision to raise prices and justify it to your members. Explain to your members how the cost of living crisis affects your club and how you need to raise prices to keep up. 

Go out of your way to highlight all your club's improvements over the past 12 months. Focus on all the extra value you are delivering to your members and all the added value you can give them once you have a little bit more money in your back pocket. Explain to them how increasing their membership dues by the small amount you are will provide you with many more opportunities to add value to the club and host many new exciting events and activities. 

If you are not currently with a membership management system like Member Jungle and are increasing prices to be able to afford the system more comfortably, explain to your members how the system will save them and your time and how you will be able to reinvest all that saved time into helping improve your club. 

If you constantly equate the rise in membership dues with the increase in quality and value for your members, you will get fewer complaints and pushback from members as they will be able to see the direct link between either the extra $10 a year and all the ways that benefit them. 

The Psychological Factors Around Pricing For Your Club 

The psychology of pricing is a deep rabbit hole that you could disappear down for a very long time. This article isn't going to go super deep down this rabbit hole, but it will cover several interesting and valuable psychological factors that you can use to help you raise your prices at the right time and in the right way and minimise member complaints. 

A large chunk of this will revolve around perceived price. The average club member will not know how much their membership actually costs. The cost of storing their details in a database, renewing their membership and running events for them is not something they know; they will instead infer the perceived value of their membership from context clues. 

These context clues will be what other similar clubs charge for membership, the price of your membership, and how hard they believe it is to run your club and organise everything. With this knowledge, let's talk about how you affect the perceived value of your membership so your members will be more willing to pay a higher cost for it.  

So, without further ado, let's get into it. 

The Magic Of The Middle

The magic of the middle refers to the idea that when given a choice between several products at different prices, people will gravitate towards the middle-priced option. This holds true across pretty much every industry or product as long as the purchaser doesn't have intimate knowledge of how much the product or service costs to produce. Essentially, as long as a buyer doesn't know exactly how much it costs to put something together, they will assume that the middle-priced options are the best value for money. 

Take, for example, the three spearguns below. People will assume the cheapest one is too cheap and, therefore, not of great quality; people will also assume that the most expensive one is for pros only, so the majority of people will purchase the middle-priced option.  

 

Why Your Club Or Association Should Be Raising Its Prices In 2024
 

This magic of the middle doesn't just work with products; it also works with businesses and brands. Positioning your brand as the rough middle in your price demographic will make you more appealing to members. 

So look around at other clubs in the same field as you see what they charge for membership, and aim to make your prices as close to the middle of that range as possible. 

From this, your members will infer that the value of your club is higher than lower-priced clubs but fairer priced than those more expensive than you. 

Prices In Odd Numbers

 When it comes to prices, humans are more likely to view odd numbers as a more accurate representation of the cost/value of a product. As I said above, the average member will have no idea how much their membership actually costs to maintain; they will simply infer the price from context.

Let's say that your membership is currently $40 per year. If you raise your price to $50 a year, members will subconsciously assume that the $50 figure had been arbitrarily chosen and does not reflect the true value of your club's membership. However, suppose you were to raise your price to $49 or $53. In that case, your members will subconsciously assume that that price is more carefully thought out and better reflects the actual value of their membership. 

You will likely get more renewals and fewer complaints if your new membership price is $53 than if you made it just $50. Did you notice that all the prices of the above spearguns are odd numbers? 

While it may not be as relevant here, the same trick works in reverse for discounts. People perceive sales and discounts as more significant because they are round numbers rather than odd ones. Basically, 10% off seems more significant and a better deal than 12% off. So, if you offer discounts on membership dues or events to certain members, ensure those discounts are round numbers. You'll get more bites for event tickets if they cost $59.99 with 10% off rather than $60 with 11% off. 

Word Your Prices Carefully 

As I said at the beginning of this article, I read two books by pricing experts before I wrote this article. From that, I picked up an interesting little tidbit.

According to research, writing a price without including the dollar sign reduces the reader's pain reaction. Essentially, "In 2024, we are raising the price of membership renewals by 10." triggers a less negative response in your members than wording it, "In 2024, we are raising the price of membership renewals by $10."

With this in mind, you can literally trigger the pain receptors in your member's brains less than you otherwise would. Resulting in less pushback and complaints from your membership. 

How To Write Pricing A Summary

When it comes to actually telling your members about the price increase, we can use all the above information and write up something like the email below. Keep in mind that this is just a rough draft of an email that I have quickly written; it is not intended to be a template for you to send out to your members. Just a demonstration of some of these techniques in action. 

Why Your Club Or Association Should Be Raising Its Prices In 2024

As You can see, the above email has used several of the techniques that we have discussed, including the complement sandwich, pricing in odd numbers, not including the dollar sign, justifying and explaining why prices are increasing and how that will benefit the members and add value to their lives. 

This email is pretty short; your real one should probably be longer and include more details about events you've held, events you've got planned and, of course, around the price change. 

Remember To Influence How Your Members Perceive Your Club's Value

If you follow the above recommendations, you can price your club's membership and communicate that new price to increase your member's perceived value of your club's membership and reduce the chance of complaints. 

The complaint will still likely happen, and that is okay. All you need to do is reiterate why you need to increase your prices and how this will help your members in the long run. It may take a little while, but if you listen to your members' concerns, be honest with them, and explain why the changes need to happen, the complaints won't last. You will end up with the overwhelming majority of your members accepting the changes and renewing their memberships. 

What Else Do You Need To Know To Help Increase Your Club's Prices Smoothly? 

As I already mentioned, I read two books by pricing experts to help me write this article. If you are interested in either of them, they were Confessions of the Pricing Man by Hermann Simon and Priceless by William Poundstone.  


Besides them, you may want to read 5 Tips To Unlock Your Club's Success In 2024 to help start your new year off in fine form.

Related Articles

Let's Keep in Touch

Subscribe and never miss another blog post, announcement, or special event. We hate spam and will never sell your contact information, we will only send you our monthly Member Jungle newsletter, full of great articles.