Guidance on Raising Association Membership Dues

The past year and a half have presented associations with significant economic challenges. Many have realized lower revenue from meetings and less dues revenue.  

One association executive summed up the situation in this way.  “It’s a lost year (and maybe two). . . The impact on our financial health may extend well beyond the pandemic as it takes years of careful financial stewardship to build reserves and we’re spending it now.”

To help offset the reduced revenue, associations are exploring increasing dues. Based on data and experience, here are some of the best practices around implementing a dues increase.  

How often do associations raise dues?

Data collected over the years from the Membership Marketing Benchmarking Report shows the frequency of dues increases has remained remarkably stable over the past decade. About a quarter of associations report that they raise dues annually. However, the majority of associations say that they raise dues on an as-needed basis. These stable outcomes may primarily be the case because the past decade has witnessed a period of low inflation. But with tighter finances and resurgent inflation, many of the “as needed” associations may require a price increase.

How much should dues increase?

Historically, benchmarking respondents share that the median increase of their most recent dues change was 5 percent. When a dues increase exceeds 10 percent, there can be an erosion in renewal rates.  An essential consideration in raising dues is awareness of psychological price points. Ideally, prices ending in a 7 or 9 receive less resistance than those ending in zero to 4. So, for example, raising dues from $95 to $99 will receive less pushback than going from $95 to $100.  Of course, at some point, the price will have to breach a price barrier, requiring a somewhat lower percentage increase. Sensitivity to price points may be more important than the actual percentage increase in dues.

How do associations justify raising dues to members?

With the current level of inflation, 2022 may be one of the easiest years to justify a dues increase.  Costs for salaries, printing, and postage to service members are increasing. However, it can be further supported by supplying additional justification for higher prices.

In addition to inflation, associations have justified increases to support new programs and services or support public awareness and advocacy efforts.

What outcomes have dues increases had on membership numbers and revenue?

One of the most frequently asked questions about a dues increase is how it will impact membership renewals. Based on experience with many dues changes, here are some outcomes that can be expected. First, a dues increase will produce more revenue. In other words, any loss of members will be offset by the increased price. Secondly, a dues increase of 5 percent or less will likely not constrict renewal rates.  Dues increases at higher levels, especially of more than 10 percent, have produced lower renewal returns.

How should a dues increase be communicated?

Transparency is a significant value in the association community. So, when a dues increase is needed, there are many discussions on how members should be advised. The best practice is not to note the change at the point of transaction in the renewal notice, email, or website renewal page. If the increases occur annually, then it is expected by members, and a notice is not required. If rates rise on an as-needed basis, it is appropriate to note the upcoming change in a newsletter or somewhere on the website. Posting a clear explanation for the change also allows staff and volunteers to present a simple unified message to members.

Price increases are often required to maintain an organization and keep up with rising costs. However, increasing dues should not be a consistent solution. Some very successful associations have insisted that price increases are a last resort—instead, the organization focuses on generating revenue through new member growth and product development. Growth by adding new members and services represents a dynamic way to serve the community and accomplish an association's mission.   

The Impact of a Membership Dues Increase on Renewal Rates

It has been my observation that the demand for membership renewals is fairly inelastic of price. In other words, a percentage increase in dues rates generally does not translate into an equal or greater percentage drop in renewals rates. The demand for the membership holds. At least up to a point.

Some data from our recent Membership Marketing Benchmarking Report supports this premise. For example, 82% of organizations that raised dues by between 1% and 10% reported renewal rates of 70% or better after the increase. Similarly, 83% of organizations that raised dues by between 11% and 20% also report renewal rates of 70% or better after the increase.

However, this pattern falls apart with dues increases over 21%. In this case, only 68% of organizations that raised dues by more than 21% reported renewal rates of 70% or better.

The chart below provides the data on percent of dues increase and renewal rates.

The bottom line -- based on the the aggregate data -- it appears if an organization can keep a dues increase to under 20% there will not be a drop in overall renewal rates. But going over a 20% dues increase may errode renewal numbers.

Six Components to Building Your Membership Model

Membership models are a hot topic these days. I am speaking with a number of clients about options on how to build new memberships or adapt current categories.

Instead of trying to build an exhaustive list of the different membership models now being deployed, I thought that it might be of more value to outline the components that go into and can be changed to form a new membership.

I have identified six levers that an organization can adjust in a membership product. By thinking through and making decisions in each of these areas you can define the membership model that best fits your organization and the needs in the market.

Here are the six elements that go into building a membership model.

1. Participants – Who do you want as participants in the membership? This can be defined as specific markets or market segments. It can also be defined as whether the membership is for individuals or groups of people in organizations or companies.

2. Value – What products and services are desired by your market that you are able to deliver to the membership? Providing value involves both understanding the need for content, community, savings, etc. and also your knowledge and ability to deliver what is needed.

3. Term – When do you want the membership to start and to end? For many organizations the standard term of membership is a year. But many memberships – like health clubs – offer a monthly membership term. Others require multiple years of membership tied to an event like certification

4. Fulfillment – Where do you want to deliver membership benefits? There is a growing shift from providing a paper based or in localized in-person membership to an electronic only membership.

5. Price – How much, if anything, do you want to charge for the membership? Memberships can range from tens of thousands of dollars to just a few dollars a year. And increasingly, the concept of ‘Freemium” membership is being tried by organizations where membership is used to build community or engagement as part of a larger economic strategy.

6. Purpose – Why do you want to create the membership? The ability to create a membership model and an economic plan to sustain it are very important in planning, but Tom Collins also points to doing what you are deeply passionate about as a foundation for success.

To build your new membership model, I suggest that you look at each of these membership components and list all of the options under each that are available to you. How you mix and match each of these options will form the outline for the membership model that best fits your organization and the needs in the marketplace.

Please feel free to post a comment here if you think that I have missed any important membership components here.

Pricing Your Product, Service or Membership

Sometimes pricing is an afterthought when developing a product or service or changing your membership structure. But this can be a mistake. Pricing is one of the four “P’s” of marketing for a reason. Proper pricing has a huge influence on the viability and profitability of an offering and should be part of the conversation from the very start of product development.

For example, a quick search for a pair of sneakers shows a price range from $6.99 to $2,395. Clearly, there are vastly different strategies between these two ends of the pricing spectrum.

So how does one go about building a pricing strategy? Here are five basic approaches to pricing.

1. Cost-Plus Pricing: A price established to cover costs plus a margin added for profit. This method is not unlike that used in regulated industries like utilities.

2. Market-Oriented Pricing: A price based on the levels charged for similar products in the marketplace. Automobile companies are keenly aware of the price for completive vehicles. Perhaps in part because of this competition, car prices have risen at a much slower rate than inflation over time.

3. Market-Penetration Pricing: A low price to position a product to gain market share. An example of this might be the deals offered by telecommunication and cable companies seeking new customers. The price starts low and then goes up after a year or two.

4. Premium Pricing: A luxury price is designed to convey extreme value and exclusivity. Some people only want to buy the very best and are willing, for example, to pay $47,500 for a Rolex watch.

5. Value-Based Pricing: A price established based on the actual or perceived value a customer places on the product. This method requires a lot more work to set a price, but done properly it can also lead to better profits.

A book that does a good job explaining the value-based pricing strategy is The 1% Windfall: How Successful Companies Use Price to Profit and Grow. The book makes the point that successfully adding just a 1 percent price increase can produce a ten-fold increase in profits.

How does your organization set prices? Do you have a strategy or make it up as you go along? Feel free to share your thoughts.

3 Tips on How to Improve the Presentation of Your Membership Product

Whether it is a meal at a restaurant, a theatric performance, or a piece of art, presentation is important.

How membership is presented is also important when promoting to prospective members.

So when I came across some behavioral concepts from the consumer market in the Mckinsey Quarterly magazine, I thought that they could be applied to how we market and present our membership product.  Here they are. 

1. Offering payment terms – Many organizations find that adding a bill-me to a membership promotion or offering installment billing can improve responses. In fact, over 45% of associations report that they now offer a dues installment payment option. Similarly “retailers know that allowing consumers to delay payment can dramatically increase their willingness to buy. One reason delayed payments work is perfectly logical: the time value of money makes future payments less costly than immediate ones. But there is a second, less rational basis for this phenomenon. Payments, like all losses, are viscerally unpleasant. But emotions experienced in the present—now—are especially important. Even small delays in payment can soften the immediate sting of parting with your money and remove an important barrier to purchase.”1.

2. Offering a tiered membership with lower and higher priced options – I have commented in the past on the benefits of developing a tiered (or multi-level) membership product. These tiers allow a member to pick the best value for themselves and allow the organization to maximize its share of wallet. As an example from the retail world, “many restaurants find that the second-most-expensive bottle of wine is very popular—and so is the second-cheapest. Customers who buy the former feel they are getting something special but not going over the top. Those who buy the latter feel they are getting a bargain but not being cheap.” 2.

3. Bundling diverse additional services into a membership package – The opposite problem of having only one membership category is having a membership with lots of choices like interest sections, local chapters, and optional periodicals. This complexity can actually reduce response rates. In fact, “reducing the number of options makes people likelier not only to reach a decision but also to feel more satisfied with their choice.”3.

Trying new ways to present membership really comes down to making the buying decision easier for a prospective member. We make it easier for them to buy if we offer payment over time and if we give a member a product that both meets a member's diverse needs, but also is not too complex or cumbersome to purchase.

What other suggestions do you have to better present membership in your organization?

1. Ned Welch, A marketer’s guide to behavioral economics, McKinsey Quarterly, February 2010.
2. Ibid.
3. Ibid.

How to make sure the Price is Right!

Are you using price as a strategic tool to drive sales? A very high price may support the impression that you product is exclusive. A low price may help launch your product against an established competitor.
Pricing is a part of marketing and needs a strategy just like promotion and packaging.

Lynda McDaniel makes the point in her October Associations Now article, Perspectives on Association Pricing, that pricing for association products, services, and membership can sometimes receive inadequate attention. And yet, proper pricing can actually determine a product’s success or failure.

She shares some great examples from pricing strategies used by a number of associations related to membership, conference, and publications. She also highlights some of the findings from the Dues Increase Research that I did several years ago.

Here is the link to the article.

Membership Dues Pricing and Value

The last few months, I have received a number of questions related to dues increases and pricing issues for membership.

If this is a topic of interest for you, please feel free to join me and my colleague Erik Schonher for an ASAE and the Center Membership Idea Swap titled, The Fundamentals of Pricing and Value.

The session will take place this Wednesday, May 5, from 9:30 to 11:30. Here is the link to register.

We will explore some of the following topics:

• Pricing Theory
• Price and Offer Testing
• Price Points
• Dues Discounts
• Dues Increases

But if you cannot make it, feel free to look at some of my previous posts related to these topics.

Supply and Demand Applied to Membership Marketing

With gas prices up and down, we are hearing a lot these days about supply and demand. So I was thinking, how does supply and demand play out with membership marketing?

Here are three observations.

1. Demand for membership renewals is fairly inelastic. Meaning a percentage increase in dues rates generally does not translate into an equal or greater percentage drop in renewals rates.
2. Demand for membership acquisition is more elastic. Meaning a percentage dues discount usually translates into more members.
3. Membership supply is very elastic. Meaning it is easy to increase the number of member benefits (i.e. magazines) to meet increased demand.

What implications does this have for your 2009 planning?

1. You may have room to increase dues rates on renewing members.
2. You may want to try a dues discount to encourage new members to join.
3. You can quickly and easily meet an increase in demand for more memberships, so push growth.

Let me know if you agree with these observations.

Surprises from the Dues Increase Survey

I wanted to share the biggest surprise coming out of our dues increase survey that we completed this fall. The study shows that there is a far greater price inelasticity in dues levels than is commonly believed.

As I mentioned in my last post, these results are from responses of 324 association professionals who completed our dues increase survey.

In the verbatim responses to the survey, the vast majority of responders recommended a dues increase strategy of small regular increases. This is something that I would probably also have recommended to associations.

However, the data from the survey revealed a different outcome on the impact of dues increases when looking at membership counts. As the chart here shows:

• Associations raising dues by 11% to 20% overall were most likely to report membership growing by over 10% than those who had lower or higher dues increases


• Associations raising dues by 11% to 20% overall were the least likely to see a decline in membership of under 10%.

The survey did show that there is a limit to the increase that a membership can sustain.

• Associations raising dues by dues by 21% to 30% were most likely to report a membership growing by over 10%.


• Associations raising dues by 21% to 30% were most likely to see a decline in membership.

Not surprisingly, the best revenue outcomes were also associated with dues increases of 11% to 20%. These findings show that association membership will support a dues increase as high as 11% to 20% and not negatively impact membership counts or revenue. However, anything over 20% shows a diminishing rate of return, with larger decreases in membership and acquisition rates, and declining renewal rates.

The lesson is to rely on the data, not just our intuition, when establishing pricing or any other marketing initiative. It also shows that associations that raise dues at lower percentages may be sub-optimizing their revenue.

By the way, if you would like a copy of the dues increase report, please send me an email and I will be happy to forward it to you.

The Results from the Association Dues Increase Survey

To help build an understanding of the best practices related to raising membership dues, we did a primary research project this fall of association executives. The results are in and over the next week or two; I wanted to highlight some of the findings from our research and provide some commentary on what we found.

The first portion of the survey that I wanted to take a look at is how often associations raise dues. Here are some of the findings:

• Two-thirds of association respondents indicate dues are raised as needed.


• 18% of respondent organizations raise dues annually.


• 34% of organizations have raised dues this year.


• Almost 20% last raised dues in 2006 and about 15% last raised dues in 2005.


• Associations primarily offering organizational memberships are significantly more likely to have raised dues in 2007.

Since the most common answer to when associations raise dues is “as needed”, there does not appear to me to be a pricing strategy employed by most associations. Instead, it looks like dues or price increases are driven by accountants not marketers. If dues are simply raised as needed, then the dues increase serves to back fill program funding needs.

Dues are the “price” that an association charges for membership. And price is one of the 4 p’s of marketing. It is the only one of the 4 p’s that actually generates revenue.

So ideally, dues rates should be part of the marketing equation for an association. They should not be raised simply to fund increase expenses or shortfalls from other programs. Dues should be strategically set to maximize either the number of members (lower prices) or the net revenue to the association (higher prices). This is known as price elasticity. There is an optimum price or dues rate for each association.

Let me know your thoughts on this. Should associations price membership to maximize their strategic goals?

By the way, for those of you who like the statistical backing for the survey, here is the methodology. The survey went to 10,347 association executives and we had 324 responses. The response rate for this project was 3.1%. This sample size of 324 carries with it a margin of error of +/- 5.4 percentage points. That means that if all the recipients were surveyed, we could expect that the results of that survey would not vary more than +/- 5.4 percentage points at a 95 percent confidence level.