By Tony Rossell, Senior Vice President
The past year and a half has presented associations with significant economic challenges. Many have realized lower revenue from meetings and less dues revenue.
One association executive summed up the situation 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 best practices to consider when 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 be the result of a decade which has witnessed a period of low inflation. But with tighter finances and resurgent inflation, many of the “as needed” associations may now 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 0 to 4. 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. In addition to inflation, associations have justified increases to support new programs and services or bolster 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. The upcoming Membership Marketing Benchmarking Report will include a focus related to this question. Based on experience with many dues changes, several outcomes are relatively common. 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. When a dues increase is necessary, discussions need to take place 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 increase occurs annually, then members expect it 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 association 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 considered an ongoing or recurring solution. Some very successful associations have insisted that price increases are a last resort. Instead, they focus on generating revenue through new member growth and product development. Growth by adding new members and services represents a more sustainable and dynamic way to serve the community and accomplish an association's mission.