We all know that some products have been dropping in price, where there’s intense innovation in design or production (data storage; low-quality t-shirts). But for most goods and services, we expect them to increase somewhat, don’t we? Do you pay the same for a haircut or an accountant or a movie ticket as you did 10 years ago?
So why are associations so shy to raise dues regularly? They’re often concerned that this will seem like a massive change to their board and their membership. They are often right about the board, but not always about the membership – there’s not usually any kind of significant response at all.
There are indeed some good reasons to avoid raising dues – but there are also some weak ones, which are worth challenging if you hear them.
Six pretty good reasons to keep dues where they are:
- The bottom has really fallen out of your profession or your industry. If the economics are very challenged, e.g. if members are losing their jobs or going out of business, perhaps this is not the time for an increase in dues. (That said, it may be that this signals a structural change in your industry which may lead the way to a higher-dues association with fewer members, made up of the industry survivors – or the need to connect with other elements of the industry to sustain the organization.)
- You’re really struggling to prove any sort of significant value for members. Maybe significant parts of your membership value proposition have disappeared (e.g. a member benefit that used to be unique to you is now available from a competitor), or you have had some kind of noticeable and significant drop off in service levels. This is clearly a crisis that has all sorts of ramifications, but perhaps this is the time to focus on the fix, rather than a dues increase that you won’t be seen as having earned quite yet.
- There’s cheaper competition. This should lead the association to look at its cost structure and fundamental assumptions about operations, because if there are alternatives that are structurally able to offer the same services more cheaply, in the medium to long term that spells doom.
- Your costs have gone down. If there’s been some kind of structural, permanent change to bring down the costs of your provision of services, maybe it makes sense to pass some of the benefits to the members in the form of frozen (or maybe even reduced?) dues.
- Dues were set very high and you need to spend a few years normalizing. The question I would ask here is, how do you know they’re really high? By what benchmark?
- You’ve got a revolt on your hands. If the organization is in some kind of existential political crisis that goes way beyond business as usual, this is probably not the time to focus on dues.
4 reasons that aren’t so strong:
- Sheer inertia. I would suggest evaluating dues every year. They should be a part of your budgeting process, and absolutely part of strategic planning. Inflation alone means prices of your goods and services (rent, salaries, insurance, contracts, etc.) are going to be up around 2% per year - over a decade that means your revenue and your costs are mismatched by over 20%. And if inflation goes up (despite a long period of low inflation, some of us remember different times), this drive gets more intense.
- You think you provide good value to members, but you aren’t telling that story well, so you are hesitant to ask for higher dues. The solution to that is to tell the story – communicate the value provided to members, in members’ terms. And then, look at raising your dues!
- The Board isn’t functional enough to have that conversation rationally. Or the board and staff relationships are acrimonious and there isn’t the time or opportunity to initiate these discussions. These are obviously significant and broad problems. Perhaps the need to do increasingly urgent things like raise dues will provide some of the impetus to actually address those underlying organizational dysfunctions.
- Non-dues revenue is often spoken of as a panacea for many things that ail associations, including the hesitance to raise dues. There is an expectation that non-dues revenue could make raising dues unnecessary. Now, this may be a good point. Some organizations can keep dues low through non-dues revenue, and that may be a sensible trade-off to make. But in many other organizations, increasing or even sustaining non-dues revenues isn’t all that practical. Don’t avoid raising dues before you’ve got the non-dues revenue actually flowing in.
Not raising rates handicaps your ability to throw money at any of your problems. Good organizations can wind up starved for the funds they need to do what they need to do. Raising rates is a completely viable option if you need to raise funds for the strategic options you want to pursue.
You do have to demonstrate value if you want to raise rates – and that’s the best way to sustain your organization anyhow. But if you do in fact deliver that value, don’t be shy to get paid for it.
Meredith Low provided this guest post. She is a management consultant, focusing on helping organizations and companies understand how, when and where to grow in the context of fast-changing environments. Her work with associations includes leading strategic and tactical planning, performing assessments to position conferences and meetings for growth and durability, and assessing the needs of members and other stakeholders.
Image courtesy of renjith krishnan at FreeDigitalPhotos.net