Author: Dr. Michael Carr-Tatonetti, CAE, CPP | Pricing for Associations
Key Takeaways:
- A nonprofit tax classification is a tax status, not a business model. For associations, pricing is a financial sustainability decision.
- A small price increase flows straight to margin, with no new costs and no new members. Few levers on association profitability are stronger.
- Ask what members value before asking what they will pay. A member value survey shows what to lead with, and focus groups explain why.
- Test willingness to pay rather than assuming it. Gabor-Granger suits a dues increase, Van Westendorp a new offering, conjoint analysis a tier redesign.
- An association pricing strategy runs on a cycle: data, value, price, annually on your one to three most profitable products, with everything else reviewed every two to three years.
Educational / General Disclaimer: This article is for informational and educational purposes only. It does not constitute investment advice. Raffa Investment Advisers is a registered investment adviser with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. The views expressed are those of the author, Pricing for Associations, and do not necessarily reflect those of Raffa Investment Advisers. Each organization’s financial situation is unique. Please consult with a qualified professional before making financial decisions.
Most associations set prices every year. Far fewer have a method for it.
That is the gap we see again and again. Prices get carried forward, nudged up by a round number, or copied from a peer organization. There is often no data behind the decision, evidence of what members actually value, or test of what they will pay. The result is money left on the table and, just as often, value left undelivered.
Association pricing does not have to work that way. There are three building blocks we recommend considering when developing your association pricing strategy: data, value, and price. Working through these blocks helps your organization’s pricing structure become more intentional.
What Is Your Association Pricing Actually For?
Association pricing is not greed, but financial sustainability. It is important to understand this and to reframe what pricing is actually for. It keeps the lights on. It pays your staff well enough to keep them. It funds the programs that advance your mission. A nonprofit tax classification is a tax status, not a business model. Your association is still expected to be profitable and reinvest those profits back into the organization. That is the point of the association’s pricing structure.
Value sits alongside pricing. We used to call value “innovation,” but now call it listening and delivering. Your members, learners, attendees, and sponsors will tell you what they need. Your job is to decide what is feasible, deliver it well, and take a fair share of the pie in return
"Association pricing is not greed, but financial sustainability."
How Even Small Association Membership Dues Price Changes Can Affect Profit
When considering association pricing, a small price change can affect profit more than volume. Before considering an association pricing method, look at the stakes.
Take a $100 product with a 30% profit margin. Every sale returns $30 to your mission. Now apply a 10% discount, which is the smallest discount anyone ever proposes. Your costs do not move. Your profit drops from $30 to $20. You just gave away a third of your margin. To break even, you need to sell roughly 50% more. We have never seen a 10% discount drive a 50% lift in volume. Now flip it. Raise that same product from $100 to $103. Nobody blinks at $103. Your profit moves from $30 to $33, a 10% gain, with no new marketing spend and no new customers.
Now, consider your association membership dues. Let’s say you have a $400 membership, 10,000 members, and a 30% margin. That is $1.2 million in profit. Discount 10%, and you net $800,000, a $400,000 loss. Move to $412 instead, and you gain $120,000. Same members. Same effort.
Association pricing is the most powerful lever in the organization’s profitability. This is why the pricing method matters.
“Association pricing is the most powerful lever in the organization’s profitability.”
Block One: Analyze Your Association’s Pricing Data
Four kinds of data tell you where your association pricing stands today: price history, sales, satisfaction, and engagement. Start with the data you already have. Your data may be incomplete, but something is better than nothing.
Evaluate Your Association’s Price History
Three years of association price history is usually enough for evaluation. Five at most. Have you increased your association’s membership dues or other pricing? If you have, by how much?
Analyze Your Association’s Sales Data
When considering your association’s sales data, look at each segment. Did a past increase hurt retention? Which segments are spending more, and which are spending less?
Consider your Association’s Satisfaction Data
Your association likely has a variety of surveys and satisfaction data, such as an annual member survey, post-event surveys, and your course evaluations. Add one question to these surveys if you are not already asking it: for the money paid, was the value higher than the price, in alignment with the price, or lower than the price? That single question can tell you a great deal about your current pricing.
Association Member Engagement Data
Consider association member engagement data such as completion rates, login frequency, session attendance, and heat maps of your member portal. Behavior is honest in a way that opinion sometimes is not.
Case Study: Membership Pricing Structure
We recently reviewed a global association’s new membership tier structure. A volunteer committee had done real work on it. What nobody had priced was the effort to implement it, including a rebuild of a custom open-source membership database. The value to members did not justify that cost. The quick win was much simpler: a new tier for cross-border institutional members with larger budgets who were not accommodated in the existing structure. Revenue now, while the bigger question gets the time it deserves.
Block Two: What Association Members Value
While your data tells you where you have been, a value analysis to understand what association members care about most tells you where you can go.
Start with a member survey built around personas. Segment your audience and tailor the question sets. Always ask permission to follow up, because that is how you can build your focus group and interview pool.
In the survey, do not ask about price yet. Asking “what would you pay?” too early contaminates the far more useful conversation about where people actually get value.
Using the MaxDiff Methodology in a Value Analysis for an Association
The MaxDiff methodology is a great tool to use in a value analysis for an association. With this methodology, you list your benefits, and your association members see three or four at a time in rotating combinations, choosing what they feel is the most and least valuable. The output ranks everything on a single scale. Zero is neutral. A negative score does not mean sunset the benefit. It means do not lead with it. A positive score tells you exactly what to lead with, in packaging and in marketing copy.
Read the results in aggregate and by segment. Value drivers differ by organization size, tenure, and spend level. That is how you build differentiated messaging instead of one generic benefits list.
Then go deeper. Surveys tell you what, focus groups and interviews tell you why. Use focus groups when you have volume. Use one-on-one interviews for sponsors, top-tier members, and any segment too small to fill a room.
Case Study: Association Conference Value Analysis
We ran a value survey for an association client in the restoration industry. Every segment, from small contractors to large franchises to vendors, ranked conference attendance as the number one benefit. Clear result. Then we ran the focus groups. The conference scored highly for one reason: it is the biggest gathering in their industry, so everyone they need to see is in one room. It had nothing to do with the keynote, the sessions, or anything the association controlled. The real repackaging opportunity was benchmarking reports. We would never have found that in the survey data.
Determining the right pricing structure for your association can be challenging. Work with the team at Pricing for Associations to help analyze your association’s past pricing data, where you provide your members with value, and what your members will pay.
Block Three: What Will Association Members Pay?
Once you have analyzed your pricing data and understand what your association members value, it is important to understand and test what they are willing to pay. We recommend considering these three methods, each with its own job.
Method 1: Van Westendorp Price Sensitivity Meter
The Van Westendorp price sensitivity meter asks your association members four open-ended questions to determine their comfort levels with your association’s pricing structure:
- At what price is this too cheap to trust?
- At what price is this a bargain
- At what price is this expensive, but worth considering?
- At what price is this too expensive to buy?
Ideally, when using this meter, you need around 200 responses. Plotting the four curves can give you an acceptable range and a likely optimal point. Use it for new offerings as it is less reliable for existing products that are already anchored at a price, and respondents tend to understate what they would actually pay.
Method 2: Gabor-Granger Price Testing
Using the Gabor-Granger method to price test your association members involves setting a price ladder with a floor, a ceiling, and increments, and then asking a simple yes or no at each step. Randomize the starting point. This method is ideal for the incremental 3%, 5%, or 10% increase you are considering this year, and for pricing an added benefit. The output gives you drop-off, optimal price point, and projected revenue by segment. Generally, this method is the one associations should use most often.
Method 3: Conjoint Analysis
Conjoint analysis models trade-offs between features, tiers, and price. Use it for bundling, tier redesign, and sponsorship packaging, after you already know your value levers and your workable price range. It is the best tool for forecasting how members will distribute across new tiers.
Case Study: Association Sponsorships
An association client had three sponsorship tiers. The premium tier held nearly all the real value, including pre-event email exposure, and the same sponsors renewed into it every year. The basic tier offered priority booth selection and little else. Nobody moved up. The fix was small and low effort: extend pre-event marketing exposure to the middle tier. That one change gives the basic tier a reason to upgrade.
When optimizing your pricing strategy, consider the effect they will have on your reserves and investment approach. If you need help reviewing and updating your governance policies or adjusting your approach, meet with an adviser at Raffa Investment Advisers.
Evaluate your Association Pricing on a Cycle
When evaluating your pricing, you do not need to run through each of the analyses and building blocks listed above for every item every year. Pick your one to three core products. Choose them by profit, not revenue, because those are different numbers. Run the full cycle annually: data, value, price, adjust. Review everything else every two to three years.
Most organizations are already doing some data review and some value feedback. Pricing is the block that is usually missing, and the loop back into the next cycle is the piece that is almost always missing.
Overall, pick a product, and run the three blocks. Learn what the methodology gives you, then apply it to the next one. Every point of margin you recover becomes programming, staffing, scholarships, or reserves. It’s all about your improving your association’s financial sustainability.
This article was written by Pricing for Associations.
Learn more about the work we do at www.pricingforassociations.com.
Frequently Asked Questions Related to Association Pricing Strategy
What is a reasonable annual dues increase for an association?
There is no single answer for how much is reasonable for an association dues increase. When considering an increase, consider your association’s past pricing data, where you provide your members with value, and what your members are likely to pay. A price ladder tested with Gabor-Granger will show you the drop-off at 3%, 5%, and 10% by segment before you commit.
Can an association raise prices without losing members?
Whether or not an association can raise prices without losing members is something that should be evaluated before increasing dues. Your own sales data provides evidence that should be considered. Look at retention by segment after your last increase. Segments that absorbed a past increase without attrition are often a place to start. Additionally, consider the value you are offering members, and if there are opportunities to increase the value you provide. Before raising association membership dues, consider using the Van Westendorp Price Sensitivity Meter, Gabor-Granger Price Testing, and a conjoint analysis to test the new pricing.
Who should approve an association dues increase?
Approval of an association dues increase typically involves both staff and volunteer leadership, though the specific path varies by organization and by what the policies require. Staff generally own the analysis, including the pricing data, the member research, and the price testing. The finance committee and the board generally review the recommendation and the evidence behind it.
What should an association do with the revenue from a price increase?
Revenue gained from an association price increase can fund programming, staffing, scholarships, or reserves dependent on the organization’s needs and objectives. When additional funds are directed to reserves, the organization will need to determine which pool the funds should be directed in to. This question is typically addressed in a board-approved reserve policy, and the price increase may be a worthwhile trigger for a reserve policy and investment policy statement review.
About the Author
Dr. Michael Carr-Tatonetti, CAE, CPP
Michael is the Founder and CEO of Pricing for Associations, where he helps associations build pricing and value strategies grounded in member research rather than guesswork. A Certified Association Executive and Certified Pricing Professional, he works with membership organizations on dues structures, event and education pricing, and sponsorship packaging.