Does anyone have experience updating the pricing of memberships?
Specifically, I’d like to know if anyone has a guiding philosophy on how pricing changes affect the rates of existing members. Do they keep their old rates or do you bump them up with the pricing change? Any guiding theories for why you would or would not?
At Dallas Fort Work, we have a policy of not raising members’ rates, so whatever rate they sign up at they keep forever.
We just moved into a new facility and expect a rather large influx of members as we’ve grown in sq. footage and moved to a much denser part of town. My bookkeeper suggests that I can only continue this policy for existing members and that it’d be financial suicide to offer this on a go forward basis for everyone, especially because our introductory pricing at the new facility is dramatically reduced for the first 6 months.
Any thoughts, feelings, or salutes would be much appreciated
Oren
We went 5 years without raising our rates and I consider it on the short list of our bigger mistakes. When we announced our rate change, many members said, “it’s about time!”.
When we announced the change, I made it clear that if it put stress on anybody, to come talk to me. I was so, so, so worried that people would be resistant or upset. In the end, exactly one person approached me about her concerns…and a few months later ended up UPGRADING her membership. So it might’ve been more of a “money is tight this month” concern than an actual price change concern.
A couple of “middle-ground” options you can offer that worked well for us:
1 - allow people to hold onto their old rates for X additional months where X = the number of months they can prepay at the old membership rate. We had several members prepay for 3, 6, and 12 months (one for 36 months) at the original rate. We made it clear that after the prepayment, their rate would go up to the new one. They were happy with that.
2 - make it so that if people upgrade/downgrade, it’s to one of your new rates. Depending on how much people change their membership rates, this can help equalize things.
Costs go up. Your members will understand this. And maybe more importantly, if your members knew you were committing “financial suicide”, I bet they’d be pretty upset about it.
-Alex
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The #1 mistake in community building is doing it by yourself.
Does anyone have experience updating the pricing of memberships?
Specifically, I’d like to know if anyone has a guiding philosophy on how pricing changes affect the rates of existing members. Do they keep their old rates or do you bump them up with the pricing change? Any guiding theories for why you would or would not?
At Dallas Fort Work, we have a policy of not raising members’ rates, so whatever rate they sign up at they keep forever.
We just moved into a new facility and expect a rather large influx of members as we’ve grown in sq. footage and moved to a much denser part of town. My bookkeeper suggests that I can only continue this policy for existing members and that it’d be financial suicide to offer this on a go forward basis for everyone, especially because our introductory pricing at the new facility is dramatically reduced for the first 6 months.
Any thoughts, feelings, or salutes would be much appreciated
Oren
We raised rates in year 3. By far the most common reaction was “It’s about time!”
I do think that preparation is key to price raising. I think you have to warn people in advance, because I am not that jerk who sent you a surprise bill you now have to scramble to cover. I told the coworkers exactly why we were raising prices, why we were doing it now, and I gave them the numbers. I also think that profitability is an important aspect of sustainability, and I spoke about it in those terms.
For me it was also important to offer to either release people from their contracts or to hold at the current price to the end of the contract, even if under the contract you can raise the rate. For several people, I let them extend their contract at the old rate for a longer term (from 1 month to one year); this made them happy and got me an influx of cash which I did need at the time. But as a matter of principle, I don’t want anybody staying here because they have to, it isn’t what I am about.
In our case we only raised prices on two of our memberships: on those we were really only breaking even over the previous year. Breaking even = this is a hobby, not a business. And I have other hobbies.
Indeed, as Alex says, many people took this moment to upgrade; nobody downgraded. But the price increase narrowed the gap between two of our plans, and a number of people decided for that small price difference they would go with the extra options.
We did lose some members. But the ones we lost were always marginal, in terms of their relationship with the space. It cleared out the memebrs who were not fully engaged and made room for more who were.
I mean, not everybody is onboard with radical transparency, I do understand that. But it has worked for me.
Cheers,
Jeannine
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On Tuesday, December 2, 2014 12:46:24 AM UTC+1, [email protected] wrote:
Does anyone have experience updating the pricing of memberships?
Specifically, I’d like to know if anyone has a guiding philosophy on how pricing changes affect the rates of existing members. Do they keep their old rates or do you bump them up with the pricing change? Any guiding theories for why you would or would not?
At Dallas Fort Work, we have a policy of not raising members’ rates, so whatever rate they sign up at they keep forever.
We just moved into a new facility and expect a rather large influx of members as we’ve grown in sq. footage and moved to a much denser part of town. My bookkeeper suggests that I can only continue this policy for existing members and that it’d be financial suicide to offer this on a go forward basis for everyone, especially because our introductory pricing at the new facility is dramatically reduced for the first 6 months.
Any thoughts, feelings, or salutes would be much appreciated
Oren
I haven’t raised rates but I have also been in favor or introducing the new rate to new members and/or phasing it in the new rate to current members in 3 to 6 months. If it’s 10% or less than I believe you can raise their rate without having them to re-sign up on most subscription platforms. You don’t want to do this in secret of course but it can make the transition easier and a better customer experience if they you can handle everything.
Since you are expanding and planning on relaunch of sorts I would offer the current for a 3 or 6 month trial period and then move it up to your new higher rate. Let them know they are getting a deal but this is the expected price going forward. Since your new space is significantly larger and in a new part of town this could be used to get people in the door but set expectations.
