Leadership

When the Right Price Is Nothing

By / Jul 27, 2015 Microsoft will be giving away copies of Windows 10 upon its release. (Microsoft handout photo)

Giving away product is an essential way of doing business. But associations should also consider moving prices in the other direction.

Free is winning.

As you probably know from various news stories as well as your inbox, this week marks the release of Windows 10, the latest version of Microsoft’s PC operating system. Bigger than any changes within the OS itself, in many ways, is the price tag attached to the upgrade: Microsoft is giving it away for free to those who already have Windows installed.

But the company is doing this somewhat grudgingly: According to one report in the New York Times, the company is feeling the pinch from competitors that have begun to commandeer chunks of its market share by giving away products that once had hefty price tags attached. “Companies like Google have crept into Microsoft’s business with free software and services subsidized by its huge advertising business, while Apple in recent years has made upgrades to its applications and operating systems free, earning its money instead from hardware sales,” according to the Times.

”Regular reasonable increases rarely decrease membership or sales.”

There are pockets of the association world—especially the ones that like to say, “We need to run more like a business”—that are likely to see an important lesson here. “Freemium” models ought to be more commonly adopted at associations, the thinking goes—better people come to your association for something gratis than never hear of your association at all. And Microsoft CEO Satya Nadella has said the free strategy for Windows 10 is intended to bolster its mobile position in the long run.

I’m sympathetic. After all, this very blog post is an example of a “freemium” model at work. (Come for the articles, stay for the information about ASAE events, membership, and products and services.) But giving things away also demands some consideration about who’s coming for what you’re giving away, what you’ll offer once they arrive—and what price tag you’ll attach to those things. And how often you’ll be changing that that pricing structure, too.

In 2013, Andrew S. Lang, FASAE, argued in Associations Now that associations too often lowball the prices they place on what they sell, particularly membership. “Regular reasonable increases rarely decrease membership or sales, and they almost invariably increase the bottom line,” Lang wrote. The prevailing fear about raising prices is that it risks driving away members and/or customers. But it can also be a way of announcing the value of connection to your association. And, as many in nonprofitdom are wont to say, no money, no mission.

The pricing discussion is particularly pronounced when it comes to international efforts, where different countries with different standards of living may not be able to afford U.S. prices. But some associations have successfully held the line, often arguing that what may seem “unaffordable” in a country overall may not be for those in the industry the association represents. In 2012, SHRM’s Brian Dickson told me that “For our core products, we are trying very hard to maintain unitary pricing. We have used discounting, but our overall approach is to maintain pricing and then build more customized products. That gives us more flexibility.”

At last year’s Annual Meeting, pricing strategist Rafi Mohammad pointed out that you can charge a premium for the things you do better than anybody else. And if you feel confident about your association’s membership value, you shouldn’t be shy, as Lang suggests, about thinking about price increases at least once every year. Free has its virtues and gets attention. But announcing that what you do has value—and a price tag—gets attention too.

How does your association discuss pricing, and what does it decide to give away for free? Share your experiences in the comments.

Mark Athitakis

Mark Athitakis, a contributing editor for Associations Now, has written on nonprofits, the arts, and leadership for a variety of publications. He is a coauthor of The Dumbest Moments in Business History and hopes you never qualify for the sequel. More »

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