Ensure Your Price Is Right on Products and Services
Here’s what you should do and shouldn’t do when pricing your association’s products, services, and events.
The Price Is Right isn’t just a long-running TV show. It’s also something associations should aim for when they establish fees for their products, services, and events. Price too high, and you risk losing participants or consumers; price too low, and you risk missing out on additional nondues revenue.
Getting the price right on products, services, and events “is important because you want to make [them] available to as many people as possible while still maintaining enough funding to develop your organization and support your advocacy,” said Davin Hattaway, CAE, account manager for association consulting at M Powered Strategies, Inc.
Before you start figuring your fees, you first need to shed any pride that comes from pricing your product based on how much you consider it’s worth. The same goes for your instinct. Although experience is helpful, it can also blind you. “It’s the idea of ‘I know best because I’ve been here for a long while,’” Hattaway said. “But that can be pointless because you haven’t measured it. How do you know?”
It’s also equally important to not base your pricing decision on inertia, he said, or pricing a product the same way or within the same structure for decades just because that’s how you’ve always done it.
So, what should an association base their pricing decisions on? Cold hard data, of course!
Recently, Hattaway was working with an association client to find the right price for one of its learning courses. The association was charging $800 for this specific course, but after some research, it uncovered some interesting information.
“In that industry, the standard was that an employee could get a training approved just on their own without any supervisor approval,” Hattaway said. “But anything over and above $750 required a whole lot of paperwork and justification.”
With this information, the association took the cost of its course from $800 to $700 and ended up doubling the participation “because they made it that much easier for employees to say yes,” Hattaway said.
This example highlights the significance of discovering the dollar amount at which it’s easier or harder for your consumers to purchase your product. With this little piece of information, associations can then start making informed decisions about pricing, also taking into account its larger strategic goals. For instance, does the association want to offer its product or service below that price and potentially gain more participants, or does it offer them at or above to potentially bring in more nondues revenue?
Of course, there are other things you should do to find the right price. Figuring out the elasticity or inelasticity of a product or service is something Hattaway also touted [ASAE member login required], as is simply tweaking prices, among others.
What are some of the ways your association uses data to inform its decisions about pricing products? Please leave your comments below.
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