Profitability of products and services at associations can be a tricky business. Not every offering is meant to be a revenue driver—some simply serve essential member needs—but losing money or breaking even on some parts of the ledger can impact how you manage pricing around others. And there can be knock-on benefits to efforts that lose money on paper.
“You might have a product that’s going to operate at a negative five- or 10-percent margin, but it’s critical to your mission,” says Caroline Baugher, practice director at McKinley Advisors. “You have to make sure you’re looking at the totality of your portfolio. [Some products are] not going to make money, but it’s going to generate a pipeline to a super-strong meeting or growing your membership.”
Because data about engagement is critical to assessing a product’s value, associations should think holistically about the factors that contribute to that engagement. “The metrics we look at are both qualitative and quantitative indicators,” says Stephanie Yanecek, senior vice president of marketing and communication services at Smithbucklin, an association management company. “We will do a quantitative survey that can complement the most recent purchase, and we’ll look for member awareness, usage, and satisfaction of that specific product or service.”
In that light, tools with high engagement and connection to mission are strong candidates for pricing reassessment. Similarly, standing up new products should be done with an eye toward the bottom line and mission. “If you’re looking at a new product or a new service, I think it goes back to the why,” says Baugher. “Why are we doing that? We always want to look at the question of, have we really done what we can to generate both value and quality?”
