How to generate extra income through membership fees

Generate extra income while providing great value to your members

James Brooker
Strategic Business Manager, LoveAdmin

If you run children’s activity classes, it’s very easy to become overly price sensitive around your members through fear of them leaving. The thought of adding a membership fee on top of the cost of their classes seems like lunacy. It certainly doesn’t have to be.

When membership fees are used correctly, they can add extra value to your current offering. Membership builds a sense of community and can give you opportunities to unite people behind your club, whilst also giving you a great opportunity to increase your revenue with no real financial cost. Remember, value for money is not limited to cash, but in the value you can create for your members, whether social, financial or emotional.

Picture this membership fees example

To paint a picture; imagine a club with 500 monthly participants, all of whom take part in one or two classes a week and have been at the club for an average of a year. This gives you a reliable base of 500 engaged participants who are interacting with your club regularly and are loyal. If we were to add a £2 monthly membership fee to each customer, that would give you an extra £12,000 across a year.

It’s all about creating value to your members

To simply add in that cost burden to your members without giving them something in return is not the answer. To truly maximise the benefit of membership, and not alienate your members, it’s crucial to give something back.

This could take the form of free incentives, such as early access to camps or classes, or activities that have a cost, such as feature events or members-only merchandise and other perks. Members must be able to see the value that you’re offering them when they subscribe to membership, to the extent that they would feel stupid if they didn’t join.

Successful entrepreneur Alex Hormozi describes this process as creating the “Grand Slam Offer”. A Grand Slam Offer is one that you make to your members that puts you into a category of one. What can you offer your members that no one else can in your market? This will remove the question of price and help you to drive membership with existing members and new ones.

To create this value, you need to find your niche. To do that you need to reflect on the people that you want to be a part of your club, or the people that you don’t want to lose.

If you can answer and address these questions, you’ve got your Grand Slam Offer. All of a sudden, you’re generating huge value for your members that justifies paying a monthly subscription without question. It’s from that point that you can unlock the virtuous cycle of increased new bookings, increased new members, and increased levels of retention.

Why events are so useful

Member-only events could be seen as the holy grail of this whole process. Think back to the scenario we introduced earlier. With your £12,000 in membership fees, you could hold a fantastic summer festival for £3-4k. This would be free for all of your active members and would be on a different level to your usual activities, a real highlight in the calendar. This type of activity can the provide you with multiple benefits:

Don’t let it go to your head!

It’s important at this point, not to let your newfound wealth go to your head and next year increase your membership fee higher and higher. A membership fee must feel to your members like excellent value for money. That’s why the £2 mark a month works perfectly, it’s high enough to generate real revenue, but low enough to not meet resistance from your members. Especially if you organise a once or twice a year feature event, the £2 a month will appear like a bargain. Remember to think back to that notion of a Grand Slam Offer. Even donating to other charitable causes often comes with a more expensive monthly price tag.

Make sure it delivers what your members want

In summary, the most important aspect in introducing a membership fee is giving something back. That isn’t going to be a one size fits all solution and will be based entirely on what your members want. Decide in advance what that looks like based on how much money you expect to get. You should look to spend between 30-40% of membership revenue into additional value activities for your members, there’s no benefit to being stingy! Once your members see that you’re growing a community for them, they will be forever loyal and provide you with the ideal opportunity to grow.

If you’re not a customer yet but would like to see what we can do to for your business – book a call with one of our experts.