Financial Sustainability: The Power of Value-Based Pricing for Associations
The following is an excerpt from our book, Pricing for Associations, available now on Amazon.
In the world of associations, pricing isn't about greed—it's about financial sustainability, ensuring our ability to fulfill our missions even in challenging times. As nonprofit organizations, we often grapple with concerns about how discussing pricing may be perceived by our members. However, it's crucial to understand that pricing and value are closely intertwined with our ability to serve our members effectively and innovate to meet their evolving needs.
Financial Resilience in Uncertain Times
Considering the global pandemic of 2020 and the economic challenges it posed, associations, both small and large, found themselves navigating uncharted waters, some even dipping into their reserves to sustain their operations and continue their programs. The truth is, when we neglect to address pricing strategy, we leave vital resources on the table, potentially jeopardizing our financial sustainability.
In essence, our pricing strategies are about asking a series of essential questions:
"What value do we bring to our audience?"
"What is a fair price to charge based on the value and the return on investment our audience receives?"
"What portion of that ROI should we claim as the price for the value we provide?"
These questions aren't motivated by greed, but by our responsibility to serve our audience effectively, ensuring we maintain the financial capacity to advance our mission through good times and bad.
After all, if we fail to exist and serve our mission, who will?
The Problem
The problem most associations have isn’t if they are setting prices - we all do.
The problem is how we are setting them. Is there a strategy? Are we copying other associations? Throwing spaghetti at the wall?
Most associations copy others, but there are two assumptions we make when using this strategy:
They know the secret to pricing, and we don’t. (Not true.)
They are properly delivering all of the value they say they are, but we know our own shortcomings. (Not true.)
A Note on Pricing, Value, and Innovation
One of the often-overlooked benefits of a well-thought-out pricing and value strategy is innovation. Engaging in conversations about value forces us to consider how we can continually innovate to better meet the needs of our members and sponsors.
Innovation means asking vital questions:
"Is a particular offering still delivering the value we intend it to?"
"What other problems can we solve for this audience?"
"How can we enhance our existing programs to better serve our audience?"
"What are we doing exceptionally well that warrants further investment?"
Through these conversations, we challenge ourselves to think creatively and adapt our offerings to remain relevant. When something no longer aligns with our audience's needs, we have the confidence to sunset it because we've filtered it through the lens of value delivery - not pride, or how we’ve always done things.
Pricing is a strategic tool that bolsters our financial sustainability, enables innovation, and empowers us to provide ever more value to our members, their organizations, and our partners. It is through this lens of pricing and value that we can secure a prosperous future for our associations and the industries they serve.
