In our years of working with zoos and aquariums all over the world, I have never heard anyone speak these words: “My membership program is making more than enough money, thank you.”
In fact, the very notion of membership with all its benefits and privileges is something that spurs lively (and sometimes contentious!) conversation. There are people who will tell you that membership at an admissions-based organization is simply a give-away. On the other side of the aisle are the ones who point to the benefits of a large membership (e.g. it drives visitation, a pool for donor development, an economic hedge against uncertainty, a large data pool) as balances against potentially lost gate revenue. Each side of the argument has merit, but hey, why can’t we have both?
We’re firmly in the pro-membership camp, but only if it’s being priced the right way. Priced too high, and you’ll miss out on big chunks of your market; too low, and you’ll kill your gate. Either way, you’re leaving revenue on the table, and we HATE that. We hate it more than steamed vegetables, which is a lot.
We’ve seen a lot of misinformation out there about how membership “should” be priced, and today we’re going to dispel one piece of it.
The Myth of Two Point Five
Frequently, when we talk membership pricing with our clients, they’ll say something like, “family membership should be priced at a 2.5 multiple.” What they mean is that their base-level membership level is priced at 2.5 times the total cost of two adult and two child admissions. While there certainly are some circumstances when that’s appropriate, treating that number as gospel for the entire industry is simply wrong. While pegging membership to admissions pricing is the right strategy, one size does not fit all. Let’s take a look at how these membership prices are actually being set in the industry today:
In the chart above, which is based on data from the 2016 AZA directory, we see that there is a wide range of price ratios at work. The dashed black line is the trend of those ratios, and the simple version of what’s happening here is that as admission (the blue area) gets more expensive, the membership price ratio (the orange line) declines.
And that makes sense! If your admission cost is low, a 2.5 multiple doesn’t get you enough revenue to be worthwhile. And on the other end of the spectrum, if it costs a lot to get into your zoo or aquarium, using a 2.5 multiple could very easily result in a membership well north of $200, which is too expensive for an average family to afford.
Another interesting facet of this analysis is the degree to which organizations “agree” about how to set their prices. On the low-end of the admissions price spectrum, there are wild deviations (low agreement) above and below the trend, while at the high end, there is much tighter clustering (high agreement) right around it. While teasing this out involves a bit of speculation, it follows reason that the additional cost burden on a member paying $60 as opposed to $40 is far less than one deciding on whether or not to shell out over $100 for their annual membership.
How Should My Membership Be Priced?
Short answer: it depends. There are a lot of variables in play besides the cost of admission. But when we look at how your peer organizations are pricing theirs, there is good data that points towards correlating your admission fees to a membership price ratio that is at or near that trend.
It’s also critical that you do not pick a ratio and stick with it indefinitely. As prices change (and they inevitably will), you’ll need to change your ratio accordingly. That’s why it’s so important to understand this concept as you set out to create a plan for the future.
While it’s impossible to create a “one size fits all” answer to this question, we would be happy to help you figure it out on an individual basis. Click here to drop us a line, and we’ll start a conversation about how you can get the most out of your membership program!