Sunday, November 25, 2012

When will associations move to “dynamic pricing?” Lesson from Black Friday

Back in September, I wrote that over the last 34+ years in association management, I've watched associations struggle over where to set member dues and how often we should change dues. We've had the wait and leap philosophy versus the “steady creep” model of small annual dues increases.

Whether sporting events, airline fares or Christmas gifts, our members are getting used to rapidly changing prices ... whether variable pricing (depending on the opponent) at a football game or differential pricing (for airline seats) or now dynamic pricing (for online and bricks-and-mortar stories).

Check out this Wall Street Journal article about dynamic pricing this holiday season
  • Amazon said it constantly revises its listings, a practice known as dynamic pricing, that may help it match or beat competitors' prices or cause rivals to drop theirs.
  • Amy von Walter, a Best Buy spokeswoman, said the retailer routinely monitors its rivals' prices and aggressively makes adjustments to stay competitive.
  • Wal-Mart's e-commerce team in Silicon Valley has built sophisticated tools that let it adjust prices throughout the day to stay competitive.
Yet, nearly all associations set dues for 12 months. Many haven’t changed dues in years. A conference registration fee tends to be set and maintained throughout the process ... other than, perhaps, an early registration rate or a “walk-in” rate.

Why do associations continue using fixed pricing?
  • Is it because we don’t have the computer software to explore dynamic pricing?
  • Or, is it because we allow boards of directors to establish annual member dues?
  • Or, is it because we’re afraid our members might complain if they knew another member got a “better deal.”
Once you’ve covered your fixed costs (for membership or a conference), what’s the real cost of the next person to join or to register? Perhaps we should be looking at variable pricing as a tool not only to generate more members or attendance but also to generate more net revenue.

In the Race for Relevance, it’s time for associations to explore pricing models.

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