How to model a membership price increase

Model a price increase on paper before you announce it by running the new price against your current panel, then testing what happens when some members leave.

Start with what you collect today

Use your actual numbers from the last full month, not your price sheet. Count the members on each plan and multiply by what they pay. If you have family plans, kids' rates or employer contracts, list each group separately. They may not all change at the same time.

Example, made-up numbers: say your panel is 400 members at $75. That's $30,000 a month in membership revenue. You're thinking about moving to $85.

Find how many members you can lose and still come out even

If everyone stays, 400 members at $85 is $34,000. That's $4,000 more each month. Nobody should plan on everyone staying, so the next question is how many can leave before you're worse off than today.

Divide your current revenue by the new price. $30,000 divided by $85 is about 352.9, so you need 353 members at $85 to match what you collect now. That means you could lose up to 47 members and still come out about even.

Now run a few cases from the same example. Lose 10 members and you have 390 at $85, which is $33,150, up $3,150 a month. Lose 30 and you have 370 at $85, which is $31,450, up $1,450. Lose 47 and you have 353 at $85, which is $30,005, about even. Lose 60 and you have 340 at $85, which is $28,900, down $1,100 a month.

That spread tells you how much room you have. You can try your own panel in the membership pricing calculator.

Think about who might leave

I'd expect members who use you the most to be the least bothered by a $10 change. Members who joined for a low price and rarely come in are the ones I'd watch. Losing a few low-use members can also free up time on your schedule, which is worth something even if revenue dips a little.

Then look at members whose price can't change right away. Members who prepaid a year have already paid at the old rate, so the new price can't reach them until renewal. Employer agreements may lock a rate for a set term, so read yours or ask your attorney. Those groups delay the increase, so your first few months will look smaller than the full model.

Some owners keep current members at the old price for a few months and charge new members the new rate right away. Put that in the model too. It changes when the extra revenue shows up.

What I'd do before announcing anything

• Count members by plan and by what they pay today
• Set the new price for each plan
• Find how many members you can lose and still break even
• Run three cases: few leave, some leave, many leave
• Mark which members can't change until renewal or contract end
• Decide on notice timing and whether current members get a delay

If the many-leave case still leaves you even or close to it, the increase is low risk. If it puts you behind, try a smaller increase or a slower rollout. It's your call. The model shows you what each choice costs before you commit.

After the change goes live, watch your revenue per member and your cancellations each month for the first few months. That's how you'll know whether the real result matches the paper one.

Common questions

How much notice should I give members?
Enough that nobody feels surprised. Check what your membership agreement says about price changes and give at least that much.

Should I raise prices for everyone at once?
Not necessarily. Some owners start with new members and move current members later. Model both and pick the one you're comfortable with.

What if more members leave than I planned?
Track cancellations monthly after the change. If you pass your break-even number, you'll see it early and can adjust.