Subscription-Style Revenue: A New Trend That May Be Right for Your Association

Subscription-Style Revenue: A New Trend That May Be Right for Your Association

It’s no secret that the last few years have turned business models, as we previously knew them, on their heads. With more associations operating online and some economic sectors feeling a financial pinch, it’s been necessary to re-examine income streams. Many organizations are turning to subscription-style revenue systems. Is this trend something your association might want to embrace? Read on to see.

How Organizations Can Utilize Subscription-Style Revenue

You’re probably familiar with the other side of subscription-style payments for your association. Perhaps you pay a monthly fee for accounting or membership software or have a subscription to a niche industry platform for news and resources. Instead of paying annually, which can be a big bite out of your cash flow, you pay monthly, which is typically more manageable.

Within your association, there are likely dozens of ways you could use this model to collect your own revenue, such as:

  • Membership dues
  • Service fees
  • Accreditation
  • Courses and webinars
  • Gated content (videos, blogs and ebooks accessed with a password or payment)
  • Private groups and chat forums


The Benefits of Using a New Income Model

If you’re already using subscription-style business models in reverse, you’re certainly familiar with the benefits. It lets you test a service to see if it works for your group, so you’re not committing funds to something that’s not really what you want. And, as mentioned above, it’s less of a hit to your cash flow and allows you to spread payments out over the year. 

Taking payments monthly rather than annually has other advantages. It creates a steady stream of income for your organization because you have people signing up all year long. In fact, you have the potential to generate more income across the year in volume (and in slightly higher fees — see below) than you would with one annual payment.

Many people set up auto debits and forget about them. You may find that, where you used to see membership attrition annually, you now have people staying around because, “What’s one more monthly payment? I’ll cancel next month if I need to.”

When you let users trial your services, you can entice potential members who might otherwise be put off by a large yearly fee. If you set up the system properly from the start, having members or service users on monthly automatic payments ultimately reduces your labor because there’s no huge membership drive to be conducted. This gives your association a better handle on revenue predictions too.

What It Means for Your Association

To make this model work best for your organization, it’s best to implement it correctly from the start. You’ll have to change your payment options and methods, as well as some content on your website. This involves an up-front cost in addition to the potential for increased fees for more transactions on your end.

You can easily justify and recoup these expenses, however, by charging a bit more for monthly subscriptions in total. Those extra fees can go towards any administrative costs incurred by switching your income model. Amazon, for example, does this with its Prime membership, as do many newspapers. You save money at the end of the year if you subscribe annually, but many people elect the slightly pricier monthly subscription for the reasons mentioned here.

Most businesses that use subscription-style revenue have several tiers to appeal to different types of users and budgets:

  • Basic/single subscriber
  • Basic plus 
  • Multiple users or agency members
  • Premium

Also, keep it simple, with about four or five tiers so that it’s not too overwhelming for new subscribers. Include a comparison chart that shows what each level offers. Be sure to include the option for annual billing and show them what this saves over 12 months.

Consider having separate member and non-member categories, if that makes sense for your organization. You might also want to offer a free trial period that automatically converts to one of your paid tiers after a specific amount of time.

Finally, make sure users know they can upgrade monthly if they desire (or downscale should they retire or leave a company to go work for themselves). Set a policy for cancellations so that subscribers understand how far in advance they need to cancel payments. Reiterate your privacy policy and data security, especially if you’re asking members to switch from writing a paper check every year to making online payments.

Need help setting up your subscription system or promoting it via your email and membership list? Jaffe Management can help. We provide comprehensive support for associations and nonprofits. Reach out online or call us at 212-496-3155 to let us know how we can assist you.