The Cost of Underpricing in Associations
Is Your Association Leaving Money on the Table?
Many associations set their pricing based on what feels safe rather than what’s sustainable. In an effort to keep membership fees, event registrations, and sponsorships affordable, organizations often underprice their offerings—without realizing the long-term consequences.
While keeping costs low may seem like a way to attract and retain members, underpricing can actually harm your association’s financial health, perceived value, and ability to deliver on its mission.
So, what is the real cost of underpricing, and how can associations ensure they charge what their value truly warrants?
The Hidden Costs of Underpricing
Underpricing can impact associations in several critical ways:
1. Financial Instability
When fees are too low, it becomes difficult to cover operational costs, invest in growth, or fund new initiatives.
Associations may find themselves relying too heavily on sponsorships or external funding, creating financial uncertainty.
Without adequate revenue, organizations risk cutting back on valuable member benefits, weakening their overall value.
2. Decreased Perceived Value
Price often influences how people perceive quality—if your fees are too low, members may assume your offerings aren’t valuable.
Underpricing can position your association as "cheap" instead of high-value, making it harder to attract premium members or sponsors.
Members are often willing to pay more when they clearly understand the benefits they receive.
3. Difficulty Raising Prices Later
If you set your prices too low from the start, it becomes much harder to justify price increases later.
Long-time members may resist changes, leading to membership churn when adjustments are eventually made.
Associations that incrementally test and adjust pricing experience fewer disruptions than those that suddenly raise fees after years of stagnation.
4. Limited Investment in Member Benefits
Underpricing means less revenue to invest in new programs, technology, and improved member experiences.
Associations that price too low often struggle to keep up with changing industry standards and evolving member needs.
A lack of reinvestment can cause an association to fall behind competitors, ultimately leading to member disengagement.
How to Set Pricing That Reflects Your True Value
To avoid the pitfalls of underpricing, associations should take a strategic, data-driven approach to pricing:
1. Assess the True Cost of Delivering Value
Calculate all direct and indirect costs associated with delivering your programs, events, and membership benefits.
Consider staff time, technology, marketing, and future investments in your pricing structure.
Ensure your pricing covers costs while generating enough revenue for growth.
2. Research Member Willingness to Pay
Conduct member surveys, focus groups, and market research to understand price sensitivity.
Analyze past purchasing behaviors to determine whether members are willing to pay more for premium experiences.
Compare your pricing against similar organizations while keeping your unique value proposition in mind.
3. Implement Value-Based Pricing
Focus on pricing that reflects the true value of membership, events, and services rather than just covering costs.
Highlight exclusive benefits, networking opportunities, and professional development resources to reinforce your pricing strategy.
Use tiered pricing models to accommodate different levels of membership and engagement.
4. Test and Adjust Pricing Strategically
Small, incremental increases are more effective than sudden, steep price hikes.
Offer early-bird discounts or loyalty pricing to ease transitions while still increasing revenue.
Monitor renewal rates, member feedback, and participation trends to refine pricing over time.
The Long-Term Benefits of Strategic Pricing
When associations price their offerings appropriately, they experience:
Greater financial stability – Enough revenue to sustain and expand member benefits.
Stronger perceived value – Members see your offerings as high-quality and worth the investment.
Higher member engagement and retention – Pricing aligns with expectations, reducing churn.
More flexibility for growth – The ability to reinvest in new programs, technology, and services.
Underpricing might seem like a safe strategy, but it ultimately limits your association’s potential. Strategic, data-driven pricing helps ensure financial sustainability while maximizing value for members.
Are you ready to tackle your association’s pricing problems? Visit www.pricingforassociations.com today to schedule a virtual coffee chat where we can discuss what your organization needs and how we can best support you.
