What Is Your Membership Pricing Strategy?
“People value what they pay for and will pay for what they value.”
An often overlooked and undervalued strategy lever in museum membership is price. Developing a membership pricing strategy involves assessing customer segment(s)—their needs, perceptions, and willingness to pay—market conditions and competitors, service delivery, and the cost of benefits, among other considerations.
The pricing strategy a museum applies to its membership program requires a deep understanding of its audiences as well as the psychology of price. The vast majority of museums arrive at a membership price by benchmarking against similar organizations within their market, implementing a “cost-plus pricing” approach, or by balancing the value proposition of membership with the cost of admission (e.g., “Membership pays for itself in just two visits!”).
I’ll jump to the punchline: None of these methods is an ideal way to arrive at an effective pricing strategy.
Free Membership is Not a Panacea
In 2021, the Museum of Us launched a new membership program called "Membership on Us" that includes unlimited return visits for a full year for free (with the purchase of a single, $19.95 admission ticket).
Museum of Us graphic reads: “Membership On Us — Annual Access for All — With just one visit to the museum, every visitor qualifies for a year of free admission! Just give us your email at the lobby to opt-in.” | Image via Museum of Us
The move is part of a broader commitment by the museum to equity, inclusion, and accessibility with a goal to provide “equal access to all who join.”
But here’s the thing: Price is rarely the most important barrier to participation. In fact, it’s not even in the top three!
The top five barriers to cultural participation in order of importance are:
It’s not for someone like me
I didn’t think of it
It’s inconvenient
I couldn’t find anyone to go with
Its value is not worth the cost
Notice that when price does finally make an appearance, it’s not because of an inability to pay. It’s because audiences don’t believe that the value is worth the cost—which is not the same thing as a price that’s too high.
[Side note: An interesting feature of the free membership program at the Museum of Us is its requirement for visitors to opt-in by providing an email address. This enrollment approach is reminiscent of a loyalty program wherein the museum offers a low friction way for visitors to stay connected to the museum paired with a data capture strategy that allows for better visitor behavior tracking.]
Discounts and Mindset
An all too prevalent pricing strategy in museum membership marketing is the use of discounts. While discounts can certainly drive demand by lowering the “regular” price and creating the perception of a good deal, this practice is rife with challenges.
Not only has discounting been shown to erode price integrity, decrease customer satisfaction, and contribute to an overall lower perception of quality, discounts also lead to higher attrition rates and more expensive acquisition costs. Further, this type of pricing strategy can create the problem of “discount-waiting,” whereby customers will postpone making a purchase until the next discount arrives.
Perhaps most importantly, discounting can shift a member’s mindset toward a more transactional, consumer-driven decision.
All of this is to say that while museums may be able to increase short-term membership sales by relying on discounts, as a pricing strategy, discounting is likely to have a detrimental effect on long-term profitability.
What Are Your Goals?
Price can convey many things to museum audiences, including quality, prestige, institutional priorities, and relevance. The wrong pricing strategy risks, at best, leaving money on the table, and, at worst, devaluing the very essence of what it means to be a member. This is why museum leaders need to be thoughtful about how membership is priced.
A pricing strategy can even affect audience behavior. For example, research has shown that an organization can boost usage by implementing more frequent payments. So, if you’re seeking to increase member engagement, implementing a monthly membership may help to encourage repeat visitation, among other things.
In an interview with The San Diego Union-Tribune, Museum of Us CEO Micah Parzen noted that “There are members who are haves and nonmembers who are have-nots. Traditionally, the higher your level of membership the more privileges you get that people who don’t have those resources can’t get. That separation is antithetical to our values.”
I applaud the Museum of Us for aligning their actions with their values. As museum leaders seek to prioritize diversity, equity, accessibility, and inclusion (DEAI), such commitments must be more than a passive statement posted on the website or reserved only for certain aspects of the museum’s operations. The ideals of DEAI must be reflected throughout the entire organization for museums to make holistic, meaningful, and observable impact. Therefore, museums must confront how the traditional membership model—whether directly or inadvertently—reinforces practices that are in conflict with their stated DEAI goals.
There is not a one-size-fits-all solution for how membership should reflect the principles of DEAI. I believe it is incumbent upon each museum to determine how best to express their values.
People Value What They Pay For
What do museums hope to gain by making membership free? At what point does a free membership program offer so little that it can no longer be considered “membership?” And what are the implications of free or discounted membership on member behavior, perceptions of belonging, and the financial health of the museum?
Surely there are alternative approaches to a traditional membership program that can be both equitable and financially sustainable. Radical changes are needed for museums to become more inclusive and equitable; however, a blanket approach to making membership free is not necessarily the best solution.
It was famed economist Milton Friedman who wisely observed that “… people value what they pay for and will pay for what they value.”
In truth, the Museum of Us has put a price on membership — it’s $19.95.
Rosie
P.S. If you’d like to dive deeper into topics like membership pricing strategies, check out upcoming Membership Innovation meetups in the MaP Community.
Banner image via Museum of Us
