How often do your members pay you?

When setting up a new facility, it may be hard to decide on the payment frequency options you offer your members. This post contains six factors for owners/managers to consider when making these decisions.

1. Costs associated with more regular payments

All else being equal, there are decreased administration or direct debit costs with less frequent payments, and so the less frequent your members pay you the better.

Of course from a cash-flow perspective, up front (where members pay at the start of their membership) is preferred.

2. Incentives

One way you can incentivise members towards your prefered frequency option is by adjusting price.

If you do this, be aware of extrapolating amounts between payment frequencies. As you double the cost from weekly to fortnightly, the gross revenue remains the same. This not the case for doubling the amount from fortnightly to monthly payments. The table below outlines the difference, based on a $50 per week membership. If your club has 100 members, this is a $20,000+ per year difference in gross revenue, and so well worth considering!

<td style="text-align: right;">
  <strong>Payment amount</strong>
</td>

<td style="text-align: right;">
  <strong>Payments per year</strong>
</td>

<td style="text-align: right;">
  <strong>Total amount per year</strong>
</td>

<td style="text-align: right;">
  $50
</td>

<td style="text-align: right;">
  52.2
</td>

<td style="text-align: right;">
  $2,609
</td>

<td style="text-align: right;">
  $100
</td>

<td style="text-align: right;">
  26.1
</td>

<td style="text-align: right;">
  $2,609
</td>

<td style="text-align: right;">
  $200
</td>

<td style="text-align: right;">
  12.0
</td>

<td style="text-align: right;">
  $2,400
</td>

Payment frequency

weekly

fortnightly

monthly

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3. Software

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Can your software handle the types of memberships you want to offer? As a minimum, any software you use should be able to:

• Offer lots of frequency options (weekly, fortnightly, monthly, 6-monthly…)
• Easily adjust the amount charged (for example, for friends, staff, and family)
• Set many options for the same membership (e.g. to allow for discounts to students or those working for services)
• Handle the types of memberships that limit the number of visits per week, and manage this for you within the member booking system
• Set and record different minimum sign-up periods

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4. Competition

What does your competition offer, and where do you want to place yourself in that market?

This is not to say ‘match your competition’, but rather consider why you are offering what you do.

**5. **Your desired cash flow

How often do you want money coming in? How often do your suppliers (rent/mortgage, power etc) invoice you, and do you want your income to match the timing of these payments?

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6. Member cash-flow

How often your members get paid and what are their preferences? Some may prefer to commit and pay up front for a whole 6 or 12 month period. Others may be paid weekly or fortnightly, and prefer their payments to go out at the same time.

Minimising any defaulting of payments is going to mean less follow-up and wasted time in the long run.

What other factors have I missed? Do you need help in calculating these for your facility?

If you have any questions or comments, we’d love to hear from you.