Fee Structures
by Sigmund Werndorf
Most clubs generate funds by charging their members a recurring fee. While there are alternatives to generating club funds and paying bills (check out When and How to Start Thinking About Money for more on this!), few are as reliable and self sustaining as this. However, the decision to charge a fee is just the beginning. How you go about it can have a big impact on your club and doing so in a thoughtful, deliberate fashion will benefit both you and your organization.
Why Are You Charging Money?
The first step to determining your fee structure is to understand why you’re charging a fee. Do you have bills to pay, such as rental fees on your venue, insurance bills, or upkeep for a website? Are you looking to fund club gear or send some members to a travel event? Are you looking to pay for your own or other people in the club’s labor? Each of these are different financial needs with different features.
Ongoing vs. One-Time Expenses
Consider how often your expenses will arise. Paying venue rent is an inflexible requirement that will have a set schedule and needs to have a reliable source to pay it. One time expenses like club gear or funding membership travel only require a cash pool to draw from that has enough money when the time arrives. Paying for labor is often a recurring expense but can be more flexible about when and how the payment is made (eg. weekly, biweekly, monthly, through check, digital payment, in cash, etc), depending on the agreement you can work out with the person being paid.
Depending on the size and complexity of your club, you may have one or more of these types of expenses. Understanding them will help you set up a fee structure that supports them and, in turn, your club, successfully.
What Kind of Club Are You?
On a deeper level, it helps to understand what kind of club you are and want to be (check out What Kind of Club Do You Want?). Your fees should support your club and its goals. A small study group will probably struggle to sustain large and frequent fees unless the people involved are particularly wealthy, whereas a big, growth oriented club may have a hard time achieving its objectives if its fees are too small or irregular. Don’t charge money just for the sake of having it but at the same time, don’t starve your aspirations of the funding they’ll require.
Creating a Fee Structure
In broad strokes, fee structures are fairly straightforward. Choose a price, choose a billing cycle (that is to say, when and how often people pay), and choose a way for people to pay.
The particulars, however, can get very complex, very quickly. Should payment be based on a period of time (x money for y weeks/months) or by class (x classes costs y amount of money)? Some hybrid of the two? Should you bill weekly? Monthly? Quarterly? What about different payment tiers? Discounts for buying classes in bulk or bigger periods of time? Punch-card systems? All access passes? All of these have their advantages and drawbacks.
Unfortunately, there is no universally right answer. Even within your club there will probably not be a single best option. Look at your club and its goals and try to find the fee structure that best fits them.
Matching the Fee Structure to the Club Structure and Goals
To find the right fee structure for your club, consider your structure and goals:
Does your club have a single, weekly meeting? No need to set up a ‘class punchard system’, you’re probably better off setting up a fixed fee at a cycle that your membership base is comfortable with.
Do you have an inconsistent membership base with people who regularly drift in and out of showing up? Having a shorter billing cycle, every other week or once a month, may be better for them so that they can pay for the classes they attend, rather than periods of time when they’re not around.
Does your club have regular or large bills that have to be paid on time? In this case you would benefit from your membership paying quarterly or annually, so that you have your funds locked down in advance.
Do you have multiple class offerings throughout the week which have different attendees? A per-class system would probably benefit the membership best so that they don’t have to pay for classes they’re not taking.
As you can see, having a clear understanding of what your club is and wants to be is important to making a good choice. When in doubt, talk to your membership base and keep it simple. Keep in mind that not only do you have to understand your system, the people who will be paying the fees should be able to easily understand it too. The smaller the club, the simpler the system should probably be. A straightforward system that everyone understands is preferable to a hypothetical extra couple of dollars in the bank and a confused, uncomfortable membership.
Who Will Fees Exclude?
One thing people often forget to consider is that club fees constitute a financial barrier to participating in the club. You are setting up a gate to participation and anyone who cannot afford your fees cannot get through the gate. The higher the fees, the more people waylaid at that gate. While having funds is often a necessary part of building a club, the financial burden of the fees you charge is also a limiting factor in who shows up and sticks around.
The more money required to participate in your club, the more people who will be unable to afford it. It can be hard to see some of your favorite students stop showing up because they can’t afford it. Likewise, your best marketing and advertising efforts may be stymied because of the limited number of people in your area who can afford to attend. However, there are ways of mitigating the tension between funding your club adequately and creating a financially accessible organization. One method is a sliding scale system.
Sliding-Scale Fee Structures
Sliding-scale fee structures give people several payment options. Often, there are three levels:
first is the lowest the club can possibly receive and still remain viable
the second is covering all basic costs
the third is covering costs plus making up for the gaps in the first tier
So if club costs require $50 a month from each student, your tiers might be $25, $50, and $75 (or even $100). This allows for your membership base to pay at the level they can afford and wealthier members help supplement those with less money.
Sustainable use of the sliding scale does depend on a few things, however. First, you have to trust your membership base to pay what they can afford, rather than defaulting to the lowest amount possible because they can. This is a culture issue. You must evaluate your membership base and decide whether this is an appropriate option or not for them.
Second, having a sliding scale relies upon having enough people able to pay the second and third levels to balance out those who need the first. If the majority of your membership base is unable to pay the second or third tiers, then your club may want to take a different approach and adjust its expenses to lower the overall fee burden on its membership.
Scholarships and Fee Waivers
Another option to reduce the financial barrier of your fees is scholarships that supplement or waive the fee requirements for certain students. The basic components to decide are:
what the scholarship constitutes
the number of scholarships your club can financially sustain
how recipients are selected
There are many ways to do this and it’s a good place to be creative. Maybe you say that for every five or ten or twenty paying members, the club can support one scholarship member. Maybe every year you do a collection or run a funding event and use that money to support the scholarships for the year, with the amount raised dictating how many you can offer.
At minimum, scholarships should lower or waive the fees, but they can also come with additional components like club responsibilities or one on one coaching sessions. These scholarships can be awarded on the basis of financial merit (which you’ll need to decide how to measure), participation in certain projects, or attendance rates.
Decide whether you want people to have to apply (and what that application process looks like) or whether they are simply awarded. Most of all, think about how this process will be a fair one. Simply choosing which members should get a scholarship based on an arbitrary or opaque process can lead to some people wondering why they aren’t getting the same support.
How Will Money Impact Your Club Culture?
Remember that these are your club mates you’re charging. They’re probably your friends, maybe even family. Even if yours is a for profit club make sure that your club membership feels like they’re getting something of value for the money they’re paying. Don’t forget that ultimately they can always go to the park with each other and start practicing swords with sticks for free.
If you’re charging people money for something, they should be getting something back for that money. Ideally it will be sustaining a community, a place where they can train, feel comfortable and welcome, be a part of something, and develop their art. At the very least it should be clear to them that it’s supporting the club they’re part of, whether that’s paying for the venue that keeps them out of the elements, the insurance that provides the legal capacity to train together, or the gear they use within that training.
Choosing the Right Fee Structure for Your Club
Fees can be complicated, but it’s worth taking the time to find the right fee structure for your club. Several factors will influence your decision, from the types of expenses you have to their frequency, your club’s structure and goals, and the financial impact it will have on club members. Carefully consider the culture you want to create and how your fee structure can support it.