Take Your Group to 2.0: Funding Your Group with Membership Dues

The most common way that Mac User Groups fund their existence is by charging dues. What is surprising is that so few MUG leaders have really thought about what they charge for a membership and why. A 2.0 User Group will not only have completed that analysis but will also regularly monitor the calculation to be sure they aren’t falling behind due to price increases or changes in structure.

Deciding what to charge involves calculating different types of costs and understanding how they scale (or don’t): fixed costs, variable costs, capital expenses and operating expenses:

• Fixed Costs: Fixed costs are those that don’t change regardless of the number of members in your group. For most groups the standard fixed costs include meeting space rental, web hosting and insurance. These expenses are going to be the same whether your group’s membership numbers 20 or 100. (NOTE: If you suddenly experience explosive growth you might need a larger meeting place, but few groups see changes on that scale very often, if ever.)
• Variable Costs: Variable costs increase or decrease with the size of your membership. The most common example of this kind of costs is newsletter printing and delivery. If your newsletter costs you $1 per issue, then your monthly bill will be $20 for 20 members, but $100 for 100 members.
• Capital Expenses: This class of expenditure can be considered an investment in your group: projectors, a group computer, any software you require to operate your group, etc. When including capital expenses in your calculations, keep in mind that such expenses are likely to benefit the organization for two, three or more years.
• Operational Expenses: You could argue that some of the fixed or variable expenses listed above are really operational expenses…and you would probably be right. For purposes of this discussion, however, we’re defining operational expenses as those relatively small costs that come up during the year that need to be addressed: an extra power strip, a new roll of raffle tickets, etc. Nothing large, but over time they can sneak up on your budget if you’re not careful.

Doing The Math
As an example of how to calculate your membership dues, here are two examples, one with 20 members and one with 100 members, and including some of the common expenses in each category. Feel free to fill in your own or adjust to your group:

With these numbers, and assuming that there are no capital expenses to be funded, a group that projects having 20 members throughout the year will need to charge $71.69 per member to meet expenses. More realistically, the group with 100 members projected for the year can charge $23.08 and break even.

One pitfall to avoid when doing the calculations: consider the membership number to be a minimum roster. Calculating with a maximum or even an average number will leave your funding short on the fixed costs.
This model also assumes that you won’t have any other methods of raising money for operational expenses. If you hold an annual raffle or some other money-raising event, you might want to consider factoring that in, but we prefer to lean toward the conservative side and let the normal expenses be paid for by normal revenue sources. Designate the cash that comes in from special events or activities for capital expenses or even just a rainy day.

This is, obviously, a simplifed view of the expenses your group may face, but it provides a framework for your budgeting process and how to calculate your membership dues.

If your group is going to achieve 2.0 status, you have to be able to pay your bills. Understanding where your expenses are comng from and how to utilize the most common and most stable source of income for your group will assure that the well doesn’t run dry.