Additional Fees, By Any Name, Mean Additional Revenue!By heatherf posted in ABC News
- August 1st, 2011
By: Mark Walker
Director of Franchise Support
Club Enhancement Fee, Annual Membership Fee, Facility Improvement Fee, although known by many different names, it means one thing to you… additional revenue.
Revenue you can use…
- To add new equipment
- To refurbish worn out equipment
- To reinvent your club
- To increase your advertising spend
- To address maintenance needs
- To increase the club’s bottom line
The concept of the Club Enhancement Fee (CEF) has been around for several years and is rather simple. Once (or twice) a year, each member pays an additional onetime payment towards improvements at the club. The amount can be whatever you decide, but is normally about half of your regular monthly dues. For a club charging $40 a month for Dues, a CEF of $20-$25 is acceptable.
The amount of revenue depends on several factors including the amount you charge and how many members are charged, but the impact can be impressive. For example, a club in California billed almost $40,000 in May for their CEF while a club in Florida bills an additional $15,000 each April and October.
Before implementing a CEF, there are several questions you will need to answer and decide what works best for you and your club.
- Is the fee assessed per member or per agreement?
- Is the fee assessed once a year? Or divided and assessed twice a year?
- Will the fee be assessed to cash/PIF members when they sign up?
- Will the fee be assessed on one date for all members? i.e. October 1st
- Or will they have dates to pick from? i.e. April 1st or October 1st
To minimize confusion with the members, it is recommended you include an Enhancement Fee section on your agreement. Depending on how you present it, you can have each member acknowledge the fee by initialing this section. Or make it a standard part of the agreement that does not require separate initials. You can spell out what the CEF will be used for, or be more generic as in the example below. Once you decide on the amount and the due date(s), have them added to your agreement so that it is clearly spelled out for the member.
“The purpose of the Club Enhancement Fee is to provide for the maintenance and improvement of the equipment and services offered. This fee of $_______ will be collected beginning on ____/____/____ and on the same date of each year thereafter.”
If you are an existing club, and are considering implementing a CEF, I suggest picking a date to start assessing the fee. For example, all new/renew/rewrite agreements starting on September 1st will include the CEF. Your current members would be grandfathered in but over time be included when they renew their existing membership.
Several clubs have successfully implemented the fee on their existing members. If your agreement allows for adding additional fees with a 60 day notice (the ABC versions do), you can notify your existing members and assess the fee. The caveat is you have to make a good faith effort to inform them of the fee, and by doing so may inadvertently “wake up” members that continue to pay their dues but are not regular attendees to the club. This may translate into an increase in cancelations. It is your decision to make.
One more thing… a few weeks before your CEF is due, please post a notice in the club reminding members of the upcoming additional billing they will see. If you send a monthly newsletter/email blast, it would be ideal to include it there too. This will help minimize the number of calls that both you and ABC will get when members see an additional charge.
In the end, a CEF, or whatever term you choose to use, is a great way to drive revenue up and create cash flow that can be used to address multiple issues.