Michael Tatonetti is the Founder and CEO of Pricing for Associations. He is also a Pricing and Value Speaker and Consultant and a Certified Association Executive as well as a Certified Pricing Professional.
In this episode, Michael discusses the importance of aligning pricing and value with the mission of associations and non-profit organizations. He emphasizes that value should be the central factor in creating a pricing strategy, as it resonates more with members and strengthens their connection to the organization.
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Why you have to check out today’s podcast:
- Discover the three factors that distinguish associations from traditional subscriptions and find out their similarities in some aspects
- Find out how to price an association and why these two components of value and price tie in together to create the best pricing
- Learn how associations communicate better value in their pricing and the formula you can use to best convey your pricing
“Focus on the value. Always put the value before the price.”
– Michael Tatonetti
Topics Covered:
01:01 – How he started a career in Pricing
02:36 – What differentiates non-profit associations from subscription businesses?
03:59 – How does competition feels different in an association space?
05:37 – Looking at an associations membership bylaws, pricing objectives, their competitive positions in the space
07:16 – Three things that makes an association different from subscription business and what makes them the same with it
10:15 – What to consider when shifting from annual to monthly billing for associations and what he advocates as the biggest thing that differentiates association from subscription
12:32 – Pricing an association and when does he consider competitors when pricing?
15:08 – Questions to ask to come up with the best pricing
17:17 – Using Van Westendorp to help in data analysis for pricing [and the number of samples needed for this tool]
18:17 – Michael letting Mark share his own idea of the right number of responses needed for Van Westendorp data analysis
20:49 – Relying on value and not on cost when communicating pricing
24:38 – Michael’s best pricing advice that could impact any business
Key Takeaways:
“Most subscriptions, not all, of course, run on like a monthly basis. Of course you can do annual, but most of them, you think in monthly terms where most associations are billing annually.” – Michael Tatonetti
“Most subscriptions for profit are able to just auto-bill where some associations, depending on state, cannot auto-bill, they can opt in, but for some they cannot.” – Michael Tatonetti
“Associations are typically divided into one of two categories, either organizational or individual. They’re typically called trade or individual, trade is organization. Now, when you have an organization, then yes, typically they’re not going to have it on renew.”– Michael Tatonetti
“I think of traditional subscriptions as an individual, I sign up and then I cancel when I want. Where with associations, there’s typically more thought-power that goes into the decision to continue year over year.” – Michael Tatonetti
“I lean in on value a lot. I typically will not do work with an organization on just price. I typically require that we’re doing value and price because most organizations don’t change their value too often.” – Michael Tatonetti
People / Resources Mentioned:
- Robbie Kellman Baxter: https://impactpricing1.wpengine.com/podcast/ep94-powerful-pricing-insights-from-a-subscription-expert-with-robbie-kellman-baxter/
- Van Westendorp: https://en.wikipedia.org/wiki/Van_Westendorp%27s_Price_Sensitivity_Meter
Connect with Michael Tatonetti:
- LinkedIn: https://www.linkedin.com/in/drtatonetti/
Connect with Mark Stiving:
- LinkedIn: https://www.linkedin.com/in/stiving/
- Email: [email protected]
Full Interview Transcript
(Note: This transcript was created with an AI transcription service. Please forgive any transcription or grammatical errors. We probably sounded better in real life.)
Michael Tatonetti
Focus on the value. Always put the value before the price.
Mark Stiving
Welcome to Impact Pricing, the podcast where we discuss pricing, value, and the congruent relationship between them. I’m Mark Stiving and our guest today is Michael Tatonetti. And here are three things you want to know about Michael before we start. He is the founder of Pricing for Associations. He was a VP at Professional Pricing Society and left about a year ago, and surprisingly, if you’ve ever seen him, you’ll be surprised too, he dances both Ballet and Tap. Welcome Michael.
Michael Tatonetti
Yeah, thanks, Mark for having me.
Mark Stiving
Hey, it’s going to be fun. How did you get into pricing?
Michael Tatonetti
Oh, I fell into it like everybody else. I actually got into it because of PPPs, so my background before that, I’ve been in the nonprofit space for, almost 20 years now. And, I focused more on education and marketing. And then about, it’s been about seven years now, I think, since I had first started at PPPs. But I worked there over education. And having been in that role, you have to, you know, work with all of the subject matter experts. So, you know, inadvertently I learned pricing because I’m learning from all of the greats and, you know, overseeing all of the courses and, you know, events and all that who were selecting for speakers. So I learned it because of that. Earned my CPP, didn’t plan on using it. But I always worked with associations on the side after about a year or two on marketing. And then it just kind of grew from there. They all kept asking me about pricing, and I’m like, okay, well let’s go, you know, let me share what I know. And, it just kind of morphed into its own thing.
Mark Stiving
Nice, nice. Yeah. So, let’s spend some time today talking about pricing for associations, if you don’t mind.
Michael Tatonetti
Yeah.
Mark Stiving
Not necessarily your company, although I’m happy to hear about that as well. Right. But I really want to hear about the concept and it was probably a couple months ago I got to do a presentation on pricing for a group of associations.
Michael Tatonetti
Yep.
Mark Stiving
And, it was pretty fascinating. But the thing that struck me is that an association is essentially the same thing as a subscription business. It’s similar. Yes. I would say that it’s very adjacent. I don’t always look at membership as a subscription, but it’s very close. It’s like a sibling to me. What’s interesting or different to me about associations from, you know, I would say more for-profit is associations really really care about the relationship and how you communicate. So communication matters a lot when it comes to value and pricing. And they’re also very sensitive to price, like, association members fill in ownership with the association. And so they question things a lot more than just, you know, I remember each time Starbucks goes up by about 30 cents and I go to order and I’m like, okay, you know, I don’t care as much. But there’s something about the association world where it’s very mission-driven, heart- driven, relational, and that drives a lot of how you have to go about price increases, communicating value, as well as the models that exist and how you approach those models.
So that’s actually really interesting because I could belong to several different associations. And I could see how some of them, I would not be upset, but I would be asking the questions, why would we raise price? What are we doing? Others, it’s more of a probably it’s the larger association. You’re like, yeah, okay, just give it to me, I’ll take it. Right. There’s nothing I can do about it.
Michael Tatonetti
Yep. And that’s what’s interesting too, because within the association space, competition feels different because many times there will be a national or international organization, then there will be chapter or local organizations and you have to make that decision. Are you a part of both? And then they’re almost competing against each other, but some of them in their bylaws are really a family of organizations and then some are not. They’re two completely different organizations that have no strategic tie-in for why they do what they do. So sometimes people are making decisions as well, you know, what am I a part of? Or even opposing organizations that might have slightly, you know, different objectives or education that they offer at their events. So yeah, even that comes into play a bit, of which ones do you care about? What are you looking to get? Typically, if it’s more local, then you’re looking for more networking and relationships. If it’s more national, international, you want education, certification, things like that. You know, lobbying the latest and greatest news at that big level. So how you interact with the association also does depend on their size, their function, all of that.
Mark Stiving
Yeah, that makes a lot of sense. In my mind, I’m playing through the fact that I belong to the National Speakers Association. I belong to the national group and I belong to the Las Vegas chapter.
Michael Tatonetti
Yep.
Mark Stiving
And so how you play, how my expectations of what I get out of those two different groups are very different, just as you said.
Michael Tatonetti
Exactly.
Mark Stiving
And I actually have the option of joining one or the other. I don’t have to be a member of both.
Michael Tatonetti
Yeah. That’s, and sometimes you do have to be a member, it trickles up or down, you have to join the local, then you automatically join national or vice versa. Sometimes again, it’s not the case. And then even then, if it’s not the case, are they affiliated by bylaws or are they two separate entities? And again, that’s where, like during COVID, I saw a lot of national orgs moving in their own way. They gave a lot of stuffs for free because they could afford to. And then it really hurt the local and state associations if they, especially if they weren’t affiliated. Because then they’re like, well, what do we do? You know, they’re giving away way better stuff than we have, and we can’t meet in person and do networking the same way. So it’s an interesting field and world to be in. And depending on who I’m working with, you know, what are their pricing objectives and where are they at competitively in the landscape?
Mark Stiving
Yep. Okay. So I’m still going to push back and tell you that I think an association is the same thing as a subscription. Okay. So now I’m going to tell you why I think that.
Michael Tatonetti
Okay.
Mark Stiving
So when I think of a subscription, what’s fascinating about running a subscription business is that we actually have three different revenue buckets we have to manage. I call them win, keep, and grow. Most subscription companies would call them acquisition, retention, and expansion. I call that consultant Ds. I don’t do that. Right. So win, keep and grow. Yeah. So in an association, I need to win new members. I need to keep my members. And then most associations I don’t think do a great job of this, but I’d really like to be able to grow my, not my membership, but grow the amount of revenue I get from any individual member. And so I think that fits perfectly in an association. Feel free to tell me I’m right or wrong.
Michael Tatonetti
Yeah, no, with that description, I don’t disagree. Because even within the grow, that’s where you have ancillary things like events, education, you know, et cetera, et cetera. I think where it’s different is typically when I think of a subscription, so I’m thinking more of, I’m thinking of a few things that are a little bit different. One is, most subscriptions, not all, of course, run on like a monthly basis. Of course you can do annual, but most of them, you think in monthly terms where most associations are billing annually. Second, most subscriptions for profit are able to just autobill where some associations, depending on state, cannot autobill, they can opt in, but for some they cannot. So that becomes a difference because then there’s an intentional decision of do they continue, it’s not just a sign up one time and it’s on repeat.
So it’s not actually recurring revenue. And then the third area where I think it’s a bit different is, associations are typically divided into one of two categories, either organizational or individual. So they’re typically called trade or individual, trade is organization. Now, when you have an organization, then yes, typically they’re not going to have it on renew, but they might say, yeah, we’ve got 500 people that are members of the org. We’re paying it every year. Great. They cipher out who those members are. But when it’s individual, typically it’s still the organization paying. But then when they leave that organization, the credit card changes and they have to decide if they want to pay individually or not. So, because there’s also that difference where I’m not always, typically, I’m not signing up as an individual and putting it on my personal credit card. So even if I stay within the same industry, which many people change industries multiple times throughout their career, even if I’m staying within the same industry, I then have to go get employer approval to become a member of that organization still.
And they might say, well, we’ve already got other people that are members that are higher than you. They’re the ones that go, or, you know, sure. Or whatever. So there is a little bit of a difference when I think of subscriptions, like, I’ll use, you know, Robbie Kellman Baxter, for example, here. She talks about the Forever Promise and that transaction. I think in that way it’s the same. But I think of traditional subscriptions as an individual, I sign up and then I cancel when I want. Where with associations, there’s typically more thought-power that goes into the decision to continue year over year. So that’s where I think it’s a little, a little bit different in that buy-in cycle.
Mark Stiving
Yeah. I could buy that. No, I want to point out, I’m going to be the president of my chapter for NSA next year.
Michael Tatonetti
Yep.
Mark Stiving
And, last year we changed our billing from every year sending out an invoice and then begging someone to pay it to an autopay. And so now they’ve signed up and every month, every year it’s going to hit their credit card . And then we also offered the monthly option which said, ‘Hey, go ahead and sign up per month and we’ll just hit you every month instead of once a year. And so far it’s worked out great for us.
Michael Tatonetti
I could see that, because I would assume this is an assumption, but I would assume also that many members of that speaking organization are probably self-employed. So for them it’s also a lot easier to put it on your business credit card. So in that case, yes, that goes back to what is your objective and who’s your audience. So in some cases I think you can do that and just go and if so, amen. Like go for it. I think if you can, great, but not always. It depends on the org and the audience. And so you have to kind of know those profiles of who they are.
Mark Stiving
Completely with you. And so I think the point I’d like to emphasize or make here is that we could think of associations as being relatively unique.
Michael Tatonetti
Yep.
Mark Stiving
But I think almost any characteristic you give me, I could say I can find that characteristic in business. Yeah. For example, back on my last real job that I had. I had a TripIt Pro account.
Michael Tatonetti
Okay.
Mark Stiving
Through my company. And then once I left the company, I had to decide am I going to keep a TripIt Pro account or not? It’s like there’s always similarities in different places as we think through that. And the only reason I point that out is because I love looking at different pricing situations and I can always grab a lesson to learn from you to apply somewhere else.
Michael Tatonetti
Yep. I don’t disagree there. Yeah. Again, I think in certain situations it is. I think it’s just like any industry in pricing in general, practitioners tend to think that they have unique challenges. In reality, when we all get together and share stories, it’s pretty universal. But within that, there are of course certain, you know, special things that we have to know for our niche. But I don’t disagree. I would say the biggest thing I would advocate that’s very different is the heartfelt-ness behind most associations and the members. They can get really passionate about price changes and value and all that jazz.
Mark Stiving
Yeah. They truly get identified, they truly identify with the organizations they belong to. Because they’ve attached their own identity to that.
Mark Stiving
Yeah, absolutely. Absolutely. Yeah.
Mark Stiving
I would agree with that completely. Okay. So tell me, how do I price an association?
Michael Tatonetti
Wooh. So, I’ll get into some of the nuances that I think of where I lean in and where I don’t care. One area when I’m first starting with anyone that I do care about is their historical data. Now most associations don’t have robust data. Like if you were working with a large for-profit, right? They don’t have the investment in those systems and they have not collected or gathered that data in a great way. But I still like to look at the data, to look at consumer behavior and see how that’s been historically. One area that I don’t care about is competitors. When I go to an association, they tend to care, but the way they typically price, if they’re not working with the pricing person is they look at competitors and then throw spaghetti at the wall based on that.
Which, you know, many can do that anyway, but they especially do that. So I don’t care too much about competitors. If I do, it’s a SWOT analysis of perceived value. Even then I explain, anyone can put on a marketing page what value they deliver, how good it really is. From there, what I really care about, what I typically focus on is market research with their database. So whether it’s current members, lapsed members, people who are non-members, similarly, like if we’re pricing an event, those who have attended in the last three years, those who, you know, haven’t attended, those who never, I like to talk to them a lot, especially around value more than price. I lean in on value a lot. I typically will not do work with an organization on just price. I typically require that we’re doing value and price because most organizations don’t change their value too often.
Or if they do, it’s the board. You’ll understand this, the board is made up of members that are voted in, though that board typically is who’s responsible for hiring their CEO. And then the CEO hires the rest of the staff, the board, because they are a partial representation, typically the staff is who sets prices. Sometimes the board will ask for membership depending on the bylaws, but typically they’ll just go to the board and ask the board what they think. But it’s not always a diverse board, meaning it’s usually people who are seasoned, have been members for, you know, 20 years have volunteered. You don’t really have newbies, you don’t have great representation. So I like to talk with the members, the audience, find out, you know, what value is missing, what do we need to add? What are other organizations doing well? What can we learn from them? That’s where I kind of lean in on competitors and, and truth in that.
Mark Stiving
So give me, by the way, I love everything you’ve said so far.
Michael Tatonetti
Yeah, yeah.
Mark Stiving
Give us some examples of what does value mean to an association or what kinds of questions you might be asking?
Michael Tatonetti
Yeah. So typically, some of the questions that I’m asking in general are, what are we doing well, what are we not doing, as well? Is there anything that we can stop? But even with that, I look by segment because that tells me more about the marketing communication to different segments. And then what other organizations are you a member of and what can we learn from them? So that’s where I kind of will gather more. And to me, better quality, competitive intelligence. I also, associations are really good at listing like 10 or 15 bullets of what they do, even though no one accesses all of those. So one thing I’m really big on is, you know, if we ask for a top, you know, ranking, I’ll just ask for top two or three and bottom two or three not the whole thing.
Because then it becomes irrelevant to me. People just kind of hit whatever after their top two. So typically those types of questions in a survey, but then I’ll follow that up with focus groups where I will do segments for each focus group. Typically a few focus groups per segment. And I say, okay, we’ve heard you, this is what we’re seeing. And then, you know, talk to me about it. And we kind of work through that so I can have a deeper understanding. So that’s typically what it looks like for value. And then for price, I then talk to the org and say, okay, great. Maybe here are five recommendations for value adjustments. They’ll say, okay, we could do this one in the next year, these two in year two, and then these other two in the next five years. Okay, so based on this in the next year and next three years, where might the price go?
So of course looking at their costs, even though I don’t care about costs, that’s just, you know, the floor, make sure that we’re, you know, not losing money. But from there, I typically will rely on some mix depending on the org, their sample size that we have, Van Westendorp, and then maybe conjoint analysis based on the van westendorp answers. But typically falling in line somewhere there to then figure out pricing and based on segment and based on value adjustments. And then be able to kind of deliver a, here’s a few different ways that this can go. And figuring out what fits in with their strategy, what their board wants to do ultimately.
Mark Stiving
Nice, nice. Quick technical question. How many samples do you like for Van Westendorp?
Michael Tatonetti
Ooh. Okay. I mean, I like for anything I like, well I’ll say this tongue in cheek, I like as much as I can get for anything, but of course going through it all is another story. So I say that tongue in cheek. What I find is that for most associations, I probably only get about three to five or 8% of their audience answering their database. Let me say that. So not members, because they might have 5,000 members, but have a database of 30,000. Right? So, typically, and it’s usually majority members, you know, very active people that are responding. So that’s also hard to get sometimes young professionals or lapse members all that to respond. So typically, I usually say if I can get about 5%, I’ll take it. So that scales based on the size of the organization, some things, you know, will have hundreds of respondents and that’s it. Because they’re a local org. Others, we have thousands of respondents. So it depends on the organization.
Mark Stiving
All right. Good answer.
Michael Tatonetti
I wonder for you, let me ask you, what would you think as an incoming president of an org? I would be interested here because I think of more email open rates, click rates, right? Like, so that kind of falls in line. What would you want to see? And then what do you think you would see, if you have an idea?
Mark Stiving
You will hate my answer? Okay. Or maybe you’ll love it, I don’t know.
Michael Tatonetti
Yeah.
Mark Stiving
I think what happens is once you get beyond 12 you pretty much get the same answer no matter what. Yep. And so you don’t need 500 responses in Van Westendorp. Now what’s really cool is if you’re going to do some segmentation work. So you say, I’ve got past members, current members, I’ve got young people, old people, I’ve got. So then if you get more and more people, you can start to see how the groups fit into Van Westendorp. Yes. But I think usually a dozen, if all you’re looking for is the number.
Michael Tatonetti
Yep.
Mark Stiving
What I would challenge anyone to do is, using Van Westendorp is, stop after 12 and do your analysis and see what number you get.
Michael Tatonetti
Yeah.
Mark Stiving
And then go do 50 or a hundred or 500 Yep. And see what number you get.
Michael Tatonetti
That’s an, I might go back and look historically to see that’s interesting. But I don’t fully disagree with you because the other thing that I will say is I find that Van Westendorp kind of falls in line overall, conjoint does even focus groups. It gets after I’ve, let’s say I do three for a segment. After one, the second one might give me a little different, but like 10% different. And then the third I’m like, yep. Okay, I got it. So it’s interesting that I don’t need as much data as some people might think.
Mark Stiving
Yep. And the funny thing about Van Westendorp is it’s not that accurate. It’s okay. No, but the whole point is to get you in the ballpark
Michael Tatonetti
A starting point. Right. And then I go into, okay, if we’re thinking we can go up about, you know, a hundred bucks, let’s test a 50. Like, then I’ll segment conjoint out even and kind of test, okay, we got a 50, we got a 75, we’ve got a hundred dollars. Where do we fall? Where’s the sweet spot? And again, that’s the art and science. I always tell people there’s no right or wrong answer. It’s just which one do we want to go with and explore.
Mark Stiving
Yeah. And so just for my own listeners, you just heard me say 12, I always recommend 50 but if you can only get 12, you’ll probably get by.
Michael Tatonetti
That’s interesting. I’m going to remember that. I’m going to check that.
Mark Stiving
Okay. So the other thing I want to chat real quickly about is value communication.
Michael Tatonetti
Yeah.
Mark Stiving
So I love value. How is it that an association can better communicate the value they’re delivering?
Michael Tatonetti
Yeah, and I actually, I was listening to your podcast this morning. I listened to a few episodes and I heard one where you were talking about how you communicate value increase and your kind of quick formula. And you know, what I found with associations, what I do is I usually don’t lean on cost increases as much. So I’ll tell you that upfront. What I do is, because typically, everyone’s getting the email, you know…
Mark Stiving
Wait, can we pause for just a second? I just want to make sure we’re on the same page, right? So, what you’re talking about is what I always say when someone’s going to raise their prices?
Michael Tatonetti
Yes, yes.
Mark Stiving
Right. Okay. So go ahead.
Michael Tatonetti
Okay. Yes. Okay. So, what I usually do is something along the lines of, you know, we’ve heard you, we’ve run, you know, these surveys, focus groups, talked to you, and, we’re excited about these changes and then kind of roadmap out here the changes that are coming. And then with that, here is the price adjustment that’s coming down the pipeline so that we can cover what we need for delivering this value. And I try to focus on the organization’s financial sustainability, because they’re a nonprofit, we can kind of pull, you know, on that. So it’s not about profitability, it’s not going back in anyone’s pockets. It’s, we need to make sure that we’re at least covering what we’re doing for you. So I kind of lean more with, we heard you, we’ve done this intense work, here’s the output and you know, we’re excited to continue to serve you and give you what you need. So that’s kind of the quick formula. Yeah.
Mark Stiving
So, in a way, I’ve heard Netflix use a very similar one. Yeah. Right. As opposed to Netflix saying, our costs went up. What they really say is, we want to invest more in future content.
Michael Tatonetti
Exactly. Right. Exactly.
Mark Stiving
Which is essentially the same thing.
Michael Tatonetti
Yes. But because there’s that sensitivity, it’s not saying, hey, inflation. Because the other interesting thing, I did hear you say this on a prior episode, you had said something to the effect of, if we just hook it onto cost, then are we going to go down? Like, depending on what the cost is. Right? And that’s something I do tell people a lot is we’re not going up and down because you’re going to keep riding that wave at a higher price. Right? The other thing is, when you look at inflation overall, let’s say it’s 9% still, you know, I haven’t looked in, you know, maybe two months now, but you know, you look by category, there’s a huge variance for things like education in that it’s like 3%. So the association space is not having a major increase. Maybe their technology’s getting booted up on them, otherwise events are having higher costs, but outside of the events they put on, they’re pretty lean and they can’t really use that excuse to me. I think members are smarter than that. So, relying on the value in, we’re doing this because you’ve asked for it, it does tend to hit a home run with that audience.
Mark Stiving
Good. Well, I’ll assume that you know your audience better than I do but I will say this.
Michael Tatonetti
Yeah.
Mark Stiving
Yeah. When I get hit with a price increase and someone blames costs. I never go back and check to see, did their costs really go up? I just take it as a, yep, cost went up.
Michael Tatonetti
Yep, yep, yep. Yeah. The other thing that’s interesting there is typically if I’m in a focus group, the members will talk about their costs going up and, and that, so now we’re supposed to pay more and da da. So again, they kind of personalize it a bit rather than looking at it as an optional thing. Like, okay, I’ll buy the coffee a few days less. I’m thinking more B2C because really associations are mostly B2C. They kind of look at it like, you know, no, I’ve been around. I want to continue to be a part of like, make it fair. They’re big on fairness and perception of fairness, I should say.
Mark Stiving
That makes a lot of sense.
Michael Tatonetti
Yeah. Yeah.
Mark Stiving
Michael, I think we could talk about this for a long time, but we’re going to have to start wrapping it up, so I’m going to ask the final question.
Michael Tatonetti
Yep.
Mark Stiving
What’s one piece of pricing advice you’d give our listeners that you think could have a big impact on their business?
Michael Tatonetti
Ooh. I would say, you know, I would honestly say focus on the value. Always put the value before the price. And that’s why the word congruent for me mattered a lot in that opening statement because there has to be harmony. I think if you just focus on price without value, no matter what industry you’re in, you’re going to lose. It’s a race to the bottom. So focus on value, do what you say you’re going to do, and then to me, you getting the price should not be an issue if it’s all in alignment, if it’s all congruent.
Mark Stiving
Fabulous answer. Thank you. And thank you so much for your time today. If anybody wants to contact you, how can they do that?
Michael Tatonetti
Yeah, LinkedIn is easiest. I’m the only Michael Tatonetti on there, so, I think it’s LinkedIn slash Dr. Tatonetti. But if they just search for Michael Tatonetti, It’ll pop right up.
Mark Stiving
Yep. And I’m sure the link will be in the show notes. And so to our listeners, thank you so much for your time. If you enjoyed this, would you please leave us a rating and a review and if you have any questions or comments about the podcast or pricing in general, feel free to email me mark@ impactpricing.com. Now, go make an impact!
