Charging Annual Fees
Clubs of all sizes are implementing a one-time member charge often called an Annual Maintenance Fee, sometimes called a Facility Enhancement Fee or Capital Reserve Fee. Basically, this additional billing allows the club to collect a preset amount once a year, typically for use in club improvements such as buying new cardio equipment, replacing carpeting, making renovations or other much-needed improvements.
This annual fee is a way to increase revenue without increasing dues. The actual amount charged could be similar to the monthly membership dues and vary based on the type of membership and/or if it’s a single, couple or family. If you’re an existing club, that has been in business for years and is thinking of adding such a charge, it’s recommended that a letter be sent out to the membership base at least 30 days in advance of the first charge. Often promotional flyers and posters are put up in house to promote the planned improvements and show how the added income will be spent. Showing a time line and keeping to it will keep members’ confidence high and show good faith on the owner’s behalf.
It’s important that the fee be clearly stated and discussed as a positive at the membership sale. It should be included in the membership contract and agreed to by the member. Also, be sure the staff is fully aware of the fee — discuss the fee and its uses in your staff meeting so everyone can answer member questions if the need arises. If there’s ever a dispute, question or challenge to this type of fee, generally it’s due to miscommunication, not legality.
Now, logistically, the facility’s Club Management Software should easily allow the inputting of the appropriate fee per membership and the assigned billing date. Some software allows pre-programming of this fee to set into the member’s record automatically based on the assigned membership type.
Like the regular EFT billing, the annual fee would be collected electronically as well. A common amount is $20 to $60 depending on the club, average dues, demographics, or if there’s a defined purpose for the additional revenue. Charge the same amount every year, and make it applicable to all members whether they pay monthly or prepay. To clearly separate these funds from the regular dues billing, run the maintenance file on a different day, i.e. if you normally bill on the first of each month, process the maintenance fee file on the 15th.
Another way to handle the annual billing, and to get a little revenue boost twice a year, is to break out the billing. For instance, for all members who join from January 1 through June 30th, designate that their billing will occur on July 15th. For all members who enroll between July 1st and December 31st, their annual billing will occur on January 15th. Again, quality club management software will easily accommodate this variation and allow for proper tracking and management of the transactions.
A third option is to bill the fee based on the membership type. In essence, all Gold members get charged on April 1st, Silver members on July 1st, and Bronze members October 1st.
Forecasting the expected revenue is important to owners and managers for budgeting and cash flow analysis, so reports allowing managers to preview the annual billing files are a must. Run a report that lists all members, their membership type, and the billing amount. Next, run a report to compare the file versus the regular monthly EFT billing to verify that all members are included. Along with this, run and review a problem report to show any missing account information, recent returns, or invalid amounts.
No matter how it is charged, an Annual Maintenance Fee can and should be a positive. On average for a site with 1,000 members, at even a basic amount of $29 a year, that’s $29,000 of additional income to help keep your club and equipment up to date. That’s a win-win for you and your members.