Archives

  1. Home
  2. Membership Products
  3. Initiation Fees
  4. Designing your First Year Fees

Designing your First Year Fees

Our team here at Pool Dues will help your club decide the best way to sell to new members, so consider this article suggested reading prior to an actual discussion with your Membership Director or Treasurer.

In designing the ideal setup we also have a couple “rules” to play by.

  • When an Initiation Fee product is purchased alone (without a Dues product in the cart), the buyer will not be added to the member database. Typically the only time that would happen is if your Treasurer offers a prospective member the option to pay the Initiation Fees ahead of becoming a full-fledged member, that can check-in, reserve courts etc. This is rare, but it is an option.
  • If we are setting up an automatically billed plan, PayPal will only allow one product of this type to be purchased at a time. These are “billing agreements” in their vernacular, and they only want buyers agreeing to one at a time.
  • Once an automatic billing agreement is in place, the price can be changed 10 days before it rebills on Paypal’s website.

With those points in mind, our main points of consideration are whether you want new members to sign up for a recurring billing plan at all, OR whether your club’s Initiation Fees are high enough to warrant making it an automatically billed product, or “Installment Plan”. For example, the new member is charged $1000 every year over 3 years.

Installment Plans via Automatic Billing

If you feel an automatic billing plan is a good solution for first year members, then your product should be setup as a Membership in the selection pulldown seen below…

Reason being, since PayPal only allows one re-billing agreement at a time at checkout, we will combine the Dues and Initiation into a single product. Once purchased, this will create a new entry in the member database for the buyer and they will officially be a member.

You might be wondering then how we can combine the Dues and Initiation but then re-bill the member yearly (or quarterly or monthly) at the regular annual dues price. Fortunately PayPal gives us the option to include what they call a “Setup Fee” when purchasing an automatically recurring product. This setup fee is excluded from the re-billed payments.

Let’s look at the options for a club with a $3000 Initiation Fee and annual dues of $625.

Case example 1 – The product could be called Annual Membership with Initiation Fees. The new member is billed $625 once per year indefinitely, and the setup fee is $3000. The total charge at checkout is $3625, but only the $625 is re-billed each year.

Case example 2 – The product could be called First-Year Dues with a 3 Installment Initiation . The new member pays $1000 the first year, with a setup fee of $625. The total charge at checkout is $1625. The remaining $2000 will re-bill $1000 automatically on the same date next year, then $1000 once again the year after.


Annual Membership Dues and Initiation Fees as Separate Products 👍

Our clients typically use two different products for the Initiation and Annual Dues, which are required to be purchased together. This has a few key advantages…

  • Separate per-product accounting, making it easy to see the year’s total earnings of Initiation Fees vs Annuals Dues-related products.
  • Your club may have a variety of differently priced Annual Dues products (such as Family, Couples, Singles), but if the Initiation Fees are identical for each tier, that same product can be required at checkout for every membership.
  • When a new member (or existing one) purchases a membership product they are paired up with that product for invoicing purposes going forward. So if someone buys the Family Membership they get invoiced for the Family Membership by default next year. In the second installment Case Example above, your Membership Director would need to change all the first year members to a different product to be invoiced for going forward (as you would not invoice again for the installment already in place).

If creating two separate products sounds like the best solution for your club, the Initiation Fee product will be created with the following setting…

This setting excludes unnecessary options when editing a Membership Product, and notes this product as a setup fee only (which if purchased alone will not create a new entry in the membership database).

The settings you do see are largely identical to that of every Membership Product, so we’ll tackle those one section at a time in the articles to come. For example, fields like Product Title, Price, Tax, Copy on Receipts, appear in every product.

You will notice you have the option at anytime to switch your product back and forth between an Initiation (setup fee )or Dues product (one that actually creates or renews a membership).


Was this article helpful?

Leave a Reply

Your email address will not be published. Required fields are marked *