Made in Baltimore: Pricing Your Memberships for Everyone in the Community
Two weeks ago, Open Works Mobile made its debut at Artscape, Baltimore’s annual 3-day arts festival. Over 350,000 people came through for free concerts, local artists, and great food. At our tent, we had demos going with a desktop CNC and a 3D printer as well as some activities for kids. And, most importantly, several hundred people filled out interest forms. While this is a great addition to our mailing list, it is not yet an actual membership community.
Open Works is having a soft opening in about five weeks. Our membership coordinator starts August 1st. Our membership software goes into effect August 15th. Our challenge is to sign up a lot of people in a short amount of time, and keep those folks sufficiently engaged that they keep coming back. There are a couple of intersecting issues here: the nature of membership-based organizations, pricing, and social dynamics.
Image: Open Works Mobile making its debut at Artscape 2016. We had over 1,000 visitors over three days! Image by Will Holman
Membership Business Models
From a business perspective, the closest model to a makerspace is a gym. An analysis of fitness business models is imperfect at best, but here goes: most gyms function best when members don’t show up. Ghost exercisers are the best customers, providing revenue while putting no burden on the facility. The majority of Planet Fitness locations have north of 6,000 members but physical space for only about 300, or a ratio 20 non-users to every active user. This type of mass non-use model is based on two factors: very cheap prices and locking folks into annual contracts that they don’t use much. The barrier to entry is low, and, once in, people don’t feel much commitment.
On the other end of the spectrum, CrossFit gyms (they call them “boxes”) charge 10 times as much and support a fraction of of the member base. Their approach is exactly opposite to Planet Fitness: it is based on very high prices and a deeply committed user base. Through competitions, diet challenges, and heavy use of social media, CrossFit boxes build a social community around working out. Users come for the deadlifts, but stay for the Paleo potlucks with friends.
Image: Pylon sign installed at the north end of the property. Image by Will Holman
Makerspaces are a bit different, sitting somewhere between the Planet Fitness and the CrossFit models. They appeal to a narrower group of people, they cost a lot more upfront to build, and people are there for different reasons – education, artistic pursuits, or starting a small business. While the motivations to participate are far more varied, the same business factors are at work. Anecdotal evidence from other makerspaces suggest about 20% of the user base will be “super users”, 20% hardly ever show up, and the vast majority sit somewhere in the middle. Attracting too many super-users will overwhelm the facility; having too many ghost users will make the space feel dead; and too many casual users will lead to stagnation.
Open Works has attempted to balance these factors through a few critical design moves. First, we included 140 addressable micro-studios that give people a physical space to call their own. Location is key to community-building. Second, we provided a wide array of equipment that would appeal to lots of different kinds of makers, from artists to manufacturers. Third, we have marketed to and engaged with pre-existing maker communities at colleges, other makerspaces, and affinity groups. Fourth, we have provided a ladder of pricing that helps to meet folks wherever they are in their making trajectory.
Image: Our first table saw! Image by Will Holman
Most all gyms have one membership price, as do subscription-based businesses like magazines or CSAs. Other membership structures, like public radio or cellphone plans, offer the consumer a wider array of price points. There are pros and cons to both approaches. Flat pricing is easy to explain and better suited to businesses where you are trying to attract the largest absolute number of customers possible – think Spotify. Hierarchical pricing works better when the product is more complex and has a narrower audience. For a flat price to work, business-wise, it would have to be relatively high – over $100/month. We decided on hierarchical pricing because a flat, relatively high membership price would drive away casual members, students, and neighborhood residents.
To set prices, we ran a lot of models. You can see our pricing analysis methodology in our previous post on business planning for makerspaces. From a practical, member-centric point of view, we wanted our entry-level pricing ($70) to be around the monthly price of other household expenses like a phone plan. On the high end, we wanted the price of a studio space plus a full membership ($250) to still seem low in the context of running a small business. Overall, the value proposition is the same as any other makerspace – affordable access to nearly $1 million worth of tools and equipment. It just depends on how much that access is worth to you.
An understanding of membership models and a good value will get members in the door. What will keep members coming back is an understanding of the social dynamics of a membership community. Humans naturally want to belong – they want to find their tribe. The trick is to build a tribe that is diverse and constantly welcoming to new members, goals that can prove to be mutually exclusive without careful guidance.
Relationship and communities are formed through the exchange of social capital. Bonding social capital is the formation of densely-knit communities around a (generally) homogenous identity or purpose. Such groups are largely inward-facing and bonded together through affective ties, those based on personal attachment, and normative ties, based on a sense of shared values. Bridging capital is the formation of large, loose networks based on instrumental ties, or the expectation of benefits. The Civil Rights movement, for example, used bonded communities (local churches) to create a powerful bridging community (network of churches, student groups, and political parties) that fought for and achieved tangible benefits for all parties in the coalition.
Open Works finds itself in a contradictory position, as it has to foster a bonding community within its walls and a bridging community outside its walls. The most successful makerspaces leverage a strong internal culture to attract and retain members. For many users, culture is the primary value of membership, as interacting with a community of friends and collaborators becomes more important than gaining access to a suite of tools. At the same time, Open Works needs to be a bridging space, drawing on a diverse user base from around the Baltimore area. The internal culture, should it seem too “clubby” or hostile to newcomers, threatens a makerspace’s ability to grow its business.
Balancing these factors is a matter of programmatic choices and careful culture-building. To keep the space open and welcoming, we are providing as many entry points to membership as possible: free events, youth and family workshops, adult classes, tours, and open houses. We also have retail, gallery, and café space that is open to the public, creating a “third place” to hang out in that doesn’t require membership. Once we are open, and a community starts to form, there will be lots of opportunities to grow an internal culture: maker show-n-tells, happy hours, mentoring, and the organic growth that comes from collisions of creative people concentrated in one place.
In our next post, we’ll discuss the other critical piece of growing membership: marketing.
Image: Orange paint is up on the east facade, as well as steel canopies over the doors. Image by Will Holman
Since the last post, we have:
1. Launched the mobile makerspace at Artscape.
2. Installed the pylon sign at the northern end of the property.
3. Took delivery of our table saws and shop equipment like trash cans, flame cabinets, carts, and pallet jacks.
4. Painted east façade orange and installed the steel canopies over the doors.