Do you have an annual membership or pass to any local attractions?
Many families find annual memberships to be a great way to save money on favorite places or attractions. They can be especially valuable for families. We have young kids, so we have four different memberships that we take part in:
- Detroit Zoo
- The Henry Ford Museum
- City Park (for the beach)
- Robot Garage
It’s a pretty well rounded group of attractions. The first three are pretty self explanatory. The last one is a local business that recently opened up that offers classes and drop-in opportunities where kids build with Lego, gears, wheels, pulleys, motors and all kinds of other nifty materials to create things that walk, roll, open, close and other cool things.
First Questions To Ask
Figuring out whether to buy a membership is a multi-step process that involves asking a series of questions.
- Did you like the attraction?
- Do you see yourself or your family liking it as much after a few more visits?
- Do you have time to fit this into your schedule?
- Can you commit to going at least as many times as it takes to get to the break even point?
- What is the break even point?
Making sure that the answers to the first four questions are all YES is very important, understanding that you might not know the exact answer to #4 without knowing #5. Still, the first three questions will largely get you there.
But, say you do answer yes, and you want to know what your break even point is. That’s the important question of the day from a financial perspective.
Calculating The Break Even Point
The number you are looking for is the number of visits at which you need to hit to reach your break even point.
You’ll need to:
- Calculate the cost per individual visit
- Get the cost of the annual membership
Divide the annual cost by the individual cost and this will give you the break even point as far as the number of visits that you need to exceed for the membership to ‘pay for itself.’ When the number comes out as a fraction, you round up to the nearest whole number. That’s the simple method and it works for most cases.
Sometimes, it gets a little more complicated, as you’ll see with our examples below.
Per Visit Cost:
2 Adults @ $14 each: $28
2 Kids $ $10 each: $20
Family Membership Cost: $79
In this case, $79 / $53 = 1.5
Round up, and you see that it takes 2 visits to break even.
We go at least 10-15 times per year so this is well worth it.
The Henry Ford:
Per Visit Cost:
2 Adults @ $21 each: $42
2 Kids @ $15.75 each: $31.50
Family Membership Cost: $160
In this case, $160/$79.50 =2.0
We don’t need to round up, so the number of visits to break even is 2.
We go here at least 6 times per year, so we’re more than happy to renew this.
City Park Membership (Beach)
Per Visit Cost (car entry fee): $6
Annual Pass: $30
This one is a very simple calculation in that we have to go 5 times to break even.
In all the years we’ve gone, every year but one we’ve gone at least or more times, and I think one year we missed it by one visit (it was a chilly summer and also right after one of our kids was born, if memory serves), but typically we meet this one without a problem.
This one is a little more tricky because the benefits come in a couple of different areas.
Per Cost Visit Drop-In Play: $8
Camp Discounts: $8
Annual Membership: $99
In this case, we have to estimate three different areas:
We take our kids around six times per year, meaning that we get $96 worth of drop-in visits. Wow, we’re almost there!
Our son typically goes to 2 classes per year, and while the $11 per class is an estimated savings, the $22 is enough to definitely push us over the edge.
We also sent our son to a week long ‘camp’ and members get a small discount (note: it’s actually listed as more, but since they offer an early bird special to non-members only, the net benefit is what I list): $8
So, for the $99 membership, we offset with a savings of around $126.
Not great, but we do calculate that we’re at least breaking even.
Using Numbers To Make Decisions
With the information we have above, we can see exactly how we’re doing. Putting together this analysis is easy and it’s also something you should do regularly. You can use it not only to estimate up front if you think you’ll get value from the membership, but to see if you’re actually using it when it’s time to renew.
Say you loved the beach the one time you went and had every intention of going a whole bunch…on the day you signed up. But, when you came back at the end of the year, you realized that you only went twice. You’d know that renewing might not be your best option moving forward.
Annual memberships can be a great way to save money and create lots of great experiences for you and your family to enjoy. Understanding just how they fit into your budget and how spending money can save you money in the long run is great knowledge to have.
Readers, do you have any annual memberships? Do you sit down and do a cost benefit analysis to ensure that you’re ‘making back’ the cost of the actual membership?Copyright 2017 Original content authorized only to appear on Money Beagle. Please subscribe via RSS, follow me on Twitter, Facebook, or receive e-mail updates. Thank you for reading.