Quick Answer: Should Your Business Offer Lifetime Memberships?
Offering a lifetime membership can be a great way to deepen loyalty among your current customers, especially those who already love your products or services.
It’s like giving them a reward for their continued support, making them feel even more invested.
Businesses with relatively low operating costs compared to their revenue tend to benefit the most from lifetime memberships.
While there are plenty of perks—like predictable revenue and stronger customer loyalty—there are also drawbacks.
One notable example is American Airlines’ AAirpass, which they sold for $250,000 in 1987. Decades later, they had to cancel it, leading to a major backlash.
Ultimately, whether a lifetime membership makes sense depends on your industry.
For high-cost industries, like airlines, the risks might outweigh the rewards. For businesses with lower operational costs, it can be a smart move to boost both revenue and customer commitment.
Generally, we’d recommend against offering lifetime memberships – unless you know exactly what you’re doing!
What Quantifies as Lifetime Membership?
A lifetime membership is typically a one-time payment that grants access to a service or facility for as long as the business is up and running.
While it usually means “for life,” some businesses might set a specific timeframe (like 20 or 30 years) or include clauses that let them terminate memberships under certain circumstances, like closing down or changing ownership.
In some cases, it could even mean a person’s lifetime, with businesses setting age requirements (e.g., members must be over 35) to ensure the membership lasts for the expected duration.
So, while the idea is that it lasts forever, the actual terms can vary depending on the business and any legal conditions they put in place!
What Businesses/Organizations Benefit from Lifetime Memberships?
Businesses or organizations that operate on a membership-based core business model can benefit the most from offering lifetime memberships.
These models thrive on building long-term relationships with customers and ensuring consistent engagement.
Here are some prime examples of organizations that can benefit from lifetime memberships:
- Fitness centers and gyms.
- Clubs, such as golf clubs, country clubs, and social clubs.
- Non-profits like churches & charities.
- Subscription-based businesses, like Spotify, Netflix, and other streaming/content platforms.
In short, any business that relies on recurring memberships, whether for fitness, exclusive access, or digital content, stands to benefit from offering lifetime memberships.
Benefits of Offering Lifetime Memberships
Long-Term Commitment via Sunk-Cost Fallacy
Lifetime memberships create a long-term commitment for customers due to the sunk-cost fallacy.
This is the psychological effect where people are less likely to abandon something once they’ve invested in it, even if they no longer use it.
For businesses, this means that customers who have paid for a lifetime membership are less likely to switch to competitors, even if better options become available.
While members might use the service intensely at first, usage often declines over time.
However, even with lower usage, your brand stays at the top of the mind, and these members are more likely to refer others, creating organic growth over their membership lifetime.
Ample Opportunity for Upselling Members
Lifetime members often use your services or facilities frequently, creating a great opportunity for upselling.
For example, a gym can sell protein powder, energy drinks, or meals to its members.
While not all members will make these purchases regularly, the incremental sales can add up over time.
This type of upselling works particularly well in physical businesses, where staff can directly interact with members and offer products.
For online businesses, such as content-driven sites, upselling exclusive newsletters or premium content can also be effective, offering members extra value and enhancing their overall experience.
A Lifetime Membership Brings Predictable Revenue & Solid Cashflow
Lifetime memberships bring predictability to revenue, eliminating concerns about cancellations.
With a lump-sum payment upfront, businesses can invest that money into marketing or other growth efforts without worrying about ongoing subscriptions.
To strike a balance, it’s important to limit the number of lifetime memberships available per month, ensuring that cash flow remains healthy while avoiding oversaturation.
This helps maximize customer lifetime value by not overwhelming your capacity to deliver the promised benefits and maintaining a strong brand experience for members.
Less Strain on Operations & Customer Service Teams
Offering lifetime memberships can reduce the strain on your operations and customer service teams.
With fewer cancellations and renewals to manage, your staff can focus on delivering better service to members rather than handling constant sign-ups or troubleshooting issues.
This leads to a more streamlined process for both your business and your customers.
With less churn to worry about, you can maintain a stable customer base and focus on enhancing the experience for your loyal members.
Saving on Administration Fees & Loyalty Spending
By offering lifetime memberships, you can reduce both administrative costs and loyalty spending.
Since there’s no need for ongoing renewals or subscription cycles, you save on operational tasks and marketing efforts associated with keeping members engaged.
Lifetime members are already at the most loyal stage of the customer journey, so they require less push from your marketing team.
The sense of exclusivity that comes with being a lifetime member is powerful, but the cost to maintain these relationships is far less than continuous loyalty campaigns for short-term customers.
Cost Savings from Some Dormant Members
Over time, lifetime members may become less engaged or even dormant, especially in industries like gyms or spas, where some members sign up but don’t use the service regularly.
While this isn’t ideal, dormant members can actually help reduce operational costs.
For businesses that require physical spaces, like gyms or country clubs, dormant members lower the overall wear and tear on facilities, while still contributing to your bottom line.
In contrast, for online businesses, dormant members don’t really impact costs, so this is more relevant for businesses with physical facilities.
Cons of Offering Lifetime Memberships
Long-Term Liabilities, Depending on Business Type
One of the main downsides of offering lifetime memberships is the potential for long-term liabilities.
While the upfront payment can be a quick cash boost, it doesn’t cover the ongoing costs of running your business over the years, such as facility maintenance, employee overhead, and rental fees.
These costs can drain your cash flow over time, especially as more lifetime members sign up.
The challenge is that you can’t just keep increasing the number of lifetime memberships to fix this; as time passes, it becomes exponentially more expensive to support all of them.
Also, offering too many lifetime memberships can diminish the exclusivity and prestige that typically come with being a lifetime member.
Relatively Low Customer Lifetime Value
Lifetime memberships can result in a relatively low customer lifetime value (LTV) over time.
For instance, if a gym charges $6,000 for a lifetime membership, but over the years, the member only uses a fraction of the services, your actual revenue per customer might end up being much lower than if they had subscribed to a monthly or annual membership.
This is because, as the customer continues using the services, the total revenue generated from them becomes less valuable compared to customers who pay on a recurring basis.
Unless you are able to upsell products or services consistently, the value per member will decrease, which can impact your overall revenue.
Membership Abuse
Membership abuse is another risk with lifetime memberships, particularly when members let their friends or family use their membership cards.
This can become even more problematic if members actively rent out their memberships for a fee, causing you to lose revenue and damaging your brand’s reputation.
To avoid this, it’s important to include terms and conditions that specify membership abuse is prohibited and that memberships can be terminated without a refund if abused.
A good solution is to use digital membership cards and implement features like facial recognition or biometrics for secure access.
This makes it harder for unauthorized people to use memberships and helps protect your business from abuse.
Lack of Flexibility
One of the biggest challenges with lifetime memberships is the lack of flexibility for your business down the road.
If you want to pivot your business model—say, a news site deciding to move from a membership-based model to a freemium model with ads—you might face resistance from lifetime members.
They signed up for a specific service, and now you’re changing things on them.
To keep these members happy, you’d need to offer additional perks or benefits to make up for the changes, which could increase your costs.
This lack of flexibility can limit your ability to adapt and grow as a business.
Potential Legal & Liability Concern
Offering lifetime memberships also comes with potential legal and liability concerns.
If your business gets sold, undergoes a merger, or faces financial difficulties, your lifetime memberships might be affected under new management.
Depending on your location, this could lead to legal disputes or even lawsuits. It’s important to make sure your terms and conditions include a disclaimer that your business is not liable in such cases.
While this isn’t a substitute for proper legal advice, having a solid legal framework in place can protect you from unforeseen issues.
Always consult with a legal professional to make sure you’re adequately prepared for these kinds of challenges.
How Much Should You Charge for Lifetime Memberships?
The price for a lifetime membership should reflect the value of your service, market competition, and long-term sustainability.
A good rule of thumb is to price the lifetime membership at 5 to 10 years’ worth of an annual membership. So, if your annual membership costs $500, a lifetime membership would likely range from $2,500 to $5,000.
From our experience, this range offers a solid balance between cost and profitability.
Of course, your brand’s value and unique selling points will play a big role too.
If you’re the top choice in your area or offer something competitors don’t, you can definitely charge more.
Not to mention, the type of business matters too. A gym would charge more for a lifetime membership than an online news site would.
Ultimately, there’s no one-size-fits-all formula. Pricing depends on factors like industry, location, and your brand’s position in the market.
Keep in mind, lifetime memberships are still a relatively new concept, so there’s limited research on what works best!
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