In a previous article, Andrew Gideon said:
Paul Tomblin wrote:
all without
hitting up our members for anything extra beyond their monthly dues.

How does this work financially? For example, doesn't it mean that your
monthly fees (fixed or variable or both) are "overpriced" to pay for future
upgrades?

No, it means that your monthly fees include an upgrade reserve.

Consider a member that joins in 2000 and leaves in 2004. If, in 2005,
there's finally enough money for some planned upgrade, doesn't that mean
that the now-ex-member helped to fund an upgrade he or she will never use?

That member joined a club that had newish aircraft in 2000, bought with
the upgrade funds contributed by other members. They got the benefit of
other members upgrade reserve, just as future members get the benefit of
theirs.

The club started with 20 guys and a Cessna 120. Fifty years later, we've
got 48 members and 5 planes, and all along the way the fleet has been
upgraded as necessary to keep up with the needs of the members.

When we bought a new plane, for example, equity was increased. We did this
over time, so in looks like a periodic payment. But a departing member
gets all his or her equity back.

Since our member only had to pay $795 to join, he doesn't have any equity
and doesn't get anything when he quits. The other local club at our field
does an equity thing, and it costs $32,000 to join. And when they
increased the fleet to 4 aircraft, every one of them got hit with an
additional assessment. When we, on the other hand, traded in two 6,000
hour Archers for a 2,000 hour Archer and a Dakota, we didn't even raise
our monthly dues.


--
Paul Tomblin http://xcski.com/blogs/pt/
Never underestimate the bandwidth of a station wagon full of
tapes hurtling down the highway.
-- Andrew Tannenbaum possibly quoting Warren Jackson