There is a version of the membership conversation that goes like this: sign up as many people as possible, collect recurring revenue, watch the MRR number climb. It feels like growth. It often is growth. But there is a quieter question underneath it that fewer people ask early enough.
Every dollar you collect before you deliver the service is not revenue. It is a promise. And promises have a weight.
The accounting reality: deferred revenue is a liability
When a pet owner pays $300 for a 10-pack of daycare sessions, your bank balance goes up by $300. But you have not earned that money yet. You have earned it session by session, as each day is redeemed.
In accounting terms, that $300 sits as deferred revenue - a liability on your balance sheet. It represents services you owe. The same applies to memberships: the monthly fee collected on the 1st covers services the member has not yet used. Until the benefit window resets or the service is delivered, that money is not yours to count as profit.
This is not a technicality. It is the difference between a business that is genuinely growing and one that is spending tomorrow's obligations today.
For a small pet business running a simple cash-basis bookkeeping system, you might not see a "deferred revenue" line item. But the obligation exists whether you account for it or not. If ten members are owed daycare days you cannot deliver, you have a problem that does not show up in your bank balance until it is too late.
What Australian Consumer Law actually says
The Australian Consumer Law (ACL), contained in Schedule 2 of the Competition and Consumer Act 2010, has several provisions directly relevant to pre-paid services and memberships.
Section 36: Wrongly accepting payment. A business must not accept payment for services if it knows, or should reasonably know, it cannot supply those services within a reasonable time. If you sell a membership that includes 8 daycare days per month but your facility physically cannot accommodate all your members on the days they want to book, you may be in breach.
Section 18: Misleading or deceptive conduct. If your membership promises "guaranteed daily spot" or "priority booking" but your capacity cannot honour that for every member simultaneously, the representation may be misleading.
Section 60: Services rendered with due care and skill. When overcrowding degrades service quality - stressed dogs, inadequate supervision, a room that is too full for safe play - the statutory guarantee may be breached.
Unfair contract terms (Part 2-3 of the ACL). Since November 2023, unfair terms in standard-form consumer contracts carry civil penalties of up to $50 million per contravention. A term that allows you to unilaterally reduce the service level (by selling more memberships than capacity supports) without giving the consumer a right to cancel could be deemed unfair.
These are not theoretical risks. The ACCC's 2026-27 compliance and enforcement priorities explicitly call out "subscription traps and other dark patterns" as a focus area.
What the gym industry learned (the hard way)
Pet memberships are newer, but the fitness industry has been navigating these questions for over a decade. The lessons are instructive.
Consumer Affairs Victoria reviewed health and fitness centre contracts and took multiple matters to VCAT (Victorian Civil and Administrative Tribunal), including cases where gyms allowed unilateral variation of services without notice. The principle is clear: if you change what members get after they have signed up - including degrading the experience by letting the facility become overcrowded - you may be in breach.
The ACCC has long scrutinised misleading membership advertising and pricing in the fitness sector, and the regulatory direction is unmistakable. In April 2026 the federal government introduced the Competition and Consumer Amendment (Unfair Trading Practices) Bill, which explicitly targets subscription traps and is due to take effect from 1 July 2027. It brings new obligations around clearer disclosure, pre-renewal reminders, and easier cancellation for businesses that collect money before they deliver.
The overcrowding principle has been established across multiple jurisdictions: if your facility is persistently too full to deliver the service a reasonable consumer would expect, they are entitled to remedies including contract cancellation. You do not need to wait for an ACCC investigation. A single disgruntled member with a smartphone and a state fair trading complaint can trigger a review.
The pet services industry is not yet in the regulatory spotlight the way gyms are. But the ACL applies identically. And with council-mandated headcounts for many daycares and boarding facilities, the gap between "memberships sold" and "capacity available" is measurable by anyone who asks.
The dog daycare problem in particular
Daycare is the membership vertical where this tension shows up most sharply.
Your local council permit says you can have 30 dogs on premises. You sell 50 memberships at 8 days per month each. On paper, the maths might work - not everyone books every day, cancellations happen, some members use fewer days than their allowance.
Until a school holiday week when 38 members try to book for Thursday and you have to tell 8 of them there is no room.
Now you have:
- A member who paid for something they cannot access
- A potential Section 36 issue (accepting payment for services you cannot supply)
- A reputational problem ("I thought I was paying for guaranteed days")
- A stressed team fielding angry calls
This is not a hypothetical. It is the reason most mature gym and fitness businesses cap their memberships relative to facility capacity. Many established operators aim to keep utilisation in the 70 to 85 percent range, leaving headroom for variability.
A healthier way to think about it
The answer is not "do not sell memberships." Memberships are genuinely good for pet businesses and for pet owners. Predictable revenue, better coat and health outcomes from regular visits, deeper relationships, higher lifetime value. The benefits are real.
The answer is to sell memberships with your eyes open about what you are promising.
Know your real capacity. Not the theoretical maximum on a perfect day, but the sustainable capacity you can deliver week after week, accounting for staff breaks, cleaning time, temperament groupings, and the buffer you need for safety and quality.
Think about the gap between money collected and services owed. That gap is your deferred revenue. It should feel manageable, not precarious. If every single member redeemed every single benefit simultaneously, could you deliver? If the answer is no, you need either a smaller member count or a clear, upfront policy about how booking works when capacity is full.
Be transparent about how it works. Members who understand usage windows, booking rules, and what happens when the room is full are far less likely to feel misled. The businesses that get in trouble are the ones that sell the dream and hide the constraints in the fine print.
Track utilisation, not just revenue. MRR is a lagging indicator of health. Utilisation - how full your facility actually is relative to how many members you have - is the leading one. A business at 95 percent utilisation with growing membership sales is heading for a cliff, not a celebration.
Pre-paid packages carry the same weight
Everything above applies equally to pre-paid packages (session packs, credit bundles, ten-packs). Each unredeemed session is an obligation. If you sell 200 ten-packs and then close a location, reduce hours, or lose a staff member who handled half the bookings, those unredeemed credits become a very real liability.
Good practice:
- Set reasonable expiry dates (12 months is standard under the AUSactive National Code of Practice) and disclose them clearly at purchase
- Track outstanding credits as part of your financial health, not just your revenue reporting
- Understand that a "popular" package that has low redemption rates may actually represent dissatisfied customers who gave up trying to book, not pure profit from unused sessions
What this means for your software
The software you use to sell memberships and packages should help you stay on the right side of these obligations, not just help you sell more of them.
That means:
- Transparent usage tracking that both your team and your members can see, so disputes about "what is left" do not happen
- Capacity systems that prevent you from booking more than you can safely deliver
- Clear benefit rules with visible counters: issued, redeemed, remaining, overage
- Honest overflow policies that tell members exactly what happens when their allowance runs out or when the room is full
- Automated billing that handles grace periods, retries, and proration so a payment hiccup does not turn into a silent liability
We think about these things constantly at Petboost. The membership engine was designed to make the obligation visible, not to hide it behind a growing MRR number. Usage windows, benefit counters, overage rules, and transparent tracking are not administrative overhead. They are the mechanism that keeps the promise honest.
And we are not done thinking about it. The relationship between how many members you have and what your facility can actually deliver is one of the most important questions in this space. We expect it to be a conversation the industry pays more attention to over the coming year - and we intend to be part of it.
The bottom line
Memberships and packages are wonderful tools. They build loyalty, smooth revenue, and create better outcomes for pets who benefit from regular care. But they are a promise first and revenue second.
The healthiest version of a membership business is one where:
- You know exactly how much you owe (in services, not just dollars)
- Your capacity can honour those promises even on your busiest day
- Your members can see what they have, what they have used, and what comes next
- Your terms are clear, fair, and compliant with the law that protects your clients
That is not a constraint on growth. It is the foundation for growth that lasts.
This article is general information for Australian pet businesses and is not legal, financial, or accounting advice. Consumer law obligations and the tax treatment of deferred revenue depend on your circumstances, so check with your accountant or a qualified adviser before acting on it.
For the mechanics of building plans in Petboost, read Memberships Are Live. For daycare-specific tier design, see Dog Daycare Memberships. For capacity management guidance, see Dog Daycare Capacity Management.