Senator Cash delivered the warning after opening the WA Liberals' state conference in Perth on Saturday.
Attendees are being urged to support a motion for lower house MPs to be preselected through plebiscites of party members in each electorate.
The proposal, spearheaded by party president Richard Wilson, is expected to be debated on Saturday afternoon.
It comes after the Liberals suffered a 10 per cent swing in WA at the federal election, losing five seats as Labor claimed majority government.
At last year's state election, the party was reduced to just two lower house MPs amid internal turmoil over alleged branch-stacking and the controlling of preselections by factions.
Senator Cash said she was confident warring party members would put aside their differences and support the proposed change.
"I think the people of Western Australia have given us a very, very clear message: reform or pay the price," she told reporters.
"We need to give every single member of the Liberal Party in each division the opportunity to have their say.
"We will achieve that today, I hope."
The motion needs the support of 75 per cent of conference attendees to succeed.
Former state leader Mike Nahan and other party elders will move amendments against the proposed plebiscite model, arguing it should also include upper house preselection and exclude delegates who don't live locally.
Senator Cash has confirmed she will back the amendments but said the reform should still be pursued even in its current form.
Dr Nahan said the president's proposal had flaws but did not rule out supporting it if the proposed amendments failed.
He told AAP it was "ridiculous" the party had more branches now than it did 30 years ago despite a plunge in membership.
"It's going to be close," he said of the amendment vote.
"Our major problem is the vast majority of our branches are defunct, non-existent, controlled by a small cadre of people.
"If the president stands up and says 'this is the first stage of reform' ... then I think most of us could live with it."
Conservative powerbroker and upper house MP Nick Goiran said he would support the president's proposal but declined to weigh in on the proposed amendments.
He denied the party had struggled to attract high-quality candidates.
A damning review last year found the WA Liberal Party had become a political "wasteland", in part because of the corrosive influence of factions.
The report said the party's financial viability was at risk amid an exodus of corporate funding.
"If our situation doesn't induce new reform, we're doomed," Dr Nahan said.
With federal leader Peter Dutton absent, his deputy Sussan Ley told members she was confident the Liberals could be re-elected in 2025.
She said the party had been written off before "and each time we storm back to government".