Creating an effective pricing structure for gyms and studios is actually a bit of an art. As a business owner, this is an art that you must become proficient at to generate revenue and stay profitable. So how can fitness business owners accomplish this?
The very first step is to understand the key factors for creating your pricing. The next step is to get to work. Below are pricing rules to live, breath, and run your business by.
Don’t over complicate your pricing with too many options. A new client should be able to look at your pricing options and easily identify the one that meets their needs and aligns with the goals they have. When there are too many pricing options, clients feel overwhelmed, and this will directly impact your conversions and your ability to retain clients in the long term.
Recurring revenue allows you to set realistic goals and make strategic financial decisions. Historically, we find package holders may not be consistent or repeat buyers. In turn, we cannot rely on this revenue and that will affect your bottom line. Without a monthly financial commitment, a client may be less committed as they are not seeing a monthly auto draft and have an extended amount of time to use classes. Remember that when a client chooses a monthly auto pay membership, they are committing to your business AND their own wellness journey, which is a win-win for everyone!
Your intro offer should be an enticing offer that still correlates to your value and aligns with your pricing. This means don’t offer new clients a two week unlimited intro offer for $5 and have membership options that are $150 per month...that’s a bit of a bait and switch. The right offer paired with the right timing, however, is a recipe for success. Two weeks or less is the sweet spot for the length of time of an intro offer or new client special. Intro offers over two weeks can be challenging to convert as they require more points of contact. New clients have plenty of time to try multiple classes during two weeks and for you to show value during the new client journey.
Your single session is your anchor pricing and your most expensive per class option. Your single session should be priced high enough that new clients want to purchase your intro offer over your single session. If clients don’t want to commit to a package or membership option after doing an intro offer, no skin off your back, that's why you have your single session option!
Your packages are meant to be for clients who have a fear of commitment or for those clients that truly cannot commit, like someone who travels for work or goes to another gym. Your package per session rates should be higher than your membership per session rates as you want to show value in committing to an auto pay. Ideally, you should have only one, maybe two class pack options with strict three to six month expirations. It is crucial for your business to have these set expirations to ensure retention.
Membership options will vary based on modality, capacity, average client usage, ect, but remember, auto pay membership are GOLD. Identify your client usage and decide if you need options based on a set number of sessions per month AND/OR a monthly unlimited. Keep in mind, if you have a capacity less than ten, having a monthly unlimited could hinder your opportunity for growth as you cannot control your client usage and have limited spots available. Your monthly unlimited auto pay with no commitment should be priced higher than your commitment based monthly unlimited options. Identify your commitment tiers and your longest commitment should be your best value.
Offer pricing options that allow a new client to see value in a commitment with undeniable price differences and perks. Your commitment-based memberships should include added value that your packages do not. For example, special perks such as account holds or discounted merchandise. The per session rate should be at least $1 difference between each membership tier.
Whether you are a new business or one that has been open for years, it is imperative that you track what pricing options are your highest performers and make changes as needed. As the industry evolves, you may find a need to try different intro offers or even seasonal pricing options to meet the needs of your growing demographic.
The cost of doing business increases every year, so your pricing should as well. Making pricing changes consistently each year sets your business up for success as you will be able to grow and continue to add value for your clients.
When we undervalue our services, we don’t attract our ideal client and then in turn can struggle with retention. Enough said!
Remember, as a business owner you get to set your value; there will always be someone who questions your pricing, so just know that they may not be your ideal client. If you are an unopened business, set yourself up for success by following the rules above to ensure you have a pricing model that will convert and retain clients. If you are an established business, don’t be afraid to make changes! Let these 10 rules be your guide to pricing success.
This is a guest post by Shauna Armitage. Shauna is a Fractional Marketing Director who has been running her own business for quite some time now! Shauna works closely with teams to help them develop their marketing strategies and create successful campaigns to generate new leads; she also hosts a podcast called Startup Renegades.