Are large class packages harming your gym's business? How to price for competitive growth.

Are large class packages harming your gym's business? How to price for competitive growth.

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Pricing is one of the most common reasons that studio owners and managers seek out business coaches. Without a coach who understands the standards in the fitness industry as a whole, your pricing strategy may be to Google your local competition and match or slightly undercut their rates. The problem? They probably did the same exact thing before you. This underbidding feedback loop creates a scenario where only the studio with the lowest expenses is profitable. While we certainly recommend keeping your operating costs as low as possible, no one wins in a race to the bottom. This month we're going to deep dive into your pricing process so that you can choose your offerings intentionally. 

Large Class Packages

15, 20, 30, even 50 class packages are typical in the fitness industry, and, with few exceptions, they are only effective for short-term studio revenue boosts rather than long-term client relationships or client goal achievement. Often, clients purchase a 20-class package and say, "I'm going to come twice a week!" They consistently come twice a week during their first month, and then it slips to once a week in month two and every other week in month three. By their fourth month, their attendance is sporadic at best, and you don't hear from them again until their package has expired and they're requesting an extension. Does anyone win in this scenario? Usually not.

Class packages aren't inherently bad for business, but they can be a comfortable fallback for potential clients who haven't been guided to choose the right membership option for their goals and budget. Although it's an easy sell, it isn't doing your studio any favors if reliable revenue and regular attendance is your primary goal. Class packages are an excellent option for your clients who travel frequently or have extremely inconsistent schedules but are likely not the best option for most of your clients. Therefore, when creating your pricing, focus on the following criteria: consistency, commitment, value, and profitability. Let's break it down. 

Consistency

As fitness professionals, we know that there are no shortcuts to health or success. If your client comes in saying, "I want to lose ten pounds," and signs up for a 20 pack that she'll use sporadically over the next six months, she's not going to see the success that will improve her health or encourage her to purchase again. Our job as gyms and studios is to help our clients accomplish what they came in for or to at least create a lifestyle that supports their eventual goal achievement. Creating pricing packages that offer a set number of classes per month- like a four or eight-class membership that renews monthly- encourages your client to truly attend as often as she's planning and makes it much harder to fall off the wagon when the newness wears off. 

Commitment

As the instructor, you know that your client won't reach their health and wellness goals overnight. No matter your studio's specialty, whether it's weight loss, toning, flexibility, stress reduction, or just a healthier lifestyle, your clients need to commit to their routine to see results, which also means they need to commit to your studio. The word "commitment" often bears a scary connotation, so you'll want to practice your sales pitch with a coach or trusted colleague to present your offerings. Memberships also don't necessarily mean ironclad contracts that a client locks into forever. Committing to their goals may look like choosing between a seasonal three-month membership or discounted annual 12-month membership or any number of months in between. Be ready to explain your cancelation policies for clients who have been burned by gym memberships before. 

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Value

Your studio is so much more than the price of a single class. "How much is it?" is a question you probably receive daily, and the answer you give is crucial because you need to be sure that you clearly sell the value of your studio's experience, not just the class price. Your teachers' certifications, member engagement, class formats, extra perks, opportunities for expert teachings or workshops- all of those should factor into your price. Your cost is not the baseline when creating your pricing or selling a new client; your value is what is significant. If you try selling something that clients aren't interested in, it won't matter what it costs because they're not buying. On the other hand, if you have researched your ideal client carefully and have presented your studio and your value proposition in a way that maximizes the client's perceived value, they'll be willing to buy no matter what the cost.

Profitability

Top line or comparative pricing is a regular practice, and it can feel like buying a coat in the wrong size just because your neighbor did. It doesn't matter that your closest competitor charges $99 for an unlimited month, and the fact that most drop-ins are $15 in your town is also unimportant. Yes, we want you to be competitive, but if your clients pay an average of $7 a class to match the low-cost gyms, but your break-even expenses for that class are $200, you won't make a dime of profit until the 29th client walks in ($200/$7=28.6 people per class). Your pricing needs to reflect your goal profitability and support your profit margins. Sure, your neighbor might be cheaper, but they also might be guessing, losing money, providing an inferior client experience, or paying their staff less than you do. You don't know what their bottom line looks like, so calculate your pricing based on yours. 

Get Out of the Discount Game

Some buyers are price-sensitive, that's a buyer psychology fact of life, but in your quest for more members, you may find yourself offering discount upon discount trying to convince people to stay. At a certain point, clients cost you money if they aren't covering the cost of your class overhead. It's fine- and even recommended- to offer an incentive for clients to purchase their membership before their intro offer ends in order to encourage them to buy now. Still, it shouldn't cut into your profit margin, nor should it be offered inconsistently. For example, if you offer every client $20 off their first month's membership for signing up during their intro offer, that's an incentive, but if you fear that a client won't purchase, so you throw out a free month, that's a discount that hurts your margins. Lever your deals with purpose, and remember that teaching clients who cost you money each class is a public service rather than a business strategy. 

Practice Makes Profitable 

 If you find yourself offering discounts just because you feel uncomfortable, it's time to practice your sales pitch. Book a strategy call with a coach or record yourself selling a regular membership to your phone. Do you appear unsure? Are you leading with the value, or are you focusing on the price? Did you make it confusing with tons of options? If so, you've probably lost the sale before you even had a chance to make it. 

Your usual sales pitch should sound something like this:

"Based on our previous conversation, you mentioned you'd like to come twice a week to reach your goal of ____[client's purpose for attending your studio]_____, right?" [pause for the client to answer] "Perfect! We have the exact package you're looking for. Our eight class per month membership offers two classes per week, plus [insert other studio perks here, like priority booking, retail savings for members, access to workshops, etc.,]. All of that is $X per month with a six-month contract." Suppose they come back with concerns, the price, the terms, or any other objections. In that case, you can offer other memberships or packages based on those concerns, but practice confidently selling the option that best fits their needs and leaving the rest as backup plans. 

Bonus tip, if you're thinking, "this is so expensive/long-term, no one is going to want to buy this!" to yourself, you're transmitting that to the client with your body language. If you don't believe in what you're selling, your client won't either. So make sure you're rehearsed and secure in your studio's offerings. 

Choice Paralysis

You've probably seen it before- pricing menus that offer a seemingly unlimited amount of options that make your head spin. Although the studio owner was likely trying to be accomodating and provide choices for every client, budget, and wish, what they actually achieved is a cluttered mess of chaos. Suddenly the client is completely overwhelmed with options and will do one of two things. They'll either choose the least expensive/shortest option (i.e., the path of least resistance), or they'll give you the dreaded, "I need to think about it" excuse and run for the exit. It's okay to have options, but don't show all your cards to the potential client. By asking the client for what they're hoping to achieve with you and then providing the option that best fits their goals, you're not only setting them up for success; you're setting yourself up for a sale.  

Pricing is crucial to your gym's or studio's success, and it's also confusing. If you get started and find that you need an expert's opinion, you have access to fitDEGREE's preferred coaches who can walk you through it.

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About the author:

Niki Riga
Industry Expert
Limitless Studio

Niki has been a client, a studio owner, and a coach in boutique fitness for over a decade, and she can’t think of an industry she'd rather be in. Her favorite part about coaching and studio ownership are the same: she loves supporting clients as they push past their limits and achieve their goals. Niki became a coach because she was regularly asked, “how did you do that!?” by other studio owners who were drowning in the day-to-day responsibilities of business ownership but didn’t have the support to grow their studio to its potential. She created Limitless Studio to partner with owners who have a vision for their business and are ready to implement systems to build the studio of their dreams.