Your fitness business model has likely changed a lot since you opened. You may be running at maximum capacity or dealing with the fact that some clients are still hesitant to commit to a long-term agreement in an uncertain economy. <\/p>\n\n\n\n
Maybe you\u2019ve started new services for your clients (live streaming, on-demand, etc.) and encountered expenses you didn\u2019t initially plan for. However you got here, it\u2019s time to re-evaluate and work on a new pricing strategy to meet both the demands of your clients and your business.<\/p>\n\n\n\n
What do you do? <\/em><\/p>\n\n\n\n You’re trying to figure out how to stand out from the crowd while maintaining the profitability of your fitness business as you implement a new pricing strategy. However, the right planning can ensure you make a profit every year. Read on as we explain how the right pricing strategy can improve client acquisition, increase your retention numbers, and boost revenue.<\/p>\n\n\n\n The first step is to evaluate your current offerings, attendance, costs, and income. This is similar to an audit. With WellnessLiving, you can run advanced reports of your business<\/a>. For the last six months, take the time to really look into the following categories before we get into the numbers and how to make pricing changes in a moment.<\/p>\n\n\n\n It\u2019s essential to determine if the rates you\u2019re paying your personal trainers and instructors align with your profit margins. You\u2019ll eventually need to balance what you can afford with how much your staff feels they\u2019re worth.<\/p>\n\n\n\n Rent, utilities, and equipment costs will likely increase with everything else. Make sure you are up to date on what you\u2019re paying each month and set yourself up with any predictions of where those numbers will go for the following year.<\/p>\n\n\n\n Licenses, taxes, and insurance don\u2019t tend to increase much with inflation, but they could. Knowing in advance will help you decide what numbers to include in your pricing strategy.<\/p>\n\n\n\n How much are you being charged for payment processing and banking fees? You need to know so you don\u2019t miss out on an opportunity to eliminate a good chunk of this expense. Not all banks or processors charge the same, and you can often find good deals.<\/p>\n\n\n\n Here\u2019s another area where you may discover that you\u2019re covered well, or you may be spending too much on your business management software. You could be paying thousands of dollars more per year than you need to, especially if you\u2019re using multiple systems to manage your business. Know what you\u2019re spending, and you\u2019ll know how to save.<\/p>\n\n\n\n If you\u2019re not using an all-in-one fitness business management software, you\u2019re probably spending more time and money on additional marketing platforms. It\u2019s essential to find software with built-in marketing tools like automated email, SMS, and push notification capabilities.<\/p>\n\n\n\n It\u2019s important to know how much revenue is coming in each month from your various memberships, whether it\u2019s your intro offers, pay-as-you-go passes, or in-person, livestream, on-demand, or hybrid packages.<\/p>\n\n\n\n Knowing your total revenue for the year will help you predict your income and determine how to reach your goal based on paid memberships and attendance for each class type.<\/p>\n\n\n\n When looking at a new pricing strategy, it\u2019s essential to consider the types of memberships\/pricing models that are currently on trend. What are your opportunities to create new programs with higher price points and more chances to win over your clients?<\/p>\n\n\n\n A hybrid model is a flexible model with both in-person and online services. It\u2019s something that many fitness businesses have opted for since the pandemic. It makes sense to continue with a hybrid model, as nearly 90% of Americans who returned to their fitness facility are still exercising at home<\/a>. More than half of them continue to do so as their primary form of exercise.<\/p>\n\n\n\n Your memberships can offer in-person services, but with the flexibility of livestreams, on-demand, or a combination of all three options.<\/p>\n\n\n\n You will likely be offering a special introductory offer designed to get more people interested in what your fitness business has to offer. Design something that provides a massive discount for the first month if they join for a longer term, or give new signups some free classes or passes to your facility. If you\u2019re not already offering introductory offers, it\u2019s the best way to get clients in the door.<\/p>\n\n\n\n Your intro offer recipients are new, not-yet-steady clients, but they are considered \u201cwarm leads\u201d who will convert to your regular pricing if it\u2019s set right and if you\u2019re providing excellent value and service.<\/p>\n\n\n\n These are often reserved for certain types of clients. These won\u2019t be anywhere near your bread and butter, but don\u2019t ignore the needs of your clients.<\/p>\n\n\n\n Pay-as-you-go would be likely for special events or bootcamps, where you may give clients the option to pay as they go along for your 10- to 12-week event. Clients who sign up for your events or bootcamps may not be full-time members yet, but as they achieve success with you, you can convince them to commit to your monthly, recurring membership.<\/p>\n\n\n\n This is the most traditional. Clients know what they are paying each month, and you know exactly how much you are getting in revenue. It\u2019s a no-brainer and can be used with in-person, livestreaming, on-demand, or hybrid memberships.<\/p>\n\n\n\n It\u2019s essential to pump up the value of these memberships and ensure your clients don\u2019t cancel out on you because they\u2019re bored that you\u2019re not offering anything new and exciting. They won\u2019t stick around if it\u2019s the same old thing.<\/p>\n\n\n\n This type of pricing allows you to reduce the number of services that you offer and provide a more affordable price. This model takes into account the various factors that affect the demand for the class and the time that the client spends in the studio. This will allow you to maximize the number of people who attend your sessions.<\/p>\n\n\n\n Another strategy that’s effective is to offer lower prices for off-peak classes. This will allow you to set up a dynamic pricing system for certain services or classes. This type of pricing can also help you retain a few more clients. <\/p>\n\n\n\n Move forward with a business model and pricing strategy that best serves your bottom line. Your bottom line is your profit margin, your time, and your staffing. Your pricing strategy should include:<\/p>\n\n\n\n As you would have done when you set your original pricing, you need to keep your target audience in mind as you change your pricing strategy. You must understand the people buying and how the changes in their lives have impacted their decision-making.<\/p>\n\n\n\n Your mission now is to improve the experience of your target clients. But since the expectations of your clients have changed, you must conduct additional research to see if the changes have affected the prices you should be charging.<\/p>\n\n\n\n One of the most essential factors you’ll need to consider when it comes to pricing is the number of times your clients use your studio or gym. Use your reports and client profile information to determine the answers to the following questions:<\/p>\n\n\n\n Thoroughly researching the competition ensures that you’re not getting a low rate and you’re able to meet expenses and profit with a good margin. If your competitors are making a profit, you can too.<\/p>\n\n\n\n Just be sure that your new pricing strategy follows all of the guidelines set by your company, such as profit margin, expenses, etc. For instance, let’s say that for a specific class, you’ve been charging $30, and your competitor is charging $50. A good jumping-off point would be somewhere in the $40 range. Although competitive pricing is a guideline, it’s not a rule, and you still need to make sense of revenue versus expenses.<\/p>\n\n\n\n Make sure to research several competitors to see if they have a realistic pricing point. Aim for at least $10 for a good gauge. Always avoid charging too little just because competitors aren\u2019t charging enough.<\/p>\n\n\n\n The classic pricing approach that most brick-and-mortar businesses have used involves calculating their costs and adding a profit margin on top. However, today’s market requires you to consider innovative models as well. <\/p>\n\n\n\n When considering different pricing models or a combination of a few, you need to keep your profit margins in mind, which means you need to understand every cost of your business, from how much it costs to offer your services to each client. As well as staff (instructor and admin costs), rent, equipment costs, and how much you need to charge to make a profit.<\/p>\n\n\n\n Consumers are looking for more value when it comes to their purchasing decisions than ever before.<\/p>\n\n\n\n According to the Achieving Customer Amazement Survey Report, 50% of consumers who make less than $75K are willing to spend more for an excellent service<\/a>. In addition, 75% of Americans are more likely to be loyal to a company or brand that delivers a personalized client experience.<\/p>\n\n\n\n What does this say? As a fitness business owner, you must ensure you\u2019re giving your clients all the tools they need to reach their health and fitness goals. When you\u2019re charging a lot for your monthly memberships, you must ensure that your clients continue to get top value for your price.<\/p>\n\n\n\n Consider ways that provide more value for your fitness services or classes. How can you offer more value for your memberships?<\/p>\n\n\n\n If you provide enough value, your hybrid, livestream, and on-demand memberships may be priced similarly to in-person memberships. <\/p>\n\n\n\n Similar is not the same, however. Your membership can be lower priced based on reduced material costs, like rent or equipment. It depends a lot on how much value that person may be getting from their membership, how often they attend in person, how much equipment they use, and whether you\u2019ve rented equipment to them.<\/p>\n\n\n\n Anytime a client signs up for a membership, they should always be able to upgrade to a better one if they want. Cross-selling and upselling are two different ways that you can increase the value of your clients.<\/p>\n\n\n\n The goal of your pricing strategy should be to generate the total amount of profit that you want to reach at the end of the year. This will allow you to set the new prices accordingly and make the necessary changes to improve the efficiency of your business. You’ll also need to determine the number of sales that you’ll need to generate to reach that target based on the things you\u2019ve just read about.<\/p>\n\n\n\n Think about the pricing process more extensively and regularly monitor and adjust it as needed to help you reach your goals.<\/p>\n\n\n\n There are several ideas to begin implementing your pricing changes without causing major upheaval. It doesn\u2019t have to be stressful, and always remember that prices always go up, even in times other than the one we\u2019re in now.<\/p>\n\n\n\n So much has changed in the last couple years, and now may be the time to re-evaluate your pricing structure. First, take a look at where you currently stand with your expenses, offerings, and revenue. As you plan your pricing strategy, consider your target audience, competition, and profit margin, while providing value and flexibility with your memberships.<\/p>\n\n\n\n Thinking about hybrid pricing? Check out this WellnessLiving blog for more:<\/p>\n\n\n\n Now that you\u2019ve found your new pricing structure, you need an all-in-one platform that helps you manage and grow the rest of your business. WellnessLiving has all the tools you need to attract, convert, and retain more clients for your business! You can easily streamline booking<\/a> and payments<\/a>, track your attendance, revenue, and sales with an advanced reporting system<\/a>, and market new pricing to clients with an automated marketing suite<\/a>.<\/p>\n\n\n\nEvaluate your current expenses, offerings, and revenue<\/h2>\n\n\n\n
Salaries and payroll<\/h3>\n\n\n\n
Non-negotiable expenses<\/h3>\n\n\n\n
Non-negotiable fees<\/h3>\n\n\n\n
Payment processing and banking fees<\/h3>\n\n\n\n
Business management software<\/h3>\n\n\n\n
Marketing costs<\/h3>\n\n\n\n
Revenue from memberships<\/h3>\n\n\n\n
Total revenue<\/h3>\n\n\n\n
What are the various membership models for your updated pricing strategy?<\/h2>\n\n\n\n
Intro offers<\/h3>\n\n\n\n
Pay-as-you-go and per-class packages<\/h3>\n\n\n\n
Monthly, recurring memberships<\/h3>\n\n\n\n
Dynamic pricing<\/h3>\n\n\n\n
How do you choose a new pricing strategy?<\/h2>\n\n\n\n
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Understand your target clients<\/h3>\n\n\n\n
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Research the competition\u2019s pricing strategy<\/h3>\n\n\n\n
Consider your profit margin<\/h3>\n\n\n\n
Focus on providing value<\/h3>\n\n\n\n
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Flexible hybrid memberships<\/h3>\n\n\n\n
Continue to upsell and cross-sell<\/h3>\n\n\n\n
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Always keep your year-end goal in mind<\/h3>\n\n\n\n
Guidelines for changing your pricing strategy<\/h2>\n\n\n\n
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Setting the right price for your fitness business<\/h2>\n\n\n\n
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