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How to navigate pricing for your fitness studio

Running a business, any kind of business, is like a never-ending quest. It’s not for the faint of heart. Nevertheless, here we are. You’ve probably noticed that the way customers buy products and services has changed drastically in the last 5 years. We’re here to help you navigate through all of the changes so that you can get back to building your brand and cultivating a loyal customer base. Studio owners always ask us how they should be pricing their classes, so we decided to write a post about it.

HOW TO FIND THE RIGHT PRICE POINT FOR YOUR CUSTOMER BASE

Things in the world are a bit hectic right now. Everyone is distracted and confused. Things are changing for you, but things are changing for your customers too. Very few people know how to navigate this new world. You can cut through the noise if you send a clear and consistent message that appeals to YOUR customer, making it easier for them to buy. 

STEP ONE: LOOK AT YOUR PRICES THROUGH YOUR CUSTOMERS' LENS

How much does it cost to come to your class one time? How much does it cost to come back? Do customers get any benefit for being loyal customers? Or do they get benefit for being lost customers? Who gets the best price at your studio? Is it new customers? Loyal customers? Classpass customers?

How do your prices compare with your competitors? How does your service compare with your competitors? Whatever the answer, your price point should match the value-proposition for your target customer.

STEP TWO: DEFINE YOUR TARGET CUSTOMER

Who do you want to appeal to? Do you want to be accessible to the maximum number of customers? Or would you prefer to be more exclusive, appealing to a select group of fancy folks? Does your studio offer a social environment where people make friends with others or does it cater to people that want a great workout without the chatter. Do you want to appeal to a younger audience or an older audience? 

STEP THREE: SET SOME PRICES AND MEASURE THE RESULTS

I'm not going to lie. Pricing is really complicated. All studio owners have different goals and customers are different. Below, I've included a sample of personas to help get you started. Don't hesitate to reach out to me (contact info below) if you have additional questions.

A sample of Personas:  

 

YOU WANT TO REACH THE FANCY CUSTOMERS?

Everyone seems to want to appeal to the fancy, but everyone can’t do fancy well. Fancy is really hard to pull off. You have to be the absolute best and you cannot compromise your pricing strategy at any point. Fancy people are not easily fooled so credibility is an absolute must without exception.

Acceptable drop-in rate (NYC): $36 - $44
Difference in price for drop-in vs. packages: 10%-25% discount for 5 pack and higher

Benefit of targeting this group: Relatively consistent customer base. Once you’re in their rotation, you’re likely to stay in their rotation.

Risk of targeting this group: This group tends to be a bit older. By catering to this group you could be alienating younger customers. That prevents you from building out your pipeline for future customers.

Most important factor for success: Authentically fancy. You cannot appeal to everyone. 

Rule: No Classpass. Your customers will be turned off if random people can buy the same classes for a third of the price that they pay.

Recommended pricing strategy: Stick with the tried and true.

  • Drop-ins and packages
  • 1-2 promotions per year

 

YOU WANT TO REACH THE YOUNGINS?

Another hot group - the youngins. People think youngins aren't loyal, but they're actually more loyal than any other group. They're about adding to collective benefit, not winning for themselves. Young folks want maximum flexibility and convenience. Do not try to lock youngins into packages before they’re ready to commit. They ain’t havin’ it. Youngins are budget conscious but if they love you, they really really love you. And since they’re all about that Instagram Story life, if they love you, all of their friends will know about it. If you can get them to fall in love, you will have an endless supply of customers… Well, at least until the next cool thing comes along. :-)

Acceptable drop-in rate for NYC: $25 - $38
Difference in price for drop-in vs. packages: 0%-10%

Benefit of targeting this group: If you connect with this group, they will sing your praises from the mountaintops. They will make your cause their cause. Your business will skyrocket.

Risk of targeting this group: If you don’t connect, if you display even a hint of trickery, they’ll drop you and you won’t even know what happened or when it happened.

Most important factors:
Transparency
Authenticity
Flexibility
Modern technology

Rule:
Don’t try to lock them into anything. They'll commit when they're ready.

Don’t do last minute deals. They’re super savvy. They’ll sniff out the rules. They’ll wait just long enough to get the deal over and over again. You WILL lose money.

Recommended pricing strategy:
This group is extremely savvy and in high-demand - and they know it. They're targeted by literally every business on the face of the earth. If you’re courting this group, you MUST implement a more flexible pricing strategy, like today. This group can be nudged into commitment but it happens over time. If you're too aggressive, they will withdraw.

  • Implement off-peak pricing for low demand classes.
  • Adjust your drop-in rate so that it's in line with the per-class price on your lowest package. Youngins don't like to feel like they're over paying by buying a drop-in. 
  • Very very few promotions. If youngins think you'll give them a better deal later, they're happy to wait. 
  • Send individually targeted promotions for single class purchases after their 1st, 2nd, 3rd, 4th, 5th classes. Let them ease into a habit of coming to your classes. The promotion should give the customer between $2 and $10 off the purchase of their next SINGLE class. Do not push packages onto this group. When they’re ready, they’ll buy a package.

This group is extremely savvy and in high-demand - and they know it. They're targeted by literally every business on the face of the earth. If you’re courting this group, you MUST implement a more flexible pricing strategy, like today. This group can be nudged into commitment but it happens over time. If you're too aggressive, they will withdraw.

A note about Classpass and Youngins: 
Many of you have asked how many Classpass spots you should allow. This question is particularly important for studios that target youngins. As long as youngins can book into your classes on Classpass, they will continue to book on Classpass. It's so much cheaper for them, so they're willing to deal with the slight inconvenience. We recommend that studios restrict Classpass spots to 10%-15% of overall inventory. That way, your off-peak pricing has an opportunity to capture customers that would normally book through Classpass. 

 

 

 

YOU WANT TO REACH THE SERIOUS ATHLETES?

Serious athletes are a great group. They know what works for them and they tend to stick with it. They’re not about to leave you for the new kid down the block. They could care less about what some influencer said about the latest juice cleanse. They’re just not about that life.

Acceptable drop-in rate for NYC: $18 - $32
Difference in price for drop-in vs. packages: 10%-20%
Acceptable membership rate for NYC: varies

Benefit of targeting this group: They are committed and consistent.  

Risk of targeting this group: It takes a long time to build up your customer base if it doesn't already exist. The serious athlete is a creature of habit and they're not likely to disrupt their routine just to give you a try. If you already have these customers, keep them happy at all costs. If you don't already have them, you'll have to target people that have the potential to become the serious athletes and then use your expertise to help them get there.   

Most important factors:
Knowledgeable and consistent instructors

Rules:
Keep them happy at all costs. Don't give them a reason to leave. Ever.
Keep giving them results.

Recommended pricing strategy:
This group is more traditional and is likely happy to be in a membership as long as you’re consistently helping them reach their goals. If you’re courting this group, you should offer flexible pricing options with the goal of moving customers into auto-pay memberships after a defined period of 3-6 months.

  • Longer intro specials (2-4 weeks)
  • Month-to-month memberships (cancel anytime)
  • Longer term, discounted memberships with commitment

 

I have more questions. How can I ask them?

Send me an email at alicia@ondibs.com.

I'll do my best to answer your questions.


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