In the United States, 60.8 million people have some kind of membership to one of the country’s 38K gyms and health clubs. Collectively, gyms rake in more than $30 billion every year. Effective pricing goes a long way in your fitness business. When opening a studio or gym, it forms one of the many crucial decisions you have to make. If you price it too low, you could miss out on profits and risk overfilling your gym. Price it too high and you could lose out on more members and money.
Several different factors come into play when determining the pricing for your fitness business. In this article, we will talk about the different types of gym pricing structures and elements you need to think about when setting your studio or gym’s price.
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- What are the Different Types of Gym Pricing Models?
- 7 Points to Consider When Setting Your Studio or Gym’s Price
What are the Different Types of Gym Pricing Models?
There are different gym pricing options to choose from and depending on the type of business you have, your needs will vary. A monthly membership may be perfect for a 24-hour gym but offering a ClassPass-style payment option may suit a boutique fitness business.
Your payment system can heavily influence the customer experience so make sure your payment provider can implement the right pricing model for your business. Here are four different types of pricing models to consider when setting the price for your business.
This is one of the most traditional payment structures and is used in a variety of industries. In this model, clients pay a fixed monthly payment to gain access to your facility and services. You have the option to provide rolling monthly packages, 12-month or multi-year contracts. This is a simple model for both you and your members.
Clients know exactly what they pay each month and it comes with the added benefit of consistent revenue. This model allows you to calculate how many new members you need to hit revenue targets. Although a basic model, it is flexible and a popular way to pay for fitness services.
Pay-as-you-go and Class Packages
Being able to pay-as-you-go or book class packages is very attractive to certain clients. If you run a bootcamp business, clients may want to book a block of 10 classes at a time or pay as they go so that they can try it out before committing. This form of payment can also be a powerful way to attract new members.
A monthly membership can be daunting for some and by offering another payment option, you can reach a new level of potential clients. As this payment model doesn’t provide consistent income, it’s often recommended to combine it with a more stable model such as monthly memberships.
Dynamic pricing looks at setting prices in a new, fresh way. This pricing model takes into account the demand for the class, the time, classes and determines what the best price should be. The idea is that if all classes are priced the same then the classes at the best times, so after or before work hours, will be the most filled out. This can lead to overcrowded classes.
By offering lower prices for off-peak classes, it might help to fill out classes that tend to be emptier. Your 6 pm yoga class Monday to Friday may be packed at $30 per person while the same class earlier in the day could be less than half-filled. By lowering your yoga class to $10 at off-peak, you might be able to reach additional customers and increase your revenue.
Currently, ClassPass is a very popular and attractive option for clients. Clients pay a monthly fee to ClassPass and get to explore any venue in the ClassPass ecosystem. ClassPass then pays the studio for each member that signs up for a class. Again, this is a great option for people who want to try out different facilities and don’t want to commit to a long-term contract. This model features similar benefits to pay-as-you-go and class packages as it helps to target another set of users.
ClassPass also takes care of the majority of the sales and marketing, pushing your business to new customers using their own brand. Like pay-as-you-go, the downside is that you won’t receive consistent income. When choosing your payment structure, you don’t have to rigidly commit to one model. For many fitness businesses, the perfect payment structure is a combination of these.
7 Points to Consider When Setting Your Studio or Gym’s Price
When you’re setting your studio or gym’s price, there are a few points that you need to take into consideration. By looking at your long term vision, goals and mission, you can work backward to determine the right price for your services.
1. Price Research on Your Local Competition
Before setting a fixed price, check out what your competition charges. This is an essential part of the planning stage. Do some research on your competition and find out how much they are charging. If a similar place charges $150 per month, you’re not going to charge $70. And if you underprice, you’ll be doing yourself a disservice as well as the fitness community. If your competition is making a profit at a specific price point, you can do it too.
If you’re passionate about fitness and thinking of starting your own business or just looking for some inspiration, here are three great podcasts to listen to:
- Eventual Millionaire – host Jaime Masters looks at what makes millionaires different and how you can tap into their genius to make your first million.
- She Did It Her Way – this female-focused podcast is a great place to find business inspiration and advice from experts.
- Entrepreneur on Fire – hosted by John Lee Dumas, each episode focuses on an inspiring entrepreneur and is a great way to keep you motivated and tap into your own business potential.
2. Break Your Fitness Offerings into Different Levels
Unless you’re a gigantic gym chain that has one single price for every member, the likelihood is that you will need to figure out different prices for different services. There’s a fine line between providing a valuable service and a price that suits your target audience. You might want to offer prices by time, clientele and genre.
There’s no longer a one-size-fits-all approach to pricing. If you offer fitness classes, you might want to consider a weekly class pass and a 3-day class pass to include every possible member. Some clubs restrict access to certain services and break memberships down through this. For example, members would only have access to tennis facilities or swim only.
3. Structure Your Membership Options
Your membership options will depend on the type of services you offer, your clients and business. When thinking about pricing, consider the services that you offer. Whether it’s budget, mid-tier or high-end, the type of services you offer will help dictate the pricing. A budget gym might offer essential gym equipment and changing facilities but no frills. With minimum staff members, a high volume of members at a relatively low membership cost provides a healthy profit margin. The bigger the gym, the lower your price can be as you can get more people through the door.
It’s common for memberships to add packages and add-ons. These packages can vary from personal training VIP sessions to discounts on long-term contracts. Brands such as SoulCycle who have innovated indoor cycling go against traditional payment options and don’t offer memberships at all. Instead, you can buy as many or few classes you like for $36 per class plus shoe rental. This amount can quickly add up yet it doesn’t deter members from coming back again and again. SoulCycle position themselves as a lifestyle brand rather than just another workout, creating a sense of community.
4. Client Research
In order to price your fitness business right, you need to fully understand your clients. How often do they like to workout, their interests and how much they are prepared to pay for your services. During your business planning stage, you would have already carried out a considerable amount of research on your target audience and potential clients. You can refer to this while you’re trying to figure out the best price for your services.
Whether you’re planning on opening your business or are looking to re-evaluate your pricing structure, focusing on your clients is very important. It’s useful to understand how often clients are using your gym or studio. If a high percentage of clients visit your business at least three times a week, you need to do the math to find out how much you need to charge to turn a profit without overcharging and forcing them to go to your competition.
5. Pricing Model Supported by Gym Management Software
Your gym management software is at the heart of your processes. It’s what streamlines your admin and makes managing a fitness business just that bit easier. Your gym management software is responsible for a number of jobs such as tracking and setting up payments, manage class bookings, offer insights and more. Essential features to look out for in your gym management software include a streamlined dashboard and membership management. Find out more about how to choose the best gym management software for your fitness business.
When you’re deciding on the payment model, make sure it’s supported by your gym management software. If it’s not supported by the software you will have to either change your system which takes a considerable amount of time and effort or pick a different pricing model. Some systems may support a pay-as-you-go model but when you start to add in a selection of packages, the system might have a tough time keeping up with the accounting. This will eventually lead to a massive headache for you.
6. Keep Your Profit Margins in Mind
By choosing the right payment model, you will offer a service at a price your customers are willing to pay for. In order to be successful and continue to innovate, you need to be profitable. When considering different pricing models or a combination of a few, keep your profit margins in mind.
This means understanding every cost of your business. You should know how much it costs for you to offer your services and what each client costs. Think about instructor costs, rent, equipment cost and how much you need to charge to make a profit. With the correct knowledge, you can price your services well and understand how viable your pricing structure will be.
Regardless of what price you land on for your services, it doesn’t mean you can’t experiment. It might take a few attempts to get your optimal pricing. Don’t experiment blindly, track and analyze data especially in the first few months of operation to get the right pricing model. Look at the reports from your gym management software so that you can make data-driven decisions that are based on results.
Experiment with promotions, pricing models, and discount options. After a few months, you should be able to see what the most popular option is and pinpoint where you need to make changes. If the pricing structure is difficult to understand or your customers are finding it hard to use, all these things will impact the customer experience, potentially harming your client base and profits.
Potential members need more than a one-size-fits-all approach and depending on the type of business you have, membership prices needs can differ massively. How you determine the right price for your business requires strategy and thorough planning. The perfect pricing model for your fitness business may be a combination of payment options. By effectively pricing your business you can target potential clients, increase revenue and grow your brand.