What are your price points and why have you set them that way?
Get the Basics…
Choosing the right pricing structure for your fitness business is an important decision that requires careful thought and execution.
There are a number of different pricing models with different attributes and considerations.
It’s important to do your homework, experiment, and make the best choice about pricing for your fitness business.
Choosing the right pricing structure for your fitness business is one of the most important decisions you will make. It’s important to find the right pricing model and consider the numerous factors that can affect how you set your prices.
Setting your prices too high or too low is a missed revenue opportunity. If your prices are too low, you are missing out on possible revenue, and with a large membership base, that can really add up. If your prices are too high, you are missing out on memberships, packages, or services that you might otherwise be generating revenue from.
Here are 20 tips and strategies to help you set your prices to maximize your revenue and ensure your fitness business is a success. Ready to see how Exercise.com can help you grow and manage your fitness business? Schedule a free demo today!
Setting Your Pricing: The Big Picture
Setting your prices appropriately involves doing your homework and looking at various factors, like:
What amenities and services are offered at your facility?
What are your hours?
How big of a client base can your facility support?
What are the demographics of your clients?
How will you market yourself?
What brand or image do you want to present?
Monthly membership fees may vary from the low end of $10 a month to upwards of $200 a month. It greatly depends on the location, amenities, services, and demographics of your area.
#1 – Look at Your Profit Margins
There are numerous variables to consider when determining what your profit margins are or are projected to be. For example, what are your overhead costs? Do you have rent or leased equipment fees? What are the costs associated with your employees as far as salaries, benefits, and human resources?
It’s important to calculate how much it costs each time a member visits your studio. From here, you could use this information to set your daily fee or drop-in rate. This could range anywhere from $10 on the low end to $30 on the high end.
Pricing and Revenue Models
There are also a few pricing and revenue models to consider when determining your prices. First is your pricing model for all of your fees that will be charged to clients, members, and potential members. The other is a consideration of an overall pricing model for market penetration.
#2 – Choose Your Pricing Models
There are a number of different pricing models. Your business should determine which of these options would make the most sense for your revenue goals and strategies and match your business plan and budgets. This is the first step in setting your prices.
Monthly Memberships – this is the most common for fitness businesses. This is a set fee paid each month for access to the gym or club. The amenities and services offered vary among different gyms, fitness facilities, and health clubs.
Initiation Fees – sometimes called a joining fee, this is a fee that is usually paid once with the initiation of a new membership.
ClassPass – a monthly membership to ClassPass, which has agreements with a number of different fitness studios and facilities. Businesses can partner with ClassPass to allow ClassPass members to book classes or services at their facility.
Pay-Per-Visit – also called a drop-in fee.
Promotional Packages – oftentimes, gyms will offer promotional packages to lock members in for a set period of time. For example, offering a four-month membership package for the price of three months guarantees that, even if a member does not consistently frequent the gym, they are locked into paying for three full months of membership.
#3 – Consider Pricing for Market Penetration
Attract new clients by pricing just below competitors, even if it means a profit loss for a while. First, you must know who your competitors are and what they are charging, which requires data collection and analysis. Next is to use that data to inform your pricing model.
Market penetration works to Increase brand awareness, which can be important for some new businesses. This can attract many potential new clients and members and make them aware of your equipment, classes, and services.
Pricing strategies are the considerations for how you will set your prices for monthly memberships, drop-in rates, package rates, and promotional packages. There are a number of different options and it will depend on your business on which strategy or strategies you will use.
Watch the video below about one theory to set prices for online fitness coaching businesses:
#4 – Promotional Pricing
Promotional pricing is usually a short-term strategy to offer a discount based on some promotions. Many fitness businesses offer promotions after the first of the year because of the influx of so many new members or clients.
You have to be careful with promotions. If you offer a special promotion for new members but nothing for long-term members, it may create an issue with existing members. It would be better to offer a one-time promotion like no initiation or joining fee versus a percentage off of membership fees.
Also, if you are offering free or inexpensive pricing, what does that say about your business? You want to create a value behind your services, facilities, and packages. That’s where free or inexpensive prices do not help create a good image for your business.
#5 – Prestige Pricing
This is also sometimes called premium pricing. Fitness businesses and studios that are in areas with a higher cost of living can usually use a premium or prestige pricing structure. This illustrates that their products, memberships, or services are luxurious or high-end.
For example, OrangeTheory Fitness has thousands of locations across the United States. Many of the locations have a similar pricing structure for their monthly memberships. Depending on the market, some studios have a slightly higher price. But there are some studios in New York City, Los Angeles, etc., that have premium or prestige pricing which have a considerably higher monthly rate.
There are health clubs and gyms across the United States that offer luxury or premium amenities, but these do not come cheaply. Some of the most expensive gym memberships can cost hundreds of dollars a month, but their members feel as though the price tag is worth the services, amenities, attention to detail, and brand name.
#6 – Competitive Pricing
Competitive pricing is setting your fees and prices in accordance with your competitors. In this case, you must know who your competitors are and know what they are charging. Be a “secret shopper” and pay the daily fee at competitor facilities and try their equipment, take a class, or use their services and facilities.
#7 – Cost-Plus Pricing
Cost-plus pricing is when you determine the cost of a service or items and then add a “markup” in addition to that cost. That’s what the consumer pays and the markup is your revenue.
Let’s say you have a partnership with a local dietician who is providing nutrition and meal planning consultation at your health club as an optional service for your members (and a really good idea at the first of the year when everyone is thinking about healthier eating).
This dietician normally charges $100 for an initial consultation and $70 for each follow-up visit but charges $80 and $50 respectively because you are allowing the use of the space in your club for free. Your “markup” for this service is 20%, so members would pay $96 for the initial consultation and $60 for each follow-up. This is a win-win for the dietician, your business, and your members.
#8 – Dynamic Pricing
Dynamic pricing is where prices fluctuate based on time, demand, or other variables. For example, you may charge clients or members less if they only use the facility during off-peak hours, like late morning or early afternoon, as opposed to the busiest hours in the early morning and late afternoon/early evening.
For example, a health club or gym may have a membership for older adults who can walk on the track from 9-11 am or 1-3 pm. This is useful for the facility because it is getting used during an off-peak time and keeps those members from coming during peak hours, plus it works well for the schedules of those members.
#9 – Value-Based Pricing
This involves setting your prices and fees based on what your clients or members will pay. It provides a value for the consumer even if you could charge a higher fee or rate. These prices may have to be adjusted more often and require careful planning and thought to determine value.
Grow and manage your fitness business better with Exercise.com
Here are some general recommendations that will help you determine and manage your prices. These are either business processes or business decisions that can impact how you will set effective pricing.
#10 – Use Fitness Business Software
The right fitness business software should make your life easier and be an all-in-one solution for managing your fitness business. You should be able to set pricing for memberships, packages, classes, or services and allow members to purchase these with ease.
Fitness business software should also allow you to run reports on facility usage, revenue, costs, and other administrative functions that are useful as you are reviewing pricing models and strategies.
Exercise.com is one all-in-one solution with the ability to set prices, sell packages or memberships, and run administrative reports. The information gleaned from using an all-in-one solution can give you the data you need to make an informed decision about prices. There are also numerous options for integrations that make sense as part of your pricing structures and strategies.
#11 – Use Data to Inform
Use all the available data that you can to help inform your pricing structure and strategies. You can run reports using your fitness business software to give you the data that you need.
How often are people using your facility? What classes, equipment, or services are they using and for how long? What are your sales goals?
This is information you should have quick access to within your fitness business software or membership database or software. Use data to see how you are progressing toward those sales goals.
#12 – Experiment
It’s not a bad idea to experiment with different pricing strategies and methods to see what might work best for your facility. If you have any competitors that are similar to your business, you might start out with similar methods and strategies that they use, but then tweak based on your individual needs and preferences.
Don’t change prices too often. Allow some time to pass to gather the data to evaluate the current strategies and models before you change too rapidly.
#13 – Reward Your Loyal Customers
While this doesn’t directly affect your pricing structure, it’s important to reward your loyal customers. Loyal customers are more likely to refer friends and family and also invest in your business in other areas (retail items, special events, etc.)
Let’s say you have a long-time member who is paying $99 a month for their membership. You run a promotion for new members in January with no joining fee and a price of $89 a month. Don’t you think that might leave a bad taste in the mouth of your long-time members?
Other Pricing Considerations
There are many other considerations when it comes to pricing. Here are some additional ideas and options to consider.
#14 – Discounted Memberships
Will you offer a discounted membership to students? What about a discount for military and veterans? How about teachers?
Will you offer corporate rates if a business pays for a certain number of memberships or signs a contract promising a certain number of memberships from their company?
You need to determine this in advance so that you are fair to all members. Keep it simple, like a $10 discount a month for those individuals you decide to extend an offer to for a discounted membership.
#15 – Contract Lengths
Will you offer only 12-month contracts or allow some flexibility for a month-to-month contract? Obviously a month-to-month contract should be more expensive, but will you require a one-month notice of cancellation? What about a discount if someone pays for a 12-month membership in one lump sum?
These are all the decisions you must make while setting your pricing structure.
#16 – Founder’s Rates
If you are a new facility that is just opening, will you offer a special membership price to those who join before opening or join within the first three months? The great thing is that you lock in new members and build excitement toward the opening of your new facility.
#17 – Group Fitness Rates
Will your group fitness classes be offered at an additional cost or will they be part of the membership fees? Some health clubs and gyms charge a separate rate for group fitness classes, while some offer free group fitness classes with an active membership. Additionally, some offer two membership options where members can pay more monthly for unlimited classes if they so choose.
#18 – Personal Training Session and Package Rates
Health clubs and larger fitness facilities must also determine the prices for their personal training sessions and packages. Many gyms and health clubs offer a package with a specific number of personal training sessions, like 10 or 15.
What does each personal trainer cost your business? Are the personal trainers paid hourly or salary? Do they receive benefits?
If you are strictly a personal training studio, this will be your main source of revenue so it’s important to set these fees accordingly. Will you hire your own trainers or work with personal trainers who are independent contractors? There is a wide variation in what personal trainers are charging, so look at local data to help inform your prices.
Watch the video below to see one strategy on setting your pricing for personal training:
#19 – Prices for Other Services or Items
Do you have other services available to members that will come with an additional cost, like massage therapy, retail items, supplements, or workshops?
Do you have any facility rentals like meeting rooms for parties or community events, use of basketball courts, equipment, or other options?
#20 – K.I.S.S
Keep it simple, silly. Don’t overthink your pricing strategies, models, or considerations. Make your membership, session, or package options easy to understand by offering 2-3 options so as to not overwhelm your members or clients.
Price Setting: The Bottom Line
Much more goes into setting your prices than just a simple evaluation. It’s important to take the information available to you and use it to help develop strategies, models, and considerations that will benefit your fitness business in the long run.
Frequently Asked Questions (FAQs)
– What is the easiest strategy to set my prices accordingly?
There is no one easy strategy that works the same for every business. Taking the time to collect information and then use that to put together a pricing strategy is the most effective way to go about it.
– What are other sources of revenue besides memberships, passes, and packages?
There are many other sources of revenue for fitness businesses, including sales of retail items, special events, workshops, facility rentals, consultations, or fitness assessments.
– How do I know if I have set my prices correctly?
If your business is meeting your sales goals, staying within the goals set on your business plan, and is meeting your goals for members, employees, and use of the facility, then that’s when your pricing strategies are correct.
Collect payments and manage your gym with Exercise.com’s All-In-One Fitness Business Management Software. Request a demo today!