On average, inflation drives up the cost of running any business somewhere between 1%-3% every year.
This means that a price increase is a necessity, if you want to continue profiting anyway.
In a time when prices are rising faster than we can keep up with you might be tempted to make a bigger price jump than you normally would. And while this might make sense in the books, mindlessly adopting a new price can actually leave you worse for the wear. If you’re wondering how to raise gym prices without damaging your business, keep reading. We will be providing a protocol for you to follow so that you can raise your gym prices to meet the rising cost of inflation.
Key Steps to Increasing Gym Prices
Is it time for you to increase the price of your services? Here are some tips and tricks to prepare yourself for the increase and make the implementation process as smooth as possible.
How to prepare before raising prices
When it comes to increasing the prices of your offers, there is certain steps that should be taken before implementing the changes in order to maximize customer retention post-price upgrade.
Here are a few things to keep in mind.
Increase the value of your offers
One of the best ways to eliminate any opposition to a price increase is to do upgrades around your gym. This makes it obvious to your customers where their extra money is going, making them more agreeable to the change while also giving staff leverage should any clients have objections.
Some ways for you to do this include:
- Adding more classes to your schedule, including more niche classes like a ‘booty bootcamp’ or ‘calisthenics for beginners’
- Purchasing a tanning bed or sauna
- Making upgrades to your machines or gym equipment
- Hiring new trainers
- Offering new merchandise, or food options like coffee or protein shakes
The key is to increase perceived value, whatever changes you make should cost much less and be ideally a once-off cost, allowing for increased profits down the track.
Create an offer for pre-existing members
Your long-term members and the people giving you repeat business are some of the most important members of your club and special attention should be paid to the ways you can to keep them around.
One way for you to keep your pre-existing members around is to create an exclusive offer allowing them to lock in their current membership price if they pay upfront for an additional 6 or 12 month membership.
This not only makes them feel special and like they’re being valued, but it also sticks them to you like glue. If they ever have an itch to cancel their membership, they’ll remember that if they’re to rejoin they won’t be able to get the great deal they’ve currently got again.
If you can’t afford to offer this to your whole customer base, you could try another tactic. It’s common in business for 20% of your customers to account for 80% of your sales, the Pareto principle.
Use your gym software to figure out the customers that are responsible for the highest spending at your gym and tailor an offer specific for them - though do keep in mind, clients talk to each other, if a member hears their friend was offered a deal and not them, they might not be happy.
It’s important to approach this carefully and with set rules to make it easy for staff to explain the discrepancy.
Take time to run the numbers
Before deciding on the price change, it’s a good idea to take a look at your competitors and their price points, especially if they have a similar offering to you.
It’s good to keep in mind that though this information can be valuable, it shouldn’t be weighed too heavily when deciding how to price your services.
It’s not abnormal to see others charge too little for their services, and their inability to ask for what they deserve shouldn’t also negatively impact your business. As long as you have a compelling point of difference that members value, you should be able to charge more.
Next, make use of the reports regarding your most popular classes and the number of membership sales to run hypothetical scenarios of revenue at different price points. Take into account the possibility of losing a certain percentage of members when you run these numbers.
Consider the fact although a price raise has the potential to lose you some customers, over time you will acquire new customers who may be willing to pay the more premium price.
Although the decrease in members might initially cause you anxiety and lose you money, in the long run — if you take the right approach you should be able to rebound better than before.
Measure twice, raise once
When you’re ready to make the change, it’s important you get it right the first time. As mentioned previously, raising prices can cost you members and it’s hard to put the genie back in the bottle once you move to the next step. Make sure your price raise not only honours your costs today but also sets you up for any increased costs you might experience in the near future. You don’t want to find yourself in a position in 6 months where you’re forced to once again raise your prices. Instead, be precise in your price increase so that the numbers for your business make sense and are sustainable for at least the next couple years.
Rolling out the increase
After you’ve decided on your pricepoint, it’s time to roll out the increase. Here are some tips that can help you make this process as smooth as possible — generally, these changes should be made up to a month in advance.
Update your website
As soon as you’ve decided on your price increase, update all of your online resources — social media, paid ads, website, and any other avenues you attract new members — to reflect this price increase. Having potential members contact you to sign up only for you to tell them that actually the price is significantly higher is a good way for you to lose out on their business indefinitely.
Tips for notifying your members
When it comes to notifying your members, there are tried and true techniques that make notifying your clients about the transition period go as smoothly as possible, including:
- Giving them at least a month’s notice before it happens
- Notifying them of the reason behind your priced increase, and ideally spin this in a positive light from their perspective
- Including the monetary details of the price increase, while assuring them this is not a regular occurrence - e.g. highlight to them how long it’s been since the last raise
- Giving thanks for their continued patronage
- Ending with a thank-you from the owner or business executive.
Take time to craft a letter that uses a warm tone that speaks directly to members in a human-like and colloquial way. Doing so can help them feel closer to your organization and more empathetic to your need to actually turn a profit.
As much as no one loves getting negative feedback, figuring out why people decided not to stick around is valuable information.
The feedback that you get from members who decided to jump ship can allow you to re-evaluate your price increase and set you up for future success the next time you decide to implement a price increase.
Raising prices is never comfortable, but it is necessary. If you find yourself in a position where you’re noticing your profits decrease and you find yourself starting to wonder how to raise gym prices, it’s time for an upgrade.
Implementing gym management software can not only make the analytics and reporting part of this process easier, but even save time and energy when it comes to the new price rollout.