Putting together your pricing for your fitness business can be challenging and confusing. It may be a struggle because you don’t know where to start. Or it may be a challenge because you don’t have a framework to craft your offer (which includes your price). There are many different ways to price your services and I’m sure you’ve heard about a few like cost-plus pricing, premium pricing, or value-based pricing. But if you want the quick and dirty of what NOT to do (and why) when pricing your services you’re in the right spot. Let’s jump right in so you don’t make any of these common mistakes which could have lasting repercussions on the health of your fitness business. Sometimes the easiest pricing strategy is just to avoid the mistakes that other people make.
Don’t Price off your Competition Alone
Oftentimes, gym owners and fitness business owners look to their competition to create their pricing. It’s a good strategy to get you started but it can’t be the end all be all. There are a few reasons why this doesn’t work and why it can be bad for business. The first reason is that every fitness service is different and serves a different market. If you want to work with high-end clients in a boutique fitness setting would it make sense to charge the same price as the person across the street that serves blue-collar people? Of course not! Those high-end clients are looking for a different service and may believe that expensive equals better. Whereas blue-collar gym-goers may be looking for the cheapest price possible. Make sense?
But what if the gym across the street offers the same service as me?
Price isn’t the only factor that clients take into consideration when choosing a product or service. If the gym across the street is offering the same services at the same price and you want to get more of their business, lowering your price isn’t the best option. Is there a way you can add more value to your service (without changing your margins) or shift your messaging to enhance the customer perception of the value of your service? There are many ways that you can go about this, just don’t base your price on the competition. Plus, they may have a different set of expenses than you do, and following them might not be the best long-term strategy for your business.
Don’t Price yourself in the Middle
Pricing yourself in the middle of your competitors actually puts you in the worst place. There are two ends of the market: you have your “best-price” fitness solution or value fitness solution or your high-end luxury fitness solution. Both fitness solutions are meant for different parts of the market. The value solution is going to target people that are looking for the price first and the high-end luxury fitness solution is going to target people that are less concerned with price and more concerned with the level of service and attention. Each side of the spectrum has its pros and cons. You know where your business sits in the spectrum. And if you don’t, it should be based on how you enjoy providing your fitness services and who you want to serve.
Once you’ve established where you are, either a value fitness solution or a high-end luxury fitness solution, you can determine your price based on your expenses and the service you’re offering. You can also look at what your competitors are offering to get an idea of what you can charge. But like we discussed earlier, do not price off your competition alone. Remember, it is only a way to get started and be competitive.
Don’t Compete on Price Alone
It’s very important not to compete on price alone. It’s easy to get into a war with your competitors to see who can go lower to get the most customers. This does two really terrible things. As you lower your prices you start to devalue your service. What you’re really saying is that what you have to offer people is of less value. People value products and services partially based on the price and partially based on what they’re going to get (actual services or even the results you can achieve). As you lower your prices you will start to resent everything that you do for your clients because you’re doing it at a rate that is too low. Next, your service starts to slip. You won’t enjoy the work you’re doing and your clients will feel it. (They will also not understand where it’s coming from). Before you know it, your business could be underwater from the low prices or you’re left feeling fed up, undervalued, and want to quit altogether.
The moral of the story is don’t compete on price alone. Understand the value of your services and price accordingly so you can continue to enjoy your work (and get clients results). And make sure your prices align with the market you’re targeting and build your marketing funnel accordingly.
Never Default to Discounting
Discounting your services can be a part of your strategy but it must be done the right way. If you’re discounting your services because you’re not closing enough sales conversations or if you’re discounting to beat your competitors then you’re in trouble. If you’re not closing enough sales conversations then the first step is not to offer a discount. Instead, evaluate your sales process to see if it’s actually effective. Are you connecting with your prospects’ aspirations and obstacles? Are you describing your services correctly?
If you’ve priced your services according to your expenses and what you want to be making, every time you discount your services you’re going to be losing profit and maybe even losing money. It’s easy to discount your services to get a bump in business but is that bump in business actually making you money? On top of that, if prospects and customers see that you often offer a discount then they’re going to be reluctant to buy at full price. You’re basically training your customer base to only buy at discounted rates and that doesn’t serve you or them. Like I mentioned before, with attempting to compete on price alone, defaulting to discounting leads to the same decline in your business and the way you value yourself and your services.
Fitness Revolution helps fitness business owners build and scale successful businesses they love running. Through Strategic Business Coaching, powerful tools and metrics, and live training events, FR is able to help these studio owners tackle their biggest, most pressing challenge. For more information, visit https://frnation.com/.