How to Make Money with Dynamic Pricing
Successful business owners use Mindbody’s Dynamic Pricing engine to find extra monthly revenue and fill empty class spots.
Dynamic Pricing turns on with a click of the mouse in your software. It offers clients who use the Mindbody app a variable price for any class you select. That price fluctuates within a range you choose, based on demand.
The concept is pretty simple: In this scenario, business owners open any number of spots in a lightly attended class to be dynamically priced. Showing clients a price designed to make them book helps studios fill previously empty spots. It’s a game plan Terri Fry deploys successfully.
Cold mornings, warm bodies
Terri owns and teaches at Hot Yoga Factory in Chelmsford, Massachusetts. The gregarious yogi has been a Mindbody customer since 2015. After first using Dynamic Pricing in the winter of 2017, she immediately realized its value.
“It takes a hardy person to get out of bed at 5:30 in the morning during a Massachusetts winter, shovel out their car, and come to a class when it’s 5 degrees,” Terri says. To fill her 6 AM class, she needed to incentivize that sort of hardiness.
Enter Dynamic Pricing. By showing customers a price that’s too good to pass up, Dynamic Pricing filled slots during an off-peak time at a slight discount.
“85% of something is much better than 100% of nothing,” Terri says. She’s ridden that strategy to $550 in extra monthly revenue since adding Dynamic Pricing to her toolkit.
Likewise, Crissy Trayner, the sales marketing director at the Boston-area Barre & Soul studios, enables Dynamic Pricing for one to two spots during a slower class to increase attendance.
Trayner wants the customers, even at a slight discount, she says. “Either way, if it’s for $19 instead of $22, that’s OK. That’d be zero dollars to me if I didn’t get them in that way.”
OK. So now you know how the pros draw customers in. Here’s how they keep them.
Have a plan
Filling class spots is nice, but Terri realized Dynamic Pricing can boost her bottom line in more ways than one.
“I looked at it as a lead generator to get people into my studio,” Terri says. “And then, I thought, it’s incumbent upon us to get them to come back.”
After interacting with several clients who purchased dynamically priced classes, Terri noticed they weren’t quite ready to commit, so she created a follow-up program just for them.
To turn drop-ins into pack purchasers, or better still, members, Terri formulated a pre- and post-class strategy involving extra care. She trained both front desk team members and teachers to identify and greet Dynamic Pricing customers warmly upon check-in.
Terri and her staff then follows up their class visit, both in-person and with an email, by offering a limited, slightly discounted “welcome again package”—essentially an intro offer for a five-pack of classes. It’s tailored specifically for customers who book with Dynamic Pricing.
Research shows this sort of interaction is appreciated by customers, who are less likely to cancel a membership or package when staff members interact with them personally.
About 35% of Dynamic Pricing customers end up buying the package, she says.
“Maybe they’re not going to be a member, but at least they’re buying something from you. They’re buying your services, and they’re coming back time and again,” Terri says. “And who knows? Maybe at some point in the future, you do a great job. They love your community. Maybe one day they will become a member.”
Above all, Terri says, there’s money to be made with Dynamic Pricing if studio owners have a plan and execute it.
“I tell people all the time that if you’re going to use Dynamic Pricing, you’ve got to have a follow-up strategy,” she says. “It’s not something you should stop to think about it. Just do it. Because that’s when you’re going to capture those customers back, and now they’re not just a lead, they’re a client.”
How Dynamic Pricing can help your business
Dynamic Pricing offers the right price to optimize class revenue for favorite and less popular class times. The best part of this feature? You are in complete control of setting your minimum and maximum prices. According to our research, almost 50% of fitness class spots go unfilled each day. However, if you provide the right price at the right time, paying customers will be knocking at your door to fill those empty spots. The fluctuation of your class prices happens automatically based on the minimum and maximum prices you have put in place.
But wait...there’s more!
Recently, we’ve introduced the concept of surge pricing—which is a new way to take advantage of Dynamic Pricing. While Dynamic Pricing helps in periods of low demand (by filling spots you wouldn't have filled otherwise), you can use the feature to make more money with highly sought-after classes. When there is a high demand for a class, you can use surge pricing to charge more. Think of it like Uber's surge pricing. The higher the demand of your class, the more it will cost for someone to purchase a drop-in. According to our research, we have seen an upward trend when it comes to fitness-minded folks taking advantage of surge pricing to find classes that they love.
Here’s how it works:
Let’s say you turn Dynamic Pricing on in your software for 30 class spots—reserving 15 spots for members. You can set your minimum price at $10 and your maximum at $30—keeping $20 as your mid-range drop-in price. A week before class, when demand is low, your class is offered at $10. Five people sign up early, which means you have already earned $50 for that class. Then, two days before the class takes place, when demand is moderate, your class is offered at $20. Five more people sign up, and you earn another $100. On the day of class, when demand is highest, your class is offered at $30. Two more people sign up, and you earn another $60.
Many fitness studios are seeing their most popular class getting fully booked a week out with a waitlist. With such high demand, you could charge a higher price as the class fills up—encouraging people to book earlier when demand is low and earning more from people who book last-minute.
Ready to get started with Dynamic Pricing? Here’s an article that shows you how to set it up in your Mindbody software.