How to Update Your Fitness Studio Pricing
Things have changed since you put together your first pricing strategy. You may have new or increased expenses, new services (on-demand, livestream, etc.), and different capacity considerations. You may also notice clients expressing hesitancy with commitment.
It’s important to understand when it’s time to streamline your offerings and increase your prices—and how exactly to make those changes. When you get your pricing strategy right, you’ll see improved customer retention and increased revenue. Let's dive in.
Audit your current offerings
The first step in updating your pricing strategy is to audit your current offerings. Focus on a single revenue or service category, record every pricing option you currently sell, and note the price per session.
Pro tip: For unlimited membership options, use an average of 8 sessions per month to determine price per session.
Next, look at your sales data. If you’re a Mindbody customer, review the Sales by Service report. Run the report for the past 6 months and focus on the service category you chose earlier. The results will include:
- Name of the pricing option purchased
- Total amount of the sale
- Percentage of total revenue for the pricing option
- Quantity purchased
- A breakdown of the cash and non-cash equivalent payment methods used
Use the findings of this report to eliminate any low-performing or duplicate pricing options. The goal? Have fewer than 7 pricing options per service category.
Next, consider your current capacity utilisation. If you’re a Mindbody customer, review Total Capacity Utilisation on the Schedule screen. This number measures the percentage of potential spots being used.
Pro tip: If your capacity is at 60% or above, that’s a good sign it’s time to raise your prices!
Move forward with a model that better serves your bottom line
You've outlined your current pricing options and reviewed your sales data. Now it’s time to make changes. Here are a few dos and don’ts as you adjust.
Raise the price of the single session
The average studio has several types of buyer personas, also known as client avatars. For example, you may have a group of clients that insist on buying single sessions and another group that opts for monthly memberships. Your ideal client comes in consistently and on some sort of recurring basis. Clients who insist on purchasing single sessions should still be able to do so, but it’s a best practice to raise the price to an almost uncomfortable level. That way, they’ll question why they aren’t committing to a package or membership.
Keep it simple
If you have so many pricing options that it’s hard for you or your staff to explain them in a few sentences, you’ll lose the attention of your client. Choice overload can leave your client dissatisfied with the choice they made (aka, “buyer’s remorse”). Or, it can even lead to behavioural paralysis, where people are faced with so many choices that they can’t decide (and make no choice at all). When you reduce the number of pricing options available, you also reduce complexity—and increase the chance of a sale.
Know your value
The key to price increases is to position them in a spirit of partnership with your client community, while also keeping an eye on improving your bottom line. Loyal clients will understand you have a business to run, and they’ll be drawn to businesses that deliver value.
Don’t copy the studio down the street
Be aware of competitor pricing but fight the urge to copy (or undercut) the studio down the street. Work to understand your studio’s target clientele and the pricing structure that will serve them best.
Don’t avoid changing your pricing because of one or two cranky clients
When you raise prices, you may receive pushback from a few long-time clients. Don’t let this deter you from doing what’s best for your brand. Most clients will understand you have to cover the rising costs of your business.
Don’t be afraid to use Dynamic Pricing
If you haven’t already, start offering intelligent pricing to sell spots in your off-peak or underutilised classes. Certain classes can be priced higher or lower depending on demand. Mindbody’s Dynamic Pricing gives studios the ability to acquire new customers and earn more revenue. ClassPass is another powerful option to connect with more clients and fill empty class spots.
Remember, it’s a process
Effective pricing strategy takes time—and should be reviewed annually to ensure you’re setting your studio up for success. Use data (not feelings) to move forward with a streamlined pricing model and, as with any process, evaluate your changes regularly and iterate when necessary.