Pricing for Profitability

Creating the right pricing model and strategy goes a long way in not only satisfying and attracting clients, but in building a profitable fitness business. This isn’t “new” information to any fitness professional but it’s also not as simple as it may sound.

But why isn't it simple?

Fitness studios have more pricing options today than ever before. Pricing options seen today, tend to include more offerings like combining in-person and virtual experiences, there are more memberships with added flexibility and, conversely, some contracts that are more strict. The list is about as long and unique as there are fitness studios in the United States. Then, top it all off with the added growth of fitness technology that gives fitness professionals the ability to create even more combinations than ever before.

Yeah - talk about having a lot of options - right?

At this point, what are you supposed to do? Where would you even begin to start building a successful pricing model? Let’s dive into popular pricing models that have seemingly stood the test of time and how you could combine these for your best pricing menu.

Membership Pricing Model

This pricing model is not only popular in fitness, but we tend to also see this for cable or internet services plus various tech platforms. To put it simply, this is when you sign an agreement/ contract/ waiver stating that you would like to pay for a certain level of access to services for a specific amount of time at a set monthly rate.

Here’s an example: “Sign a 12-month contract today, get your first month 50% off AND lock in your unlimited monthly rate at $79/ month for the rest of the year.”

I’m not surprised if you can think of a few other things you pay for with that pricing model. Why am I not surprised? Because it works for the business and the client.

The pricing model gets what is commonly called recurring revenue for the duration of the contract and the client usually enjoys these offers due to perks of that longer-term relationship. A few client perks might be they do have a guranteed lower price, priority event booking, special discounts, the ability to bring a friend for free once a month, and so on.

Pay-As-You-Go Pricing Model

If you’re looking for a non-fitness related example, think pay-as-you-go cell phones. In fitness however, this could be class packs and/or drop-in sales. In a nutshell, the consumer is paying a higher dollar amount for access to these services because of added freedom or flexibility on their side.

Here are some examples

• A client pays $25 for a single class drop-in but they have 30 days to use it or book it from purchase.
• A client buys a 5 class pack for $125 which gives them access to any class they like and they have 6 months to utilize all five sessions.

This pricing model is usually used in addition to other membership style offers because if a client is unsure about how long they may want to work with you, the added flexibility is worth the extra dollars until they are interested in something longer-term.

Bundling Pricing Model

No, we’re not talking about bundling home and car insurance but guess what, that is another non-fitness example of this use. This pricing model is most commonly seen when a client pays a base membership style fee and has the ability to upgrade with add-ons for certain periods of time.

A great fitness example might be if a studio has three tiered memberships; a“silver” monthly membership, “gold” monthly membership, and a “premium” monthly membership. If a client were to sign a 12-month “silver” contract (the studio's most basic membership) and then add-on access to certain classes or a greater quantity of classes for a short period, this would be a bundle style purchase history.

In fitness, bundle pricing models haven’t been as popular until a majority of studios needed to pivot during the height of the COVID pandemic by offering add-ons to existing contracts for virtual access, replay access, etc.

Dynamic Pricing Model

Outside of the fitness industry, an example might be when you’re looking to buy an airplane ticket for vacation. If you’re planning to vacation during “high times,” (Summer and Holidays) that’s usually when there is an increase in price. However, if you’ve looked to purchase the exact same tickets at “low times,” in the travel season, you’ll usually see a lower price point.

In fitness what would a dynamic pricing model look like? Well, you could see drop-in prices be higher for more popular classes based on time of day, you could see some classes or experiences offered at discounted rates if bought in bunches or packs - this variablilty is the cornerstone of dynamic pricing models.

Similar to bundled pricing, has this been seen frequently in the fitness industry before the COVID pandemic? Not really. That being said, this style of pricing has seen peaks in utilization in more urban studios where high times can be observed within a 24-hour window.

However today, in 2022, with the pivoting that COVID has demanded of fitness professionals all over the world, this pricing option has seen more exposure and more creative utilizations.

Subscriptions

Just by the name, I know that you can identify some subscriptions you pay for - perhaps it’s video streaming or ad free music, certain app downloads, etc. In fitness, we’re seeing an increase in subscription options especially surrounding business pivots due to COVID.

By far the most common pricing subscription we’ve seen within the fitness industry is monthly access to virtual class replays. Another option not pertaining to virtual classes could be monthly mat or equipment rentals that are easily added or canceled at any time.

So, what’s the best pricing model?

Honestly, there is no one-size-fits-all model but there is one thing all of the most profitable fitness businesses we have worked with do - they have a combination of these pricing models.

Why a combination of pricing offers? To better serve their customers and their buying preferences. Taking on the perspective of a “new client” that’s joining a studio, most clients feel more comfortable with a variety of options until trust is established and a longer-term relationship is desired (contracts, memberships, etc).

What type of a buyer journey would you prefer?

If you heard about a new studio, what is the probability of taking zero classes and jumping into a membership? Little to none.

You’re most likely going to be interested in buying;

• (1) a single class and
• (2) move into an intro offer.
• (3) Then, based on your enjoyment of that intro offer, you’d upgrade to a pack or membership and,
• (4) remain a part of that community as long as it serves you.

What’s the take-home message?

Without variable pricing offers you limit the options of your clients and could be asking them to enter into a longer-term business relationship before they are truly ready. Ultimately this negatively impacts your ability to bring in and convert new members. Which, at the end of the day, that will make it that all the more more difficult to scale your business profitably and grow your community.