Considering raising your membership prices but are really hesitating because you are concerned about member backlash?

We know how delicate the relationship with your member base can be, and nobody likes having to have 3 dozen discussions from members asking why. Disrupting the harmony in our community and being the “bad guy” alone is enough to make us think twice.

Maybe you feel that if you raise your prices, your members might leave you for a competitor, which, if profits are thin, might take money directly out of your pocket?

These are all normal thoughts to have. After all, as a customer yourself, you probably aren’t super happy when the coffee shop you go to, or the gas station you fill up at raises prices.

While most gym owners believe that members are the backbone of their business, this is not exactly 100 percent correct. Instead, the right members are the backbone of your business.

Your pricing really sets the tone for the kind of business you are and the type of members you intend to serve.

You could continue to be a low-cost service provider. Problem is that members don’t expect customer service to scale with the lower price they are paying.

Membership rate hikes don’t have to spell disaster.

If you’re considering a price raise for your gym, below are a few good reasons to help you make a decision.

Reasons WHY you should:

1. Inflation. Inflation is 3-5% per year. This means you lose 3-5% every year you keep pricing the same. You should aim to stay ahead of this in any revenue stream or asset you hold in business at the bare minimum. It’s normal with Rents and most services.

2. Market fit. Ideally you’d pull three comps of your closer competitors in your market and adjust. Generally this isn’t really that important unless you’re grossly underpriced or overpriced based on the value you’re providing. Competing on price shouldn’t be a goal.

3. Demand. Running out of space? Seeing a rise in costs due to increase demand for new equipment or more space? This justifies a rise as your members can see the necessity for these things and often want them.

HOW. Some good ways to do this without raising too many issues with members.

  • Pay it forward. Overdeliver for a couple consecutive months and make sure your members are aware of the efforts being made.
  • Time it right. At the beginning of a year or on an anniversary of the business provides good justification and makes it seem less random or “just because”.
  • Phase out old services or repackage. Instead of charging more for the same service. Instead rename everything and offer an “either/or” switch. Add extras or “bundle” an upgraded premium package.
  • Raise the price and offer a discount to keep the current rate in exchange for certain behaviors:
    • Referrals: Extend the rate for 3 months for each new member they bring in.
    • Paid in fulls: offer to keep the current rate if they pay 3, 6, or 12 months in advance. Cash flow is nice.
    • Premium Service purchases: Trying to push personal training? Offer members to keep their current rate if they purchase a 3 pack of sessions at a discount. A $10 increase is $120 per year, so a $250 PT package is worth, for example.
  • Keep it consistent. It’s normal for businesses to raise rate. Just do it at the same intervals every quarter/year/whatever.

MATH to consider:

If you just want to play the numbers game and verify that you’re making a good business decision then you’ll want to do this math.

Answer these questions:

  1. How much is the price increase?
  2. How many members do you suspect you’ll lose?
  3. Is the total revenue gained from the price increase higher than the revenue lost from members who leave?

Last thing to keep in mind. Members who are upset about price increase are the minority

The holdback many gym owners feel when raising rates is understandable. After all, who would want to upset their members.

While a few of your members are probably with you because of your price and only because of it, they are very likely the minority next to your customers who care about other intangibles and want to see you grow, among other factors.

Conclusion

Each year, be sure to look at your pricing, offerings and your gyms’ financial health.

Remember that failure to increase prices when you can, may result in a revenue crunch when you need your business to scale.

Raise rates when necessary, but don’t be greedy. While it’s important to make a profit, any increases in your rate structure should be defensible.

Otherwise, your members will see you’re just trying to take more of their money, and end up not wanting to do any business with you in the future.

Overall, if you’re practicing overdelivering on your offerings this should be easy to justify.

Have you had experience with a price increase? How did you manage it?

To Your Success… Thanks for reading!

Coach Will & The Big Little Gyms team

P.S…. Want some hands on help, mentorship, guidance, structure and trainings to help you not only survive, but take advantage of a newly wide open market?

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