So, you have a vision—you want to open a gym. Well, there will be a myriad of decisions you need to make to get started. One of the most critical decisions to be made when opening a gym is to decide what your gym membership prices are going to be. Sure, it can be deliriously fun to get caught up in your logo, paint colors, and t-shirt designs. But before you start going too far down the creativity rabbit hole you’ll need to figure out how to properly set your rates to make sure you can pay your bills, your staff, and yourself. Be sure to consider each of the steps below because an effective pricing strategy will pay dividends for your fitness business.
Understand Your Market
Firstly, understand that your pricing will vary based on the kind of market you’re in. Therefore be sure to conduct lots of market research and make sure you’re hitting the pricing sweet spot. This means your prices are not so expensive that no one in your area can afford you, and not so discounted that no one in your area will value you. My husband Josh and I opened a gym in 2012, and we made a huge mistake by structuring our pricing and offerings based on what worked at a CrossFit gym in Austin, Texas that we admired. Ultimately we learned that what worked in Austin didn’t work in South Florida. In short, get to know your market intimately before you set your offerings and gym membership prices.
Decide on Your Offerings and Gym Membership Prices
Have you heard of the paradox of choice? It’s the contention by American psychologist Barry Schwartz that says eliminating consumer choices can greatly reduce anxiety for shoppers. In other words, the more choices a consumer is given, the less likely they are to buy because they become overwhelmed and skip the purchase. As a gym owner, you can use this knowledge to your advantage to limit your offerings.
We settled on three offerings at our gym: Drop-In, 8x/Month, and Unlimited Classes. Identify what the per-class rate is (your drop-in fee) and then set your gym membership prices based on that rate.
For example, if your drop-in rate is $30, then offer a discount if the client signs up for a recurring monthly membership. For the 8x/Month Membership, you could offer 10% off your per-class rate: 8 x $30 x 90% = $216. For the Unlimited Classes, you could offer 20% off your per class rate: 12 x $30 x 80% = $288. (For the Unlimited Classes, I assumed that a client with an unlimited membesrship would attend an average of 12 times per month.)
Do Some Basic Budgeting
Figure out what your monthly operating costs are. Once you know how much it costs to operate your business every month, then you can set your gym membership prices. After that be sure to keep in mind that your projected monthly operating costs will likely be an underestimation. Therefore you’ll want to provide some cushion for your business when setting your rates. Aim to price at a place where if your monthly operating expenses prove to be higher than your projection, you wouldn’t be in trouble. In addition, if finance isn’t your thing, recruit your most business-savvy friend or relative to help with the projections.
Check Your Competitor’s Rates
Do some research and find out what your direct competitors are offering and charging. You’ll likely want to be in the same ballpark as your competitors when it comes to pricing. If you’re going to charge more than your competitors, make sure you show why your product is more valuable. On the other hand, If you plan to charge less than your competitors, be sure not to undercut the price to the point where you devalue the product.
Believe in Your Pricing
When we first opened our gym, both Josh and I would cower at our prices, and even make excuses for them. Our lack of confidence in our pricing and offerings didn’t sit well with prospective athletes. If we didn’t believe in our worth, why should they? Once we came to the realization that the service we offered was absolutely worth the price, we no longer felt uncomfortable when we discussed the gym membership prices with prospects. Know your worth and believe in your price. You’ll have a hell of a time making a sale if you don’t. For instance, new business owners often fall into the trap of offering discounts, especially when they aren’t confident about their prices. Beware of this tactic—it often backfires.
In conclusion, you’ve got an amazing new season of life coming your way—you’re opening a gym! If you’re prepared for the season, you’ll do great; but if you haven’t done the work you’re in for a rough ride. Remember to take your time in setting your offerings and gym membership prices. Find some trusted advisors to review your ideas and projections with. Furthermore, keep in mind that pricing is an iterative process. Don’t expect to get it right on the first attempt, it will likely take you a few times before you get it right.