*This blog was originally posted on the Sweti Services Blog.
Setting prices for your studio is arguably one of the most important business decisions you’ll make. You’ve built a great space, you’ve hired a killer staff, and now you need to get people in the door. Price your classes or memberships too high, and you’ll scare away potential members. Price them too low, and your business won’t turn a profit.
When it comes to setting prices for your studio, remember that less is more. Keep your membership and purchase options clear, condensed, and competitively priced. How can you make that happen? Let’s break it down:
#1: Look At Your Demographic
Look at who your studio is appealing to. Do you have an upbeat, high-energy class that millennials would flock to? Is restorative yoga for the aging body your specialty? Clearly lay out the age demographic of your ideal clientele as well as their average income. Honing in on who you’re hoping to reach will keep your pricing competitive and reasonable, ensuring you’re bringing in the right people who will stick around. Our partners at Club OS recommend that you create a digital lead form that every prospect fills out. This will allow you to capture demographic information, making it easier to define your prices.
If you’re appealing to a wealthier, high-end clientele, for example, consider a more expensive, all-encompassing price. Members with a bit more money to spare are less likely to be turned away by a higher price tag, but may get frustrated by regular additional charges or add-ons they need to deal with. Think about SoulCycle, for example: The price per class is around $25, but it includes your shoe rental, towel service, and use of the studio’s facilities before or after your class. Consider a higher class price or monthly membership that includes all the bells and whistles if you’re looking to reach high-end users.
That said, if your studio appeals to a mass market instead, a lower starting price may be to your benefit. A more expensive base price may cause a little sticker shock to folks just looking to hit the gym a few times a week. If your ideal members are younger, “price-elastic” consumers, consider an optional pricing model. This would mean that your regular or entry-level price is lower, but members can pay for upgrades like personal training, towel service, or group exercise classes. The low starting price point will get members to join, and then you can entice them with the additional services that come at an extra charge.
The more options you offer also allows you to be more specific in your marketing and communication. Our partners at Club OS know the importance that communication plays in keeping your members around, and if you know what they are interested in and willing to pay for, you can customize your communication around that.
#2: Do Your Research
Think of a successful competitor in your area -- one who you admire that appeals to a similar demographic as your studio. What’s their pricing model? That doesn’t mean you should swipe the exact membership and class options they offer, but it can definitely give you an idea of what people in your area are willing to spend. If a competitor’s prices aren’t readily available on their website, you can still get an idea of how their memberships are set up with sites like Yelp or Google+. See why their members stay.
Our partners at Club OS have seen gyms and studios find success in sending out surveys to their current members, as well. Send out a survey that has some questions about your gym, and include a question about price. Most people will want a lower price, but it will help you find a happy medium based on feedback.
Dig into the industry standard pricing for your type of studio too. If you run a yoga studio, for example, you’ll likely want to offer both a class pack and an unlimited membership to accommodate the dedicated yogis as well as the athletes who just want to drop in here and there. But on the other hand, if you run a gym that focuses on self-directed workouts in your open space, you’ll probably want to offer one or two membership tiers, as well as additional package prices for personal training or specific classes.
#3: Keep It Simple
Did you know restaurants that offer more than seven food options per category actually overwhelm and confuse guests? The same goes for fitness studios. If people have too many choices when it comes to memberships, it’s more likely they won’t choose anything at all. Make it easy for your clients to choose which membership will work for them and understand what’s involved.
Which types of class packs or prices you offer will likely depend on what kind of business you have, so refer back to your research to see what your industry standard is. There’s no magic number when it comes to how many options you should have, but see if there’s overlap in your offerings. Are two of your membership options pretty similar with only one or two differences? See if you can combine those into one option to simplify your pricing model.
Keeping your pricing simple not only benefits your members: it benefits you! When you’ve got just a handful of pricing options, it’s easier to make sales predictions and membership goals for your business. When you limit the number of purchase options, you can get a better idea of which are most popular and how many of each you typically get in a month.
So, if you’re setting prices at your studio for the first time or looking to streamline your existing options, just remember: less is more.