“Should I Increase My Gym’s Prices?”
Certain industries and sectors have little to no reservations about putting up their prices. The council is all too happy to dictate when their cut will rise, as are the trains and the petrol stations. But unfortunately for some in the fitness sector, the rise of national chain budget Gyms has turned the health and fitness industry into an arena of constant price warfare.
As such, we will be taking a look at each of the most common questions and concerns that gym owners have to try and navigate in this minefield when they increase their membership prices.
We’ve recently carried out our own price increase in our test gym “The Fit Club Redditch“, so you can follow our roadmap for increasing your prices and building your club’s revenue.
All your questions answered (click them to skip ahead)…
Is it time to raise the price of your Gym Memberships?
How much should they increase by?
Should you increase the price for all members?
How should you communicate the price increase to your members?
Should you be wary of increasing your prices?
Is it time to raise the price of your Gym Memberships?
The aforementioned price war is not necessarily a bad thing. It certainly leads to a lower price for the consumer. But in times of budget squeeze, the ability to remain competitive will naturally come into conflict with the ever-increasing, real-value cost of running your Gym.
As such, when it comes to contesting the percentage of the population who will actually purchase Gym or fitness club membership, the subject is best approached with, at the very least, caution.
With increasing property rents and energy prices, the time has come where the industry is wondering if even the budget chains will be able to sustain their rock bottom price metrics.
And of course, unlike many economic factors that assail the industry, property rents and energy prices are both concerns that impact the spending habits of the consumer. The economical and societal upheaval of the last two years has left many consumers in a very different position when compared to 2019.
It is important that we keep this in mind when both considering and communicating potential price rises.
More than ever, consumers will be concerned about the value they are getting for their service.
We will go into more detail when it comes to communicating the price rise but it is important to highlight in this section that your price increase cannot come with no benefits. At the very least be prepared to showcase how your Gym has improved, is improving or will be improved. If you can’t showcase this, a price increase may well result in a net loss of revenue.
To expand, it is important we reinforce that increasing the prices of your Gym or fitness club membership is not a silver bullet solution.
It is possible that, if mishandled, your club could end up with less collected in membership fees than before.
This is, of course, a worse case scenario but it is a consideration that should be held at all points of a membership price review. As we previously mentioned, there is an increasingly price savvy consumer base out there as the public starts to cut unnecessary costs. Many people will be reacting in a knee jerk fashion. A poorly timed or poorly communicated price increase could be just the thing to cause an exodus of people looking to reduce their monthly expenses. It is also important to consider that the obligatory communication may alert sleeping members to the fact they are still paying for your service.
If either of these take place during a price increase, it may be significant enough to reduce or even negate the benefit of a Gym membership price increase.
How much should you increase membership prices by?
While this is possibly the most important question here, it is also, unsurprisingly, the one with the most nuanced and situational answer. This will require not only a comprehensive review of your membership but also of the competition in your local area.
Before increasing the price, it is vital to research the entire fitness market in your area.
Understand if any of your competitors have already increased their price. If you don’t know their price previously, merely understanding the different benchmarks for different Gyms in your area is still valuable information. Even if you feel like an increase of £x is justified, if it prices you out of the current market in your area then it is time to ask some intrinsic questions.
In regards to your current membership, it is important to understand several different aspects of their current situation.
It is vital to understand how satisfied your current membership is with the gym or fitness club.
The two primary methods of achieving this will be social media, reviews and surveying. Thankfully consumers are very willing to give their feedback in the internet era. Review all outlets of feedback for your Gym, including review sites such as TrustPilot and Google Reviews, as well as your most active social media accounts.
If your clue is not meeting the expectations of your members at the current value, it is very hard to justify a price increase, let alone a significant one. It is important to keep your finger on the pulse of your customer’s opinion. Too often we all complain of businesses being out of touch, but in a value driven, competitive market, being in touch is paramount.
Only then will you be able to have the necessary confidence in the service you are providing to justify increasing your price.
Should you increase the price for all types of members?
The answer to this question will once again depend on the nature of your Gym or fitness club. From our (very, very long) experience in the fitness industry, we know that Gym membership categories are as varied, if not more varied than the number of clubs.
The reason we have decided to write this as its own section is to reinforce that you should take into consideration every membership when conducting a price review.
Even if you are perfectly happy with the price point of certain membership tiers, it is still necessary to communicate effectively across the entire business.
On the other hand, it may be that you wish to increase the price of every membership by a set amount. The difference between say, £1 per member and 3% per member could vary massively. Both are systems that have been implemented in the fitness industry to varying levels of effectiveness.
The economic logic here is simple.
Increasing everyone’s membership by a static amount, for the sake of argument here, £1, will give the sense of uniformity.
BUT
This method will represent a smaller increase in terms of percentage for your higher paying members. Increasing the price by a percentage across the board will, conversely, spread the load more equally, but perhaps extracting less from your lower paying members.
Another frequently asked question during a price review is whether or not loyal members should get preferential treatment. Or whether the price increase should only apply to new members. While this can be tempting and even effective, it is important to note that an increase only on new members may take months, or even years to have a noticeable impact on the margins.
How to communicate the reasons for the price increase to your members…
It is vital that when you start to communicate the price increase to your membership, it is done in a calm, clear and empathetic manner.
The tone and professionalism of the communication will be important to get the point across that you are not:
- Making this decision quickly or lightly.
- Making this decision due to panic or in a reactionary manner.
- Nor that you are making this decision due to greed.
- That you have considered all possible options and avenues before making this price increase.
In order to demonstrate that the price increase is being implemented in a controlled manner, it should be communicated well ahead of time. Preferably this should be done in writing, either via e-mail or letter.
Our Rules For Gym Price Increase Communication…
This communication should lead with an acknowledgement of the current situation. The consumer is fully aware that the price of living, energy and rent is increasing and therefore this is a solid justification for any rise.
Focus on the improvements that have been made to the Gym and how the service is different to what was being provided a year prior.
Highlight the strengths of your gym or fitness club compared to other Gyms in the area and show that the price is still competitive.
Highlight other improvements that will be being made in the future and where the additional money will be going.
Make sure to brief all staff, most importantly the managers, about this upcoming change. Make sure everyone appreciates why it is happening, so that there is a unified response to any complaints. If the team running your social media is separate from your Gym staff, make sure that they are also fully briefed.
Ask staff to refer any severe complaints to the management team.
If you have more than one gym or fitness club, make sure that the price increase and the communication is tailored to the area.
Offer to arrange a face to face meeting for members to attend to discuss the price raise. This will give the sense that their voices are being listened to. Set an agenda that involves improvements they’d like to see given the new price.
Should you be wary of increasing your membership prices?
While it is a decision that should be taken with the utmost care, ultimately gyms and fitness clubs should not be scared of increasing their prices. In the current circumstances it is an understandable and necessary evil.
While there will be some inevitable pushback, any gym should be able to effectively articulate that these price increases do not come from a place of greed.
With all the disruption to the economy within the last half decade, price increases have become an accepted part of life.
With that being said, it is important to understand that you still have to be competitive within your local fitness market.
It is important to understand the strengths of your gym or fitness club, what makes it continue to appeal to your existing members.
- If it is the advanced equipment, great location or versatile facility, that is a solid foundation for a small but impactful price increase.
- If it is purely that you are the cheapest gym or club in the area, then that may make you more vulnerable to the attrition caused by a price increase.
Further more it is important not to fall into the trap of incremental, yearly rises. This will just result in a yearly exodus of customers.
It is better to announce a one off increase that can be justified and clearly communicated to your membership.
You may want to look into offering members options when you announce the increase. This could include offering them a year of membership at their old rate if they pay the full amount upfront. While this will represent a loss of income overtime, it will mean that you collect a full year’s membership where otherwise you might not.
As stated earlier, the confidence of which a price increase can be implemented should be directly linked to the sophistication of the membership monitoring systems you have in place and therefore the knowledge of your members.
If you are confident you understand which of your members are loyal and active, and which are perhaps inactive, sleepers or non-committal, then you will understand the full implication of the decisions you take when conducting a price review.
Want to understand more about your membership?
Ashbourne can help you gain unprecedented insight.
As you can see, we really get stuck into every aspect of helping gyms and clubs succeed. Our success is directly tied to the success of our partnered clubs, so we are always ensuring that we’re at the cutting edge when it comes to helping all of our gyms grow and market themselves effectively.
If you’d like to get in touch about how we can help your club succeed, then you can always book a demo with our sales director, Grant Harrison, who would love to show you how our full club management package can help you improve and grow every aspect of your business.