Setting your gym membership prices can seem like one of those big, squishy topics that you’re not sure how to approach.
You might find yourself thinking things like:
· How much is too much?
· What if some people can’t afford it?
· I just want to help people, so I should keep it low for everyone.
The good news is: Those are common thoughts among gym owners trying to figure out their gym membership prices.
And more good news is: This doesn’t have to be a mysterious, wrenching ordeal for you, the business owner.
There are formulas to follow, advice to consider, and more steps to take you from confused to confident.
Setting the right gym membership prices is crucial for attracting and retaining loyal members while maximizing profits. A well-thought-out pricing strategy can make the difference between a thriving gym and one that struggles to stay afloat.
Let’s help you find that sweet spot.
“Gyms think that they have a marketing problem when really what they have is a bad pricing model,” says business coach Vince Gabriele. Setting gym membership rates, even raising them, “is just a decision, that’s all it is,” not anything to let overwhelm you.
First, Who Are You Serving?
Before you consider pricing models, be clear about what kind of gym you’re creating and who you want to serve. The range of options is wide – from budget-priced gyms to high-end premium facilities, each with different appropriate gym membership prices.
If you want to create a gym to help low-income people, that’s one thing. It requires a certain business model, marketing strategy, and plan for gym membership prices.
If you want to maximize revenue, that’s another thing altogether – and so is every kind of gym in between.
Also related to this question is: Where are you? This will affect the kind of clientele you’re likely to attract, how much money they have to spend on fitness, and what you’re operating costs (like rent) are likely to be.
Put simply, a small-town gym probably will have lower costs and a lower-income community than a studio in the middle of Manhattan.
Read, Watch: Business Coach Guru Thomas Plummer on Dialing in Your Pricing Strategy
One isn’t better than the other. You just need to know your own mission so you can start setting your gym membership prices.
Reverse-Engineer It
“How much should I charge?” is a common question, and the first answer in a series of answers could be;
“How much do you want to make?”
If you start there and work backwards, you can arrive a good starting estimate.
Start by considering your costs.
Calculate all your fixed expenses, such as rent, utilities, staff salaries, and insurance. These are expenses that remain constant regardless of the number of members.
Next, consider your variable costs, which change based on the level of gym usage. This includes maintenance, cleaning supplies, and equipment wear and tear.
Next, perform a “break even” analysis to see the minimum number of members you need to cover your costs – and how much you’ll need to charge them.
Do this again to figure out how to generate the revenue you need to leave the profit you desire at the end of the month.
For instance, if your break-even analysis says you need 50 members paying $100 a month just to cover your costs, then you might need to charge them $120 a month to hit your desired profit.
When Ryan Carver began his training career, he followed the examples of other trainers in his gym.
“As a studio owner, I looked at pricing of my competition, and I looked at my cost per unit (one private training session), added wages to that and the percentage profit I’d like to make per unit,” says Ryan, now owner of Leverage Fitness Solutions in Salt Lake City. “Modeling all those factors gave me a baseline to break-even and to turn profits at different levels and types of training.”
Next, do your research for similar businesses in your area. Consider if you want to be in the middle of the pack – or charge a premium because you’re just that good.
Going too low can send the wrong signal, that your service must be inferior if your price is way down there.
And if you’re worried about charging too much, think about adding value before you automatically decide to cut costs.
Not every consumer is motivated by the lowest price. If that we the case, Planet Fitness would rule the world, right?
When setting your gym membership prices, be sensitive to the needs of your desired customer. Many are seeking premium value and will pay premium rates for it.
Other Pricing Strategies
If you’re a new gym looking to attract members quickly, penetration pricing can be an effective strategy. This involves setting your initial prices lower than competitors to attract a large number of members quickly.
Once you’ve built a solid member base, you can gradually increase your prices to match the value of your offerings.
Leverage data to make informed pricing decisions. Here are some effective strategies:
Tiered Pricing
Creating different membership tiers allows you to cater to various segments of your market. A basic membership might include access to gym equipment during off-peak hours, while a standard membership offers full access along with group classes.
A premium membership could include additional perks like personal training sessions, spa access, or priority booking for popular classes.
Each tier should provide clear value to justify the price difference.
- Basic Membership: Access to gym facilities during off-peak hours.
- Standard Membership: Full access to gym facilities and group classes.
- Premium Membership: Full access plus personal training sessions and exclusive classes.
Create bundled packages that combine gym memberships with other services, such as nutrition counseling or spa treatments. Bundles add value and encourage members to spend more.
Use psychological pricing techniques to make your prices more appealing:
- Charm Pricing: Set prices ending in .99 (e.g., $29.99 instead of $30).
- Anchoring: Display the highest-priced option first to make other options appear more affordable.
- Decoy Pricing: Introduce a third option that makes the middle option seem like a better deal or which promotes taking the third deal because it seems to provide so much more value for a small price increase.
Raising Your Rates
Many gym owners under-value their services and charge too little. They worry about scaring people off by setting gym membership prices too high, but then struggle to make ends meet.
Focus on the value your business brings, rather than any “people pleasing” insecurities this might bring up.
And remember, you can always raise your gym membership prices later – either for everyone, including current members, or just for newcomers.
“I know that many coaches are afraid to raise their prices for fear of losing clients. But in most cases, this fear is completely unfounded,” fitness business coach Pat Rigsby says.
“In fact, raising your price has an added incentive of also raising your perceived value.
As strange as it may sound, not only will you make more money by raising your fees, but you may actually get more clients.
“You see, people, in general, tend to associate price with quality. So, if your price is a little higher than everyone is, they assume that you are more qualified, and provide a higher quality. If you are charging below the competition, then increase your price.”
Charging higher gym membership prices creates perceived value, but it won’t last if you don’t follow through on that promise, says Rick Mayo, CEO of the Alloy Personal Training franchise. Focus on providing high value, not just high pricing.
And don’t worry too much about losing a lot of people.
“If you’re only raising 3-5%, we’re looking at $5-$25 extra dollars per month,” says gym owner and business coach Mark Fisher of Business for Unicorns. “This isn’t a meaningful amount of money. Anyone leaving you for a $10 monthly increase is looking for an excuse to terminate. You’re still going to be better off overall.”
Wrapping Up
Money can make us all feel weird, especially when we’re asking for it – even if we’re deliviering a spectacular product or service in exchange. It just takes time to get confident realizing that you’re charging FOR YOUR BUSINESS, not for your own feelings of self-worth.
And, once you take all this into consideration, you see that setting gym membership prices isn’t so mysterious or unnerving, after all.
Just know who you are, who you want to help, what your business costs and needs are… and don’t be afraid to charge what you’re worth.
Provide great service at a price that demonstrates its value. Get results for the people you aim to serve. And grow your business now and long into the future. Setting gym membership prices is just one of many topics important to your business. You can learn about so many others through Naamly Online University. It’s your weekly pulse on fitness industry news, events, and content from the best in the business. Enroll today!