Guest Blog from Seran Glanfield.
Seran Glanfield empowers studio owners with smart strategies, expert guidance and time-saving resources to support building profitable and fulfilling studio businesses. Learn more about how you can work with Seran on her website, Pilates Business Podcast, and on Instagram @seran_spring_three.
When it comes to the long term vitality and sustainability of your fitness studio, one of the most important decisions you will make is how to price your services. As a studio business consultant of 10 years, and former pilates teacher, pricing is a topic I discuss with every single studio owner I work with.
Some of the questions that Studio owners and solopreneur teachers ask most often are:
- Are my sessions priced right?
- What's the right pricing model for my business?
- I want to raise my prices - how do I do that (easily)?
Unfortunately, there is not one, single correct answer to these questions that will work for all studios.
However, there are some insider tips and insights that you might find helpful as you refine the pricing and packages that you offer at your studio.
#1 Beware of becoming a “bargain”
First up, let's tackle the elephant in the room. There is an important factor that comes into play when a business owner is pricing their own services - regardless of how long you’ve been in the business. And that is your own mindset - specifically as it relates to money. The wrong mindset can hinder your business growth especially if there is a tendency to lean into scarcity instead of abundance in your thinking.
This can easily affect larger studios as much as small studios because while owning a studio business is exciting and fulfilling, it certainly comes with a host of worries, too. One of them being; how to get new clients. Which is why, when sales are slow or new client numbers are lower than needed, the temptation to simply undercut your competition or to price on the lower side to attract clients is very compelling.
However, this is not usually sustainable long-term. I’ve witnessed many studios losing money implementing this type of strategy and literally driving their business into the ground. On top of that, you risk attracting clients who simply want the lowest price - not who want the valuable benefits only you and your studio can provide.
If you think you might be in this situation or you’re tempted to drop your prices - pause! You don’t want to lock yourself into a position in the market that you can’t get out of later. One where your clients are simply seeking a cheap deal and are not able or willing to pay more for your services. Instead, use other tools to drive interest and attract new leads into your studio business. Start with a full audit of all the touch points in your marketing plan and optimize each one according to your goals - this is incredibly fruitful for most studios regardless of their pricing structure.
#2 The Right Price Starts With The Numbers
As a studio owner, you’ll want to get comfortable with numbers. And, there are numbers that must be considered when it comes to your pricing. Put simply, you have to cover your costs and account for your profit margin.
Once you know your expenses (rent, utilities, software) and costs associated with delivering your services (teachers), you have your breakeven price point. Then you’ll want to build in a healthy profit margin that reflects the value you offer and your growth goals. This is the science part of the pricing equation.
The artsy part is how you quantify your value.
Perceived value plays heavily on pricing. Yes, you want to make sure that you are not priced way out of line with competitors, but, let’s be clear, your competition does not set your price. Your price should be a reflection of the incredible experience and results you offer your studio clients.
Perceived value is driven by:
- The experience clients have inside your studio
- The benefits your clients receive
- What do your clients get from you that they cannot get anywhere else?
Remember: you are not selling a single session. You are selling a lifestyle, health, vitality, and community.
And, can you charge a premium for that? Yes - you absolutely can and should.
#3 Don’t Fear Change (or a price increase!)
The pandemic has presented many challenges and now, we are facing the aftermath in the form of rising costs of living and inflation. Your business is likely experiencing increasing costs too. If you haven’t adjusted your prices in the last 18 months, now is probably the time.
Every pricing change comes with its fair share of considerations. However, the key to successfully handling any price increase with your clients is clear and transparent communication and ample notice.
Be sure to inform your clients with a concise and polite notification that includes the following three key points::
- An appreciation for their business
- A clear outline of the price change
- An affirmation of your commitment to delivering your brand promise.
Will you get a little push back? Perhaps - but it’s very rare! More often I hear from studio owners who are pleasantly surprised by how understanding their clients are about a price increase!
Your pricing is a reflection of the value you deliver to clients and it can make or break your position in the market. That is why it’s critically important to get it just right and when it’s not; to make the necessary changes.