Dealing with inflation, soaring prices, and the cost of living pose a particular challenge for entrepreneurs in the fitness industry. Adjusting your pricing and offer requires a nuanced and well-researched approach—because if you do this right, you will strengthen your relationship with your clients while securing the bottom line for your fitness business.
It’s an almost natural reaction to inflation to pick from three unattractive options to keep your fitness business running: an inflation hike on your prices, lowering investor margins or cutting costs in operation.
In this blog, we will discuss dealing with inflation, pricing basics for gyms, studios, and personal trainers, and how to avoid the dreaded inflation hike plus subsequent churn.
Pricing basics: How to Adjust Membership Costs When Dealing With Inflation
In this section, we will discuss three different strategies that you can utilize as a gym, studio or personal trainer in enacting an inflation hike on your memberships.
1. Look at Which Memberships or Services Are Not Profitable
As your business evolves, so do your offering and the value you deliver for your clients. This can result in skewed membership prices: either you’re overdelivering value at a too-low price point, or you are under-delivering at a too high membership cost.
When dealing with inflation, it is especially essential to take a critical look at the pricing basics of your club before raising prices in an inflation hike.
Too Expensive Gym Memberships and Services
Let’s start with looking at too-expensive gym memberships or services. When you reach the point you have to invest significant sums of money in your marketing efforts to support a rapidly weakening business proposition, it might be time to consider lowering prices.
These situations can happen when a particular service loses its competitive advantage or was initially priced over market value. When dealing with inflation, the risk of maintaining that position increases.
However, this conundrum can be solved by reviewing spending and pricing basics. By lowering marketing spending in combination with lowering membership prices, you carve a more realistic market position for yourself.
Depending on the severity of these adjustments, it could even lead to higher profits! It’s ultimately about understanding perfectly how your proposition fits your direct market: are you offering the value people are looking for at a price point they are willing to pay?
Too Cheap Gym Memberships and Services
More commonly fitness club owners and fitness entrepreneurs deal with this: the price of the membership or service they offer is too low for the value the client perceives.
In this case, the uncertainty of dealing with inflation, combined with the expectations of the clients that prices will rise in an inflation hike, offer the opportunity to adjust communication and re-value your products into a higher pricing segment.
This is an especially valuable strategy if you have been positioning yourself as a low-cost alternative to your competitors.
Keep in mind that holding on to too low membership prices for your gym, studio, or personal training business can negatively impact your brand image and put you in a difficult market position. In this case, inflation is an opportunity to rectify that perception and put your pricing in line with the value you generate.
A well-known example of this is the European fitness chain Basic-Fit. They disrupted the fitness business as a low-budget gym, but are steadily increasing their membership prices in line with their changing value proposition. This way they are re-positioning themselves in the market and are slowly rebranding themselves at little to no detriment to their membership numbers.
Dealing With Inflation and Outdated Pricing Structures and Memberships
Finally, take a close look at your overall membership structure and the pricing basics of your memberships. Demands and expectations have changed a lot in recent years, and before you know it, your pricing is not in line with what the modern fitness consumer is looking for.
Also, take a critical look at the promotions and discounts you are running. Are they bringing you the value that is worth their investment? How can you change them to generate more sustainable results for your fitness business?
It is essential to not rely on your gut feeling for this but to truly dive deep into your business’ data and determine clearly which types of memberships are generating value and which are essentially just costing you money.
Insights into which membership types sell best and which are generally unpopular will help determine how to restructure your membership and pricing basics without throwing out a blanket inflation hike and risking your members will churn.
This and more you will find in Virtuagym’s business analytics —get all your business data in one easy-to-understand module and start data-driven business growth.
2. Discover Effective Pricing Strategies for Fitness Memberships and Health Services
In dealing with inflation, most gyms, studios and personal trainers will relate the inflation hike in their prices to their biggest expense. This means they will only act when there is truly no other choice but to act, because they want to keep their customers happy (almost) no matter the cost.
An effective pricing strategy is based on diverse and personalized fitness and health services. This enables you to increase prices in a targeted and precise way.
Most Common Pricing Strategies for Fitness
Let’s cut to the chase: do you have a solid grasp of pricing basics, and is your pricing strategy clear? To help you get started to building the pricing structure that is right for your club, we have selected the most common strategies for you:
- The Subscription Model
- The Pay-As-You-Go Model: in this model, the client pays only for what they actually use, so pricing is predicated on the individual lessons or sessions. A well-known example of this model is ClassPass, where the customers buy credits through the platform to use for classes.
- Bundles Model: All customers are offered the same base membership, which they can personalize with add-ons
- Dynamic pricing: This pricing model is based on supply and demand—so clients who want to work out during rush hour will pay a premium, while clients that prefer off-peak get a discount.
- Hybrid memberships: Combine your in-facility offering with digital services, so your clients can work out when and wherever fits their schedule best. Virtuagym’s turn key digital membership is an example of how you can easily hybridize your fitness offering.
- Third-party subscriptions: By collaborating with local businesses or providers, you can develop special memberships for the local workforce or college students.
3. Great Communication Generates Great Value
Dealing with inflation is a sensitive topic, which is why clear communication is essential . Not only do your customers need to know what is changing for them, but your team also needs to be onboard too. For example, your receptionist will be dealing with the bulk of the questions from customers coming in. And your trainers will inevitably have to deal with it too.
Make sure they are informed and on board with the changes and know how to explain them clearly to customers.
When it comes to your customers: be upfront. The way you choose to communicate this, and where you elect to focus on, will influence how your customers feel about the changes. Yes, customers care about price, but they also care about value.
Shrinkflation
Some customers are more sensitive to price, while others are more focused on (perceived) value. This means that those that are more concerned about price, are less likely to notice the lessened value of the services if the price stays the same.
This could be something relatively basic as taking out the sauna or massage chair from the basic membership. But in that case, don’t add an inflation hike to the base price of the gym subscription.
It’s the same principle that food manufacturers and supermarkets implement: they shrink the contents of their products while maintaining the same price point. This is what we call shrinkflation.
Again: be upfront and communicate to your customers what has changed in their subscriptions. If they are driven by value rather than price, they will be more likely to pay for an add-on to their base subscription in order to get access to the additional (luxury) offerings.
Focus on value
A focus and sensitivity to (perceived) value, in short, means that clients might accept a cut on services or the level of service. Consider how you can diversify your services at different price points. By adding and cutting services from packages you can create a solid stream of income.
In order to do this successfully when dealing with inflation, you need to understand what your clients consider to be essential and what their preferences and wishes are when it comes to a fitness membership. Only then you can look at the pricing basics and change the structure without alienating your client base. In short: know your client!
The same goes for the opposite: small changes in quality can lead to a much greater willingness to keep paying without a significant inflation hike in prices. This means your fitness business can start adding new products at the top side of the market at a higher price point.
Gyms and Studios Are Scared of Losing Clients Because of An Inflation Hike
Here are a few tips to help you reduce churn when dealing with inflation.
Swap Out Your Outdated Transaction Model
It’s been a tough couple of years for the fitness industry, coping with COVID-19. Luckily, our customers have not forgotten us and are returning to fitness in droves to work on their health. Of course, as a fitness entrepreneur, you want to hold on to this positive trend, which is why rising prices feels counter-intuitive.
The biggest risk of an inflation hike is losing customers that simply cannot afford the new prices. These aren’t bad customers by any stretch of the imagination - they are the victims of an obsolete transaction model.
You don’t have to let these customers churn. Instead, offer them different options that will enable them to stay on as a customer at a price point they can afford. Consider implementing a pay-as-you-go model or options to personalize memberships. This way your customers can stay on, and use their membership in a way that is effective for their lifestyles and their wallets.
Communicate to Your Loyal Clients First
Are you hesitant to roll out mass communication to your customer base about the inflation hike on their memberships? Consider contacting your most loyal and active customers first and ask for their feedback. They are most likely to stick with you and are most motivated to help you.
Open and honest communication works wonders.
Check Out the Competition
You are not the only gym, studio or personal trainer in your region. Chances are you are not even the only gym, studio or personal trainer on your street! Also, you will not be alone in having to implement an inflation hike to keep your business running. You read in the paper every day that almost every industry is dealing with inflation and subsequent price hikes.
In order to stay competitive, take a good look at what your local competition is doing. Have they changed their prices yet? What have they communicated? How are their customers reacting on public channels?
Take the time to compare your offering to theirs. Is it sustainable that your customers pay less at your fitness business while getting more bang for their buck than at a competitor? Or the other way around. Are you pricing yourself out of the local market when your offer is not on par?
Add Value to Your Fitness Memberships to Cope With Inflation
Finally, it is essential to add more value to your existing membership offer while increasing prices. If you make it worth their while, customers will stay loyal to you and your brand despite the inflation hike.
Here are a few tips for simple and cheap (free!) ways to add additional value to your memberships:
Rewards and Challenges
Challenge your customers with online and offline Challenges and instill the spirit of competition in their workouts! Gamification is a great way to keep your customers active and involved. Offering rewards for competing and completing challenges, utilizing software to show their progress and no-scale victories are simple ways to show your customers you appreciate them and keep them motivated.
Online Offering
The importance of digital content and online workouts cannot be taken for granted in a modern fitness offering. Enable your customers to work out where and when they want and join their favorite classes from home.
Virtuagym’s software empowers you to offer online services at the flick of a switch. From your own branded fitness app to Video Workouts : we have got you covered. Take a look at Virtuagym can do for your fitness business.
Collaborate With Third Parties
Fitness businesses are collaborating with non-fitness entrepreneurs more and more frequently. And it’s a great way to add value to your memberships! Consider collaborating with local stores, and influencers or organizing events.
Talk to your local supplement store or juice bar: maybe they’re willing to offer a small discount on their products for your customers. Or approach it from the other way around and start a reward scheme with them: one full stamp card gets your customers a free class or free use of extra amenities in your facility.
Or take it one step further. Have you thought about working with your local barber or hairdresser? You a both in the business of making people feel and look good, so why not look at ways you can refer clients to each other?
Dealing With Inflation As a Gym, Studio or Personal Trainer
We discussed different tips a practical examples to help you cope with the effects of inflation in your fitness business. This list is not exhaustive and creative entrepreneurs will find new solutions for their businesses to help them thrive. For example, cutting costs is another strategy that can be utilized to combat inflation.
