When setting up a fitness business, one of the hardest things to get right is pricing, and along with it, choosing the best membership structure. Even industry pros who have been in the game for years express concerns to us about how to optimize the set-up of their membership offering.
Get your membership structure right, and you are setting yourself up to build a business that goes the distance. With the perfect membership structure in place, you will reduce churn and build a roster of happy clients who remain loyal to you and your brand. Get it wrong, and clients are more likely to visit your competitors, or you risk losing out on revenue.
For most business owners, the options are between running fixed membership contracts or class packages to purchase, which may run over many months (or even years) or providing a more flexible approach that allows clients to pay for one-off classes when they book or gives the option of a rollover membership contract.
So, how do you determine the best membership offering for your business and your clients? We unpack the most important points to consider when it comes to choosing limited (or fixed contract rates) vs unlimited (flexible, rolling over contracts), and how you can make the right decision.
1. Think About Your Client’s Behaviors
What are the unique demands and desires of your clients? What makes them different from the clients who might frequent other fitness businesses in your area? When it comes to selecting the best possible membership option for your in-facility and online offering, the first step is to look at things from the client’s perspective.
Consider whether your clients have selected your gym, club, or studio for its specific facilities and trainers, or whether they come to you for your location. When you know why they visit your business specifically, you can better understand how likely they are to want to purchase different membership types.
Would as pay-as-you-go membership suit the needs of your client? This might be a prudent choice for clients that only come to the occasional class. Or do your clients wish to come frequently? In this case, a long-term, unlimited membership option might best serve both of your needs.
To understand how likely your clients are to purchase varying kinds of membership options, you can survey potential clients, or even offer a selection of memberships to start with, and then narrow them down as you start to build a strong client base. And while we’re on the topic of market research…
2. Determine Your Competitors’ Membership Structures
When it comes to pricing and membership options, it’s important to know what other fitness businesses are doing in your area, as this will factor into whether your clients will select your business over another.
The same idea applies to fixed vs rollover contracts. It’s time to do some market research. What are other facilities in your region offering by way of services, and how does that relate to your own business? What kinds of contract and membership options do the popular gyms, clubs and studios in your area offer?
Understanding what choices your competitors are providing their clients with — and how they categorize that and repackage it to clients via membership options – will enable you to build your own framework for how you would like to run your business.
It is worth noting here that checking in on competitors’ membership structures should be done periodically throughout the life course of your fitness business. When a new fitness business arrives in town and makes a serious splash, it may be time to adjust your membership structure, offering or even change your pricing.
3. Consider Your Own Offering
The next step in determining whether or not to select fixed, limited contracts or a flexible, rollover, pay-as-you-go option is to consider exactly what it is you offer your clients, and which kinds of membership options might best be suited to those services.
Do you run small group exercise classes with limited places in each class, running to a fixed time schedule? Or do you have gym floor space in which clients can turn up as and when they please? All of this should be considered and factored into your membership structure decision.
4. Be Careful Not to Devalue Your Business
When a client chooses whether they want to use the services your fitness business offers, they will consider the price not only in terms of what fits their budget, but also in terms of how they value your business. When you add a price to your business, you are sending a message about how it ought to be valued. This should also be considered when it comes to selecting the correct membership structure option too.
If you run small group classes, don’t be afraid to tie these into a fixed membership structure if that suits the needs of your business, and is likely to work for your clients. For example, if you are a high-end Pilates studio, maybe you tie clients into a package of 10 classes at a discounted rate in comparison to a singular class.
When considering how the value of your classes fits into your chosen membership structure, it is critical to think about the profit margin of these classes, and of your fitness business more generally. Put simply, don’t forget to do the math when it comes to working out your optimal membership option. Ask questions such as:
- Based on your likely amount of visitors, what are the differences in price between fixed and flexible membership structure options?
- How does that weigh up when you factor in the advantages of either one?
- What are the advantages in overall revenue of tying in clients long-term?
5. It May Not Be a Case of “One Size Fits All”
Don’t forget that you may not need to select one membership structure alone. Consider factoring multiple membership structures into your offering in a bid to attract and retain more clients, who each have their varying needs, budgets and lifestyles.
A long term membership structure may best suit a client who wants to frequently visit your studio, and a pay-as-you-go membership could work better for a client that may only visit occasionally. Consider how you might reach as many would-be clients as possible by incorporating more limited and unlimited contracts into your approach, without negating on price.
That said, every fitness business is different, and what works best for you and your brand will vary from the gym, club or studio down the road. If you are a high-end gym that delivers limited classes, a limited, fixed membership option could be the best strategy to employ. If you are a budget gym wanting to bring in as many members as possible as often as possible and to drive extra revenue from them through add-ons, then a fixed, extremely limited membership structure may not be the best approach. Take your time to consider what works best, and remember, that you can adapt your offering at any time.
