Episode 345

The Do’s and Don’ts of Effective Pricing Strategy

In this episode, we talk about the do’s and don’ts of effective pricing strategy.

[00:00:00] Hey friends, Ben here from Business for Unicorns and today Pete and I are diving into the do’s and don’ts for effective pricing strategy in your gym. If you’ve struggled with what to set your prices at, how many different frequencies, one, two, three, four unlimited times per week, how long your agreement should be, what type of options you’ve had, this podcast is for you because we want to make sure you’re doing the do’s, not the don’ts of effective pricing strategy.


Welcome to the Business for Unicorns podcast, where we help gym owners unleash the full potential of their business. I’m your host, Michael Keeler. Join me each week for actionable advice, expert insights, and the inside scoop on what it really takes to level up your gym. Get ready to unlock your potential and become a real unicorn in the fitness industry.

Let’s begin.[00:01:00]

Hey everybody. You’ve got me Ben and Pete today subbing in for Michael And we’re going to talk a little bit about pricing strategy in your gym. But before we dive in I wanted to let you know that Mark has written a new book and I was honoured, as I think you were as well Pete, to see the initial drafts of it as it was coming out.

And this book is everything you need to know. It’s the little book of gym marketing secrets and it’s honestly what I wish I had when I started marketing my gym early on. So if you haven’t got that yet, click in the show notes below and you can get a completely free digital copy. Anything you want to add about Mark’s book?

Yeah, get the digital copy and then after the fact, show Mark some love and buy a hard copy at some point. 100%. 100%. It’s a quick read too. It’s like a, an hour of material. Yeah. The description is like the comprehensive no fluff guide to marketing your gym and it is exactly that. It’s everything you need and nothing you don’t.

It’s amazing. Cool. So how do we want to lead this as we discussed off, off the recording, Michael had some bad lunch today and he had to [00:02:00] opt out at the last moment. And Ben was kind enough to jump into a previously scheduled recording for me. And Michael, welcome. Yes. And the host seat is always a little bit different.

Michael always does such a great job hosting these, but like we were talking about before, I think we should just keep this somewhat unstructured and shoot the shit about our thoughts and experiences pricing strategy. Cause I know that’s something that we get a lot of questions about in unicorn society.

And if you get a better pricing strategy, it’s easier to make more sales. We’ve my thoughts on pricing strategy are interesting because there are components of my pricing strategy that have not changed and I feel like never will change. And then there have been some pretty significant overhauls to other aspects of it over the years.

I’ll say that we are in the same place as far as our LBO goes today, as we were in 2007, we do a 99 initial evaluation and come through the door, get 75 to 90 minutes of Incredibly thorough one on one time. And then from there, [00:03:00] pricing has shifted. Obviously it’s incrementally increased over time for the services that have existed since day one.

So for us, that was once a week, twice a week. And then over time, I have seen pretty significant changes on the higher end of that, because there was a time on day one when we had a three times a week rate, a four times a week rate. We had God knows how many different price points for short term consults, long term consults, college rates, you name it, we threw them all out there.

And we have landed in a place where we have our initial evaluation fee and then three price points to choose from. That’s it. There’s once a week, twice a week, and what we call unlimited or three plus. And these are all effectively cancel any time agreements. There’s no 12 months, three months. Yes, they are.

Yeah. You are month to month in my gym. I like to think that I have to win your business every single month. There are, there are offers we do. We do get creative here and there. For example, John just spent the spring coaching at the high school varsity level. And he had [00:04:00] so many kids that he thought he could get buy in from if he could just get them to consider the summer.

So we did do a bundled summer offering as an onboard, basically an LBO, but it’s not a cheap LBO. I mean, you’re spending upwards of a thousand dollars. It’s not like it’s nothing, but there are circumstances where we’ll get creative in one off formats for pricing reasons, just to get the ball rolling and get people through the door.

So. They’re just not published. I don’t have any sell sheets on that. I’ve got some email copy I wrote to make it happen and it worked and maybe it’ll be a thing we keep going long term. But I guess the takeaway there is that it’s your gym experiment. Nothing needs to be set in stone. You can change your website at any time.

You can change a PDF at any time. And so stop feeling like you are anchored to something that maybe you don’t believe in anymore or you feel like isn’t converting. Go ahead back to the drawing board. That’s a really good point. We get the questions. And if they’re asking like, what do I need to chisel in stone for the next 20 years for my pricing sheet?

If this LBO doesn’t [00:05:00] work, or this pricing thing doesn’t work, or you sign up a few clients over the next month and none of them pick this option, like just delete it from your PDF. No big deal. One of the things that drives me crazy is when gym owners complain that people come to them asking about old LBOs and they don’t want to, they just refuse to offer it.

If somebody came to me and they were like, Hey, I vaguely remember you did 50 percent off for this community. Is that something you’d still do? Why would I say to them like, get the hell out of here? You owe me twice that much. No, I want the opportunity to demonstrate my expertise. The fact that they’re standing in front of me saying, I’d like to give you any amount of money is a win as far as I’m concerned.

And so the answer to me on that is always, yes, yes, absolutely. I’ll honor whatever you heard. Let’s do it. Get in here. I’m going to show you how good we are in two months time. I’m going to have you spending as much money as possible, as long as it’s in your best interest. Yeah, exactly. That’s a really good point.

I want, I want to go back to something you said. But the beginning of this is [00:06:00] you have some elements of your pricing structure that have been the same since you’ve opened and some that have changed. Could you give maybe the like top three that have changed and top three that haven’t? Yeah. The number one is less is more just I need less price points because they, the more I have, the more difficult it is to sell for people other than the owners and as the team has got bigger, we have needed to ask our team to be slightly more effective salespeople from time to time and if they have to memorize the number of price points.

They do worse. And so less to sell equals more compelling pitches. In my experience, building off of that, probably the best change I ever made was eliminating grandfather pricing. And so we just, we had this early on policy that we’d keep you where you were. We were never in a really like financial burdened spot where we’re like, everybody needs to go up or we can’t keep our heads above water.

We’ve always been growing at a pretty nice [00:07:00] clip. So that wasn’t the reason it was a problem. The reason it was a problem was because if we raise prices for us, it’s usually more like 18 to 24 months, not every year. So let’s say it’s every 24 months we raise prices. I’ve been in business. For nine separate 24 month scenarios.

And so if I had nine different versions of my once a week price point, it’s absolutely brutal for my office manager to manage. We’re not running the same billing software we were in 2007. And so if he’s like, all right, this is Wendy. She’s been here since 2008. So let me do some math and the once a week should be what it is for everybody, not for what it was for Wendy in 2008 and for Tom in 2013 and for Ben halfway through 2016, just before we increased prices.

And we made that mistake for a long ass time where I had probably somewhere between three and five price points for three different services. Yeah. We were at the same boat at my gym as I wanted to be. And I, I understand that I had the [00:08:00] desire to give the people who have supported us the longer and reward their loyalty.

Like it comes from the right principle, but yeah, it was the same deal. At one point we had a very similar structure. We had six, 12 and 18 months where our agreement lengths and that was tiered pricing. This is from another coaching program from a lifetime ago, but then with, so we already have three for each frequency.

And then within those, we had grandfathered rates for a couple of years. And it was just like for three different frequencies, we had to go to click next and click next again in our billing software to see all of our pricing options. We’re like, this is insanity. We need to get everyone on the same thing.

And now we’re in the same boat as you. It’s price increases, universal. Yeah. Ripping the bandaid off is tough. But it’s worth the energy to rip the bandaid off. And I remember when Mark and Michael did this and they had to go to a course correction on pricing strategy. And what happened was they woke the beast of a pretty significant chunk of their community that was dormant.

And they were letting the bills run, but they weren’t using [00:09:00] it. And those two obviously aren’t interested in that planet fitness pricing model where it’s like, God, I hope they spend money and never show up. They didn’t want that, but the reality was it wasn’t an insignificant chunk of their revenue. And by announcing the price increase.

They were reminding people that their card was just getting pinged and people who weren’t taking advantage of it. And that was hard for them to wear that drop in revenue when people raised their hand and said, no, you know what, I’m going to, I’m going to opt out of this. I’m sure that if they could go back in time, they would have done it earlier.

And it’s just one of those difficult decisions that needs to be made. So if you do have a grandfathered pricing strategy in place, I would strongly suggest. That you step away from that model, because it’s only going to create headaches for your longterm. And we tell ourselves stories that people are going to have these huge problems with modest price increases and they never do.

And I was just reminded today, we. We have some string [00:10:00] campers here who have very strong opinions about equipment and that they want what they want when they want it. And I hadn’t raised their prices forever. And I raised their prices recently. And the one who likes to tell me that we need new exercise bikes was very quick to say, I hope that with this price increase, you buy new exercise bikes.

And so I went and I bought two of them right away, but that’s why and how you do it. That’s the whole point. Yeah. And now those people that the people who were really vocal about it are going to Not be worried about that. What I’m sure was like five or 10 a month or like an insignificant amount of money in the grand scheme of things, but they’re going to be stoked that they have the exercise bike and now they feel heard and they’re going to like, that’s a member who was like, Oh, wow, I’m at a gym where these people bought the thing I asked for.

That’s great. I’ll happily pay 7 a month more or 3 a week more. Like when we’re talking about a price increase, we’re not saying. It’s separate from a price correction, which could be up to a 50 percent increase in some cases. Yeah, which is terrifying. And people should tell them stories about that being difficult.[00:11:00]

But you got to do it. You got to do it. That’s a whole other podcast, which I’ve heard Mark tell that tell how he would attack that in a absolutely flawless manner. So I’m going to say if someone has that question. We’re going to get you on a call with Mark to talk about how to have a very difficult conversation with your community about doubling their cost.

Yeah, he can handle that one. Let me come back to maybe the biggest pricing shift we’ve made. Long term and that is stepping away from having back when we had a lot of price points, we had a once a week, twice a week, three and four times a week option and four at the time was 729 a month, which might be really cheap in some people’s mind, but keep in mind, we are a semi private, so like a five to one client coach training environment since the start.

And that price point wasn’t like offensively high. It was in that probably 40 ish dollar, low forties per session range, but still 700 bucks is a lot for certain members of our community. And I [00:12:00] had a staff member, actually, I’ve talked at length on this podcast about how I had colleagues who left to start a competing gym.

And just before those colleagues left over the course of, say, the year leading up to it, one of them. The one who was clearly driving this decision was in my ear all the time saying, we have to make training in an unlimited format, more affordable for our high school and college population. We have to, they just, they need more exposures to the weight room, more reps equals better results equals more money spent, better word of mouth, all these things.

And he was always saying it and the minute he left and we realized like, Oh, we need to compete now. Like we really need to be ready to play this game. That was the moment that I had to stop deflecting that feedback and just say, All right, I didn’t want to do it this way, but I got to do it now. And we went down, we went all the way from having those Four different price points for four different frequencies down to just having a once a week, a twice a week, and an unlimited.

And we brought that unlimited all the way down to 399. [00:13:00] And it was like 40 bucks a month higher than twice a week. And my mindset was like, if we’re going to do this and be aggressive, let’s be super aggressive. Let’s set a price point where a hundred percent of the people going twice a week are going to go to unlimited.

And that anyone going once a week will say to themselves, it’s not that crazy of a jump. To go from here to unlimited. Like it always felt that like a big jump to go from one to two, but now one to two $40, less than one to unlimited maybe. I wanna have this conversation. And we’re now at a point where in excess of 62 to 65% of our clients are paying for unlimited package at this point.

Nice. And. It’s a not insignificant number and all of the reasons I thought this was a bad idea were wrong. I thought that it was going to devalue our service in people’s minds. No, it’s still an expensive product for a lot of people. It’s not 3. 99 anymore, but it’s 4. 29. It’s not crazy. I thought that it was going to overrun the weight room and like just eat up [00:14:00] resources and the team.

And sure, I think that it has taken its toll on equipment a little bit because of the volume we do. What we really quickly learned is that people who show up every day Are almost offended when you approach them and suggest the idea that you’re going to take them through their warmup. Like they pride themselves on being self sufficient in our space and they’re not resource intensive.

If anything, they just get easier and easier by the day to the point where they’re all borderline, like extensions of our internship program. Like they, they really know their stuff. And I was joking with our, our Unicorn Society member, Jacob earlier, where I was like, Jacob, there are times where I feel like I have a 40 interns in the gym and I look around and I’m having a panic attack because half of them are coaching each other and we’re like trying to stop that, like we have plenty of coaches here.

We have all the bodies we need. You don’t need to teach someone how to squat just because you happen to know that. And you pride yourself on being able to explain the program to the guy next to you. But I would call that a good problem to have nonetheless. And it’s. Been [00:15:00] our reality for a couple of years since we made that move.

And the guy who told it to me was right. The, the more they show up, the better the training outcomes, the better the training outcomes, the better the word of mouth, better the word of mouth, the more leads I get. And the flywheel just keeps on spinning. To keep the, keep pulling the thread on the unlimited piece.

The two challenges I’ve heard from Unicorn Society members on, Hey, should I offer unlimited in a semi private environment? We’re not talking about like bootcamp. One is, aren’t those people now going to come 20 times a week? Obviously I’m making decisions here, but aren’t they going to come a lot? And my, I’m not, my payroll is going to skyrocket or my utilization.

I’m going to have people all wait list for sessions. Like, how am I going to fulfill that? The other obstacle I’ve heard is if somebody is paying for unlimited, but due to life circumstances, they’re only making one or two days a week. We’ve probably seen it before where people will quit because I’m not getting a hundred percent of the value.

I’m only getting 80 percent of the value because of that missing 20%. I’m going to bail. How have you encountered either of [00:16:00] these problems? And if so, how do you tackle them? Yeah. So two very different questions. I’m going to take them in the order you presented them. And I might ask you to repeat question number two.

And I finished answering question number one. My interpretation was like, how am I going to handle everybody showing up all the time? And this comes down to in my space, doing a good job of managing expectations during the onboarding process and the assessment process, because just because you signed up for unlimited doesn’t mean I expect or want you to come six days a week, it means that your price point is for what we call three plus, if it makes sense for you to be here three or more days a week.

Then that’s the price point. And what we do at the end of the initial evaluation is say, Hey, based on what we saw, based on your injury history, based on how you move based on your goals. We suggest that you train X number of days per week and sometimes the answer that is three Sometimes that is we suggest you come and you do three full body lifts a week and if you’d like based on the package you’ve signed up for you’re more than [00:17:00] welcome to come in and get some movement work in or GPP or if you want to come in and ride the bikes on other days You’re certainly welcome to if you want recovery days for us to design for you to execute outside of our gym Do you want to get out on a field?

It’s nice out. We’ll do that for you, too And as long as we’re not talking about this as get in here as often as you possibly can come twice a day, if you want, that’s not how we position it. We position it as if you’re going to be here three or more days a week, your price is the same, no matter what. Now we’re going to tell you what the right frequency is based on how you’ve presented.

And it just works. I don’t have moments where somebody has suggested that they do a three day a week program and they show up six because if they do, we’re going to, we’re going to have a conversation about, they’re going to make a, honestly, a compelling case for why they should be on a four day a week strength training program if they’re showing up that often.

And we’re going to, we’re going to have that conversation. We’re going to find ways to not beat them into the ground with their strength training. If they want to be here that often. Great, but we’re going to modify [00:18:00] their programming in a way that they’re not a resource drain because we don’t want them lifting weights that often because it wasn’t a fit for them in the first place.

You’re hitting on a really important point. And I think sometimes we, I see this from Unicorn Society members, I do it myself as well. We think these things exist in silos. Here’s my pricing and packaging. Here’s my coaching. Here’s my sales process. Here’s my lead follow up process. You mentioned it perfectly.

It’s all about how you position that thing. So it’s like everything’s connected more of a spiderweb than it is a silo. So dear listener, if you’re hearing Pete say this and like me, you’re like, damn, I should try out three plus in my gym. Remember that doing unlimited on its own is only one of the many facets that make this.

And I think that’s a point where we often, again, forget that everything’s connected in the way it is. It’s what about this low barrier offer? This is why it won’t work for me. That’s the low barrier offer will work for you. If you do the appropriate followup steps for it, there’s always a couple of things coming down the line.

Yeah, if you’re really an expert, like you truly have your 10, 000 hours, you are this person standing in front of you, ready to make a [00:19:00] transaction with you because they see you as an expert who has a knowledge or skill set that they want to purchase, then you need to embrace that and stand in front of them and say with conviction, this is how often you should do this.

If we’re going to optimize your time in the weight room, this is the number of days I suggest. This is how long those training sessions should take. This is how frequently I suggest you schedule them. And right over here is the protocol for getting them scheduled. And they’re going to fall in line based on my experience.

If Eric Cressy looks apparent in the eye. And they’re like, your kid’s not ready for four days a week of training. I’m going to write him a three day a week program. I’ve never seen a dad be, hell you are. I’m in a five X program, right? It young man, it just doesn’t happen. And so you are in an expert position more often than not in these circumstances.

Agreed. The second half is the obstacle I’ve heard is we know that if somebody’s getting the unlimited package. But they’re only able to make it, let’s say one or two days a week. Sometimes [00:20:00] they might still be getting great results, but they might be like, Oh, I’m not getting the maximum benefit out of my membership.

I’m just going to quit now. This might be less of an issue when you guys are so prescriptive and you clearly are the authorities in your area. But if maybe you could put yourself in the shoes of a gen pop gym, where sometimes just getting your clients in twice a week is a huge frigging win. It’s less an issue for me, not so much just because we’re like thought leaders, but it’s because I do have to win business from one month to the next.

And so I’m not asking people to sign contracts, which again, as I’ve said in the past is mostly because of the extreme seasonality of my population. Yeah. However, if we, if somebody overshoots in what they think they can pull off and they sign up for unlimited and they average just under two sessions a week for that month, it’s not a, it’s not a brutal error on their part because.

Four weeks after the transaction, we’re talking about the next transaction anyway, and we can course correct as we need to. The way my unlimited package is structured is that our programs are written are actually in four [00:21:00] week intervals. So you could theoretically do a program in 28 days. We do have a very special, small subset of our community who hit 13 programs a year.

They’re just so locked in that they never, ever miss a week. There’s, there are probably four people who have done it. all time outside of our professional athlete population who aren’t here year round. But when they are here, they do that every fourth week, plus one day they’re on a new program. But year round, I can count on one hand, the number of people who do that.

And we call them, or we refer to them as like the 13 program club. And we always comp the 13th program. It’s always out of a thanks for your loyalty. This last one’s on us if they do it in that window. And it’s very well received. And Those people are still here. Now to your question about how I would suggest a gen pop gym handle that, or like a boutique fitness studio, I’d suggest that you not be so fiercely attached to the language in your contracts that you accept the fact that sometimes you got to downgrade.

And sometimes instead of trying to jam [00:22:00] someone into this like square peg round hole, because you want to extract as much money as they said they would spend with you initially. You need to admit that this isn’t realistic for you, and I don’t want you to resent your agreement with me. Let’s make it.

Let’s stop trying to force people to show up more often because they quite literally can’t do it, and acknowledge the fact that two was realistic, or a one session a week package was realistic, and let’s make it right. Tear that thing up and start over is my advice to people. But you know what? My advice isn’t that informed, because all I’m doing is applying what I see as logic at this point.

I have not had to run that model. No, you’re on the same vein as the All the positive experiences I’ve had in my gym, or more accurately, the negative ones that we’ve found the positive learned within and it’s, yeah, like we’re never taking any of them to court. We don’t have contracts because we actually expect to get that many dollars from them.

Like. It’s really just to set expectation. And again, I’m like Jen pop as hell, 55, two kids in a bad knees, our avatar. But it’s so that when something [00:23:00] comes up and inevitably it’s life that throws them off, they love the training, but life gets, gets hard. We at least have the opportunity to have a conversation with them and.

I would guess 90 percent of those conversations end up being like some version that feels incredibly custom to them, but it’s like one of three things that we do, one of which being like, why don’t we just downgrade you? Or why don’t we do this other thing? Or how do we get you that whole program that we mentioned, but we want to get you keeping going on the plan rather than, Oh, on sub point five B section two, it says this very specific thing.

I think as soon as you quote the contract to anybody, Pretty much lost. Yeah, I run into this in my own special version this time of year. Every year we sell an in season training package to our athletes. If you pay for one month of our traditional unlimited training. You get the full high school baseball season unlimited because I know that they’re going to average under two sessions a week.

They just literally don’t have the time to pull it off. So you spend 429 with us [00:24:00] after the first day of the high school baseball season starts. So sometime between say March 20th and April 1st, then you train. As often as you would like until the day your season ends and we get value. And I would say that about half of the time people use it as much as they think they’re going to half of the time, or we’ll say 40 percent of the time people use it enough that it’s like just exactly fair value.

And then you’ve got this 10 percent that way overshot their expectations and they came in like once or twice. And then we’re faced with this dilemma. We say to them, Hey, we were very clear in the language of this, that nothing carries forward, it’s use it or lose it. Or do you say, you know what? I totally get it.

I thought you’re going to pull it off. Coaches overextended you during this. Like the schedule is way crazier than you thought it would be. Tell you what, we’re just going to apply this to your first month back. Just get in here. We’d love to see you. That’s the way we go. Almost every time. The only way I won’t do that is if I.

[00:25:00] I just don’t like you because you’ve taken advantage of us enough times. You’ve been difficult from a scheduling standpoint, you’re late cancellations. You have a reputation of just being a pain in my ass. And this is like my way of avoiding the difficult conversation of firing you. But even then they don’t leave.

It’s so incredibly rare though. So I guess the ultimate takeaway here is, like I said earlier, this is your business. You wrote the rules. You can rewrite the rules. You can break the rules. You need to stop being so strongly attached to the legalese in a document that you don’t intend to litigate against anyway.

Yeah, yeah, I was just gonna say that it sounds like by keeping your pricings options so simple, it gives you room to serve those other people and it feels custom to them rather than being like, Oh, two people have requested this thing. We need to make four more pricing options around that. No, you don’t.

Just do that for them and make a note on their mind body account or whatever it is that simple. And it often comes across as way better customer service. [00:26:00] Totally agree. And look, you and I spend a good chunk of our weeks trying to basically make our, make ours and other people’s businesses feel very corporate and incredibly structured and systemized.

But I try not to lose sight of the fact that the flexibility that we have in being mom and pop small business entrepreneurs is really valuable and not something that I want to wholesale get away from. So when, you know, if I see somebody do something nice, say something nice, and I feel like I want to just rip a t shirt off the rack and throw it to them and be like, Hey, thank you.

This one’s on me. I shouldn’t feel like I have to run back into my office and get into the spreadsheets and adjust the inventory. Like I love that some of this stuff is done by feel. And that includes pricing strategy. That’s great. You want to call it there? Michael always stops me before the 30 minute mark.

I know. That’s what I was thinking too. He does the exact same thing to me. So takeaways are one. We do have that mom and pop flexibility. It’s okay to do things by feel, and it’s going to make [00:27:00] special moments for people who are going to come back again, again, to simple pricing is always going to win three, you should raise your rates and definitely don’t do grandfathered rates.

If you are doing grandfathered rates. Reach out. We can help you. I think that covered the main takeaways for me. Anything I’m missing? Yeah, that was where I landed. I was going to make sure you mentioned the grandfathered roots, but otherwise we ended up in the same place. As far as our mental notes go, we should do this again.

Absolutely. Let’s do it again. Thanks to your listeners. If you have any questions, you know how to reach us. And again, if you haven’t already downloaded Mark’s free copy of the book and do him a solid and buy the real book. If you like it, talk to you soon. Good chat, Ben. Talk soon.