What's behind your price tag?
By Susan McEntegart, Corner Shop Gym
If you asked me to identify in one word a significant issue in our industry I would have to say it’s PRICE. It is rare that price does not become a key issue when I am working with clients on a business consultancy project regardless of the reason I am brought in. When this crops up I always examine how the current price was dictated and in what climate. Did they simply look at the competition down the road and knock a couple of quid off their rates or did they set a price when they first opened and have never reviewed it since despite market changes?
In order to run a safe and sustainable business you must charge a price that supports this and there is quite a bit of consideration required when setting the price. When dealing with products pricing is simple as you have a much clearer cost of goods to deal with, in the service industry it’s a little bit harder as you have to place a value on your time, your expertise and your qualifications as well as the cost of operation. Many of my clients are notorious for undervaluing their worth yet are quick to complain when some “cowboy” who did a 2 day course has set up down the road and is charging €75 a month to deliver classes in a shed with no heating, limited facilities and non commercial or counterfeit equipment and probably no insurance – sound familiar??
For business to be sustainable the price you charge must cover both cost and profit. This is a simple, fundamental fact. The “cowboy” in the shed gets this with his €75 a month fee!! As competition has increased in our industry, both locally and online, I see many fitness businesses enter into price wars, or as I call it a race to the bottom. Pricing models go out the window as you just keep beating the next cheapest price. However, when price lowers so too must costs in order to insure sustainability and in a largely unregulated industry this causes problems. Too many people are cutting corners and although it often isn’t being done out of malice or with any intention of harm it is going to damage our industry. There is a cost to doing things the right way and you need to embrace that and even try to make it part of your marketing.
So, what is the cost of doing things the right way? It includes having adequate qualifications and skills to deliver the service you are charging for, it may include membership of a professional body, it will include annual insurance policies, licence fees, commercial grade equipment, facility hire/rent and rates, service charges including electricity and gas, it should include the provision to uphold the contents of your health & safety statement and policies within this, it should also support continual professional development. If your current price is not facilitating this you need to review. You may need to increase your numbers, you may need to increase your price, you may need to do both or perhaps you need to review your location.
Belief in your Service
The price you set must also assure sales and fundamental to this is your belief in the service’s worth and your ability to market this. The price sensitivity of consumers is linked to the level of importance they place on price relative to other purchasing criteria. Many of us have decided that price is the only purchasing criteria but this is not the case. Think about the bride who wants to feel body confident for her wedding in six months time, the person who is lonely and wants to get out a bit more, an injured person who suffers pain daily and can’t do the things they want to, a person who lacks functional strength to complete work around the home, a person who’s health is at risk due to their lifestyle, a new mum who needs to spend time on herself, someone who lacks confidence and wants to feel happier, someone suffering from anxiety or depression and needs to release endorphins in their body, someone who likes to move and be active – each of these individuals are coming to you/your business for their own reason which may have an importance to them far greater than the money they have to spend.
When we provide a service that meets these individual needs price becomes less important. The price is not just for the physical time spent with you but for the feel good factor created and for the solution to the problem they had when first approaching you.
Ability to Scale
There is a place for premium and budget services in most industries, look at Virgin Atlantic v Ryanair, Brown Thomas v Penneys, M&S Food v Aldi. All are successful and compete alongside each other targeting different segments of the market. Be warned however, if you intend to go down the budget route you need to be able to scale the business or it will not work. “Stack ‘em high and sell ‘em cheap” is a business model that requires huge investment and often as a smaller operator it is better to have less people pay you more than many, many people paying you a less.
Finally, in any industry there will always be chancers and people who bend and break the rules and do business in an unethical manner – you cannot and should not try to compete with this in any way other than doing things the right way, marketing your strengths and knowing (hoping!) that the market will level itself out. Instead of spending your time and energy fretting and moaning about this commit to spending it differentiating yourself and rise above it. Be prepared to talk to your customers about you and/or your staff’s skills and qualifications, your policies and procedures and justify your prices. If our customers see a deal website offering a 1 week online fitness instructor qualification for €200 or a gym down the road offering €3 pay as you go classes and €15 personal training sessions they probably think that is the standard.
Remember, we are the fitness professionals, it is our job to educate our customers and prospects rather than lowering ourselves to a poorly informed market’s expectations!
Susan McEntegart, is Head Coach and Owner of Cornershop Gym and has worked in the leisure industry for 20 years gaining vast experience and knowledge along the way. Her hands on experience in every aspect of operating a facility gives her a unique insight into the extensive requirements involved in opening and operating a safe and successful fitness business. Corner Shop Gym is a dedicated school in Ireland established to help fitness professionals with the business of fitness.
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