11 November 2018
The rise of both budget gym chains and expensive boutique studios has put pressure on the mid-tier fitness service.
Experts have advised many of the reasonably priced gyms to either style up or strip away the trimmings. But is yoga on surfboards anything more than a fad? Will people tire of bringing their own towels to a bare, cold and soulless budget gym?
Pricing your gym memberships is a difficult decision. A successful revenue model will return healthy margins; get it wrong and you could be in for early closure.
If you’re struggling to decide on a membership pricing model, here are some key points to consider.
Location, location, location
Chicken or egg, business model or location; it doesn’t matter which came first, but you cannot consider one without the other.
- Check out the competition. A single street does not need three budget gyms, but the neighbourhood may benefit from two. You need to determine if you should price your gym similarly to the competition- perhaps there is a high demand for another budget gym- or if you will opt for a different pricing strategy. If you choose to veer away from the competition, ensure that there is demand in the area for your model.
- Who is in the neighbourhood? Are you planning on opening up on the corner of 5th Avenue or in a small town upstate? Rent alone will force a very different price mark, but so will your target market. Single business people and wealthy families may have similar spending limits, but their desires are different.
Consider the services you offer
- A budget gym will offer the essential fitness equipment and changing room facilities, but all will be fairly basic- a meat no trimmings service. Often long hours or even 24/7 to cater to shift workers. Classes are basic and usually provided by on-site instructors or the occasional freelancer. Minimum staff overheads are attainable by using access control technology like membership pins, barcode apps or keycards. A high volume of memberships provides a healthy profit margin.
- A Mid-tier will offer an array of classes taught by good, reliable instructors. There will be plenty of on-site staff on-site to assist members and create a warm atmosphere. A medium range gym will most likely have a swimming pool- although not in a high-rent location- and should provide towels.
- A high-end gym will cater to specific needs. Childcare, on-site physio treatments and a well-run cafe mean that this is more than just a fitness facility. Swimming pools and sports facilities, as well as coaching academies and expertly-taught classes, add to the prestige and validate membership costs. Staff should make an effort to get to know members, creating a community feel that encourages members to lounge after workouts. Keeping the clientele in mind, you might add services to suit business people or wealthy families- squash and tennis are popular with both of these demographics.
Read more: 8 ways to increase revenue at your sports centre
Offer a variety of prices
- By time: You will need to offer a variety of pricing options. The most obvious example of this is an off-peak membership, which allows users to enjoy the club for cheaper at less popular times. This will benefit the club by optimising usage and controlling peak times.
- By genre: Some clubs restrict access to certain services, such as offering a Gym-only membership, a Gym and Swim, or Sports pitch access.
- By clientele: Discount models open up your gym to those who otherwise couldn’t afford to be members. While some high-end gyms want to remain uber-exclusive, a discount structure could boost your revenue. Students, corporate, family and elderly discounts can be as effective as off-peak and peak memberships in evening out usage. These demographics are all on different schedules, meaning you can bulk up mornings and take the heat of the peak 6 pm rush.
Tags: gym management, Memberships, pricing, revenue model
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25 June 2018
Booking System, Marketing, Operations
Dynamic pricing has been a part of flight sales for years. You check the amount, think about it, then return to book the next day and find out it has doubled in price. Now, many leisure centres, fitness studios, and sports courts are using dynamic pricing to increase usage and maximise profit. It makes sense; isn’t it better to have a tennis court filled, even if the profit margin is slimmer? Does dynamic pricing solve the gym’s most prominent issue of being either too full or not full enough? The answers are not as straightforward as you might think.
How does it work?
There are many software products that each have their method of determining price points. First off, the studios themselves set their price margins: the minimum and maximum they are willing to charge for a class. Then the algorithms kick in. The method works by taking the actual capacity utilisation of a studio. Let’s say a studio is, on average, at 60% capacity. Dynamic pricing aims to increase this figure while also growing revenue. However, it is possible for this studio to improve its capacity utilisation to 70%, yet revenue stays level or decreases, due to lower prices.
Who will benefit?
Dynamic pricing is particularly useful in the boutique fitness market, where customers will pay premium prices for premium slots. Then there are the many people who cannot afford to participate unless the price is lower; dynamic pricing gives them access to slots depending on when they book. Facilities that are in high demand (such as squash courts) can also do well from a dynamic model, as space will only go to waste if a timeslot is left open.
Will dynamic pricing put people off advance purchasing?
A tool like Zenrez offers a pricing structure that decreases the value of a class as the starting time nears. A descending model may seem like a positive move; that empty spot gets filled- fantastic! Ultimately Zenrez’s programme discourages early-bird bookings, causing a last-minute flurry of activity and studios struggling to predict and manage class numbers. Your class might be full, but your margins are squeezed and your customers are less loyal. People who wait until the final moment to book your classes have proved that they could take or leave your service. They are an unreliable customer that could very quickly jump ship.
What about an ascending price model?
Perhaps more useful are the systems that turn this algorithm on its head, rewarding early booking and slowly hiking the price as the time nears so that a reservation made the final hour costs up to £6 more than one made a week before. This system is more effective than a descending model and is proven to be useful in the airline industry. However, an ascending price structure can dissuade some people from booking at all.
Introducing your customers Jane and John. Jane is delighted she bagged herself an early deal for Boxfit and views your studio favourably. John doesn’t know what his plans are in a week’s time and cannot commit to a class seven days in advance. It comes to the day of, and John resents paying more than Jane for the same service. That bitter taste makes John spiteful. Maybe he is a spiteful guy? Or, quite possibly, many more of your customers are a little miffed. Jane, on the other hand, is a loyal customer who prioritises your classes, instead of offering Jane a discount on individual courses, you should be focusing on promoting class bundles or a membership.
Will it encourage more pay-as-you-go purchases and discourage memberships?
The short answer is yes; well, probably. With an abundance of choice in studios and gyms, pay-as-you-go is very popular, particularly amongst the younger generation who enjoy varied workouts. At the end of the day, each venue wants you to train with them and them alone. So if you bring dynamic pricing into the mix, aren’t you encouraging people to earn discounts by paying for individual classes?
By all means, experiment with your pricing; perhaps a dynamic model will work for your studio. However, if you want to build a loyal customer base, maybe it makes more sense to provide value for money memberships. Regarding pay-as-you-go, peak and off-peak is a tried and tested method that few customers seem to begrudge.
Tags: Marketing, pricing, revenue, Sports
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5 June 2018
Booking System, Marketing, Memberships, Operations
Members pay premium prices for peak-times, yet overcrowding often hampers their experience. For many people, psyching themselves up for the gym is a hurdle in itself. Once they have made it through the doors, the last thing they need is further blockades between them and their workout. All too much is the queue for a treadmill, the claustrophobia of a rammed group exercise class and a bruised back from doing sit-ups on a hard floor because there are no free mats. Fortunately, there are a few ways to reduce overcrowding and keep your gym running smoothly and efficiently at these busy times.
Eliminate reception bookings
There is nothing worse than arriving at the gym only to find that the reception is blocked up with customers and all of the staff are either on the phone or clicking away at computers. Priority needs to be given to those seeking access, needing towels or who have a general query. Move your class bookings online with a bespoke system like OpenPlay and increase reception efficiency.
Anyone working 9-5 cannot avail of the luxury of off-peak workouts. However, for freelancers, stay-at-home parents, retirees, students, and children, a reduced price membership could be tempting. An off-peak membership restricts the user’s access to less popular hours, such as mid-morning and late afternoon. Make sure to introduce some off-peak classes, so these members can also benefit from the timetable. With any luck, some of your current members will opt for a quieter workout and new members will be able to join.
Digital sign-ups and registers
It is essential, first of all, that you have some form of a sign-up system for your group classes. People will lose faith in your venue if it is a constant lottery where they must turn up 30 minutes before the class to have any hope of making the cut. Encourage people to sign up online, so at least this booking race is digital. Now that you’ve asked people to sign up, you need to follow through on your system and implement registers. Most clubs print off class lists, which takes up the time of receptionists, adds to printing costs, and creates a general faff for everyone involved. The OpenPlay Pocket mobile app gives each instructor access to their classes so that they can check off students in the studio. No middleman is needed; registers automatically sync with bookings and cancellations, so they are up-to-date and digitally stored.
Enforce Time Limits
Many clubs ask their members to limit time spent on each machine (usually 45-60 minutes max per person), in an attempt to democratise the gym. Time limits are useful to a degree but even waiting 45 minutes for an exercise bike is a big ask. Ensure that PTs and instructors are on the gym floor offering workout advise to customers. They can show people the benefits of less popular equipment and encourage runners and elliptical trainers to increase sprint times, so they train in shorter, more intense bursts.
Efficient Access Control
The majority of fitness centres already use a version of access control; typically this is by way of a membership card. At OpenPlay, we integrate your booking statistics with your access control system. Alternatively, we have developed an access control app that fits seamlessly with your OpenPlay account. Instead of a card which can be forgotten or lost, a barcode system works straight from mobile and operates even in offline mode. This barcode system is particularly efficient for guests or external users who have a squash court booking. Their unique barcode can be programmed to allow them access through reception, the changing rooms and the squash court they have booked.
Tags: administration, facilities, Marketing, Operations, pricing, Retention, revenue, Sports
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