If you own your own boutique fitness business, you might appreciate that determining the right price strategy is a complex and critical process. Establishing the right pricing model is a key success factor to building a sustainable business. Here are some simple tips from us to develop an appropriate pricing strategy for your business.
In adopting a value-based pricing approach, it is important that you understand your studio and your brand. How would you position your brand? Who are your customers? How much is your target customer willing to pay for the class? are some key guiding questions you can use to determine the most suitable strategies for your studio.
As a baseline, you don’t want to wrongly determine a value only to find that your prices do not cover your basic costs to run your studio. It’s important that you have good visibility on your projected revenue, and the expenses of running your business, including your rental, equipment and hiring costs.
To help you with that, doing a preliminary cost-based approach can be constructive to ensure that your prices are always set above the break-even price so that you will always have a healthy margin to work with. Boutique fitness studios are rarely profitable in the first few months of operating as people are discovering about your offerings and many of your classes may not be running at full capacity.
Most of the time, boutique fitness studios offer several different packages at different prices. Some offer a single drop-in package which is the most expensive, unlimited monthly membership, private class packages and many more. To determine a suitable discount for each package, you need to first find the blended price (it could be by value approach or cost-based approach with a margin of revenue). Then, with the estimation of packages sales’ percentage, you can find the most suitable discounted price for each package to reach the blended rate. It can be difficult to find the exact percentage from the get-go. So you can try different sets of percentages, and find the one you feel the most confident in.
There are many different pricing strategies you can utilize to appeal to customers with different needs. Here are some examples of it!
a) Session-based package
The majority of boutique fitness studios in Hong Kong use this pricing strategy. They would offer 10 classes package, 20 classes package, 30 classes package. This strategy can attract potential customers due to its discounted price for each session. The more classes that you purchase, the more value you get from every session.
b) Recurring package
The idea of this strategy is similar to those of monthly subscriptions. The members will continue their membership with the boutique fitness studio unless they request cancellation. Similar to the session-based package, this package attracts customers due to its discounted price. This strategy can be beneficial to the studio in securing long-term membership and gaining loyal members to the studio. One example would be XO Pole Studio, which offers a monthly subscription package with recording access to all of its online classes.
c) Sharing package
Several boutique fitness studios in Hong Kong use this pricing strategy. Lights//Out Boxing Club is one of them. They offer 2-person sharable packages and corporate shared packages with a validity date that is longer than other packages. Most of the time, shareable packages offer more sessions and it increases cash flow upfront for the business.
With an operational business running in clockwork, it’s important to regularly evaluate the effectiveness of your pricing strategy. Is your current price the most optimal one in generating the largest revenue? Are your customers willing to pay more for your classes? What will happen if you lower your price, will it increase or decrease your revenue? Having these reflections periodically could reflect timely insight that could help you update your pricing strategy. However, price changes can be a tricky business. You don’t want your customers to get cold feet due to the unstable pricing. Just like what Katharina Paine said, “The moment you make a mistake in pricing, you’re eating into your reputation or your profits.”.
vibefam provides a payment and scheduling platform that allows for the flexibility and customization of membership plans. We facilitate payment by processing payments securely through a global payment gateway. This way, you can sell group, private and shareable packages that help you scale.
This article was written by Fidelia Dwiksa.