“My clients would never pay $250 for a gym membership!”
Well, they’ll pay $250 for something. What?
If you asked, “What’s the worst way to price my service?” I’d give you one of these answers:
- Copy everyone else, and then drop your price by $5
- Take the average of everyone selling “CrossFit” in your area
- Guess at “what feels right”
- Decide what you can afford to pay, and charge that.
I know, because I’ve done all four of them. Here’s why they’re wrong:
1 + 2: other local CrossFit gyms probably have no idea how to price their service, so they did the same thing. Every new generation of gyms in your town now sells an identical service for $5 less per month. Guess what will happen two years from now? Yep: someone will do what you’re doing for less.
3 + 4: you’ll guess wrong. We all project our budget onto our clients. When we’re in the Founder phase, we have less money than our clients do. Stop projecting your own poverty and fear onto everyone else; it stinks!
The right way to set your rates is mathematical: you calculate your desired income and your projected expenses. Then you figure out how much money you need to break even. You should be able to reach breakeven on 50 clients or less; 30 is better. At 150 clients, you should be paying yourself and at least one solid coach.
“But…30 clients?!? I’d have to charge $250 per month! No one will ever pay that, when every gym around me charges $95!”
Maybe you’re right. Flip the script: instead of asking, “What will people pay for CrossFit?” ask, “What service can I sell that’s worth $250 per month?”
Maybe that’s a 1:1 package. Maybe that’s a small-group session. Maybe that’s a nutrition + group plan.
Sell it, and LIVE UP TO IT. Deliver $250 in value every single month. Signal value in everything you do: look professional, speak professionally, and give them exactly what they’re buying.
It’s probably something that no one nearby is selling. Don’t be surprised. If every gym understood value and its relationship to price, the average CrossFit gym would be charging more than their 2010 rates, not less.