Raising rates can save a business.
That’s obvious.
It’s just dollars and cents, and more income improves the bottom line.
But it’s important to remember that increased rates help clients, too.
I can hear the criticism already from the keyboard warriors: “It’s price gouging!” and, “You only care about profit!”
That’s nonsense. Rates that reflect value greatly benefit clients, too.
Owners Who Survive Can Thrive
I’ve seen many great coaches lose businesses because they didn’t charge enough. That’s heart wrenching. But I feel even worse when I remember that every gym closure means about 150 people suddenly lost their coach and are in danger of heading back to the couch.
They’ve lost their guide, they’ve lost the fitness home, they’ve lost their connection to other members. They’re frustrated and upset. Sure, some will find new gyms because they’ve built a strong habit, but many others will quit working out completely.
What if the owner of a struggling gym had fixed rate problems instead of “fighting the good fight” and undercharging for years? The members would build long-term habits, accomplish goals, maintain their momentum and become healthier.
Further, owners who aren’t stressed about the bills have the bandwidth to improve the gym. Struggling owners become cranky and bitter, and they certainly don’t have time to meet with members to talk about goals, develop staff or create new programs to produce better results.
An owner who’s making enough money will perform much better in the business. I know this from personal experience: I didn’t coach my best classes after I argued with my wife about the “expensive cheese” she had purchased. And I wasn’t fully present for PT sessions when I was worried that the business couldn’t pay its rent.
A rate increase improves the life of the owner, who can then focus on improving a business that’s helping a host of people improve themselves.
I’d go so far as to say that if you care about your clients, it’s your duty to raise rates so the business doesn’t fail and leave them hanging.
In fact, it’s not uncommon for a terrified gym owner to raise rates with the help of a mentor and have clients say to him, “It’s about time. We love this place, and you need to keep it open.”
Better Businesses, Better Coaches
Some of the best coaches who ever worked in the fitness industry can now be found selling real estate or putting out fires because they couldn’t support their families working at gyms with low rates.
You know the math as well as I do: A talented but overworked coach runs 40 classes a week for $25 a class and makes $1,000. She can’t see a way to make more, and she’s getting burned out coaching back to back for hours. So she starts phoning it in and sending out job applications in another field.
Another bit of math: An owner can’t afford to pay coaches, so he trades membership fees for coaching. He thinks his labor costs are $0, but they’re just hidden and he doesn’t have a clear idea of his expenses.
The well-meaning coaches do their best, but they don’t work often enough to form strong bonds with clients. The owner is struggling to keep the gym afloat, so he rarely if ever provides mentorship, evaluations, and training on procedures and policies. All this creates inconsistency in service delivery, and that’s a huge problem in a gym.
Now, I’m not saying there’s no place for part-time coaches. I’ve examined the issue in depth here: “The Case for Part-Time Coaches.”
I am saying a business that earns enough money is much more likely to have happy, long-term, career-oriented, well-paid trainers who have been coached to deliver service at an A+ level. When very skilled coaches can build careers in fitness and don’t have to moonlight at Starbucks before leaving the industry, clients get better results.
Reinvestment Serves Clients
A gym that rations toilet paper to save money isn’t a gym that’s going to be forward thinking about its equipment, facility and service. That broken air bike will probably stay broken, the lobby isn’t getting painted, and Coach Steve isn’t going to that kids certification so he can train clients’ young ones.
Client results are more important than gear, cosmetics and credentials, of course, but you get the point. When a gym charges enough to turn a profit, its owner can consider how to serve clients better.
We advise gym owners to avoid excessive investments in gear, but perhaps spending $1,200 on some sleds is worth it if it allows you to generate $5,000 with training programs designed to help people who want to set PRs in Hyrox races.
Or maybe a new wall would create a space where clients who want privacy can work one on one with a coach, which produces more PT revenue for the business.
And what if a rate increase allows you to hire a cleaner who dramatically improves the appearance of the facility so clients aren’t inhaling hair when they do burpees? They’ll probably stay longer, right?
I know a gym owner who was so overworked and underpaid that he let random stuff pile up in a room over a period of years. When he finally had a little extra time and money, he cleared the room, spruced it up and bought some lockers so clients didn’t have to leave their bags on the training floor. They saw real value in that obvious upgrade.
Great business owners with solid profit margins don’t just pad their bank accounts. They think of ways to improve the client experience.
Higher Rates, Better Clients, Better Results
Clients who want low rates will not fit in a business that sells coaching—a premium service. Think of the mismatch when members of the $20 supper club find themselves in the best steakhouse in town.
Price-sensitive clients tend to complain more and cause problems, and they’re fickle because “a better deal” is always around the corner. They aren’t invested long term, so you can’t do your best work with them. They won’t be around long enough to accomplish big goals or develop a lifelong fitness habit.
High rates screen out bargain hunters and help you acquire the right members: People who are more concerned with value than price. They want results, and they’re willing to pay and work for them. That’s the type of client you want because you can build a long-term relationship with them and help them achieve great things.
They won’t get your level of service at the bargain basement with $23.99 PT sessions. Great service costs more. Great clients know that and will seek out the best gym in town.
Rate Increases: Get Help
We’ve executed hundreds of rate increases in gyms, and we know they are good for the owner and the clients. In fact, one of our mentors has helped gym owners implement more than 81 rate increases over the years. Not a single gym lost all its clients and went under. You can read the whole story here.
With that said, you can mess up a rate increase on your own. They can be tricky. For example, we advise gym owners not to bump rates by more than 15 percent, and if a greater increase is needed, we put several increases on a timeline.
The best plan? Run your numbers with a business expert to determine exactly what you need to charge so you can own a profitable gym. Then use a battle-tested, step-by-step plan to roll out the rate increase the right way.
To hear more about how a mentor can help you do that, book a call here.
