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The $10/Week Price Raise That Added Six Figures (And Lost Zero Members) · Gym Business Coach Podcast

• 0:00
  [SPEAKER_00]: All right, welcome back to the Jim business coach podcast.
• 0:03
  [SPEAKER_00]: I'm your host Tim Lines joining studio today by Randy angst and what's happening good morning We're out here in the streets doing it guys a couple episodes ago.
• 0:11
  [SPEAKER_00]: We talked about a Price race.
• 0:13
  [SPEAKER_00]: We talked about we're gonna give you a little sneak peeking behind the scenes of what our price race was all about and
• 0:20
  [SPEAKER_00]: kind of we got some information we got some news back and uh... before we get into it we want to talk about like the fact that most people don't raise prices because they're nervous about losing clients yep and a lot of times they'll kind of have step into a price raise world i'll grant for everybody in and then all the new people coming in kind of go up and it's always your intention that you know someday we'll get everybody up to the same price but then years go by and here we are uh... you got seventeen different price points
• 0:50
  [SPEAKER_00]: and grandfathered in and military discounts and family plans and it's just a mess and so what we try to do a couple of years back is just keep everybody on the same plan so and it really was in my opinion mostly because I wanted the reporting to be really clean how many people in this membership any people in this membership how long they stay and they did it it's very difficult to do that when you don't you know you got a in-between prices yeah
• 1:16
  [SPEAKER_00]: uh... and so we took a look at our numbers and it was time for a price raise we we hadn't done it in a few years and you know we wanted you know we were trying to hold on uh... to that price point that was just below a hundred dollars per week and so we stuck to that ninety nine a week kind of format because it was just so easy to sell uh... just like you know nineteen ninety nine you know and all that stuff so you know just for kind of reference we were unlimited uh... annual uh...
• 1:46
  [SPEAKER_00]: So, we decided we're going to take it to 1-09-99, so it's a $10 a month increase, 10-10 to call it a week, increase, and that was what we decided to do.
• 1:58
  [SPEAKER_00]: We also have another membership that went to 1-39-99 a week, and so far so good, I'll give you some data here in a second.
• 2:15
  [SPEAKER_00]: we really didn't get any kickback on the price increase and we start thinking about why why is that well number one we believe we bring a great product it's undervalued even at the higher price and that's what you kind of always want to be you always want to be like over delivering for the for the price so people just can see the value if you're over charging for what you deliver than people leave so we want to always over deliver for what we're charging
• 2:40
  [SPEAKER_00]: And when it came down to it, everybody looked at it as a, hey, this is a $10 a week increase or really just a $10 increase is what they see.
• 2:49
  [SPEAKER_00]: Yeah, they don't really think too hard about it.
• 2:52
  [SPEAKER_00]: And, you know, the honest truth is, it's actually $40 plus dollars a month, right?
• 2:57
  [SPEAKER_00]: And so you start thinking, well, if we were to have like raised at $40, would that have raised more?
• 3:05
  [SPEAKER_00]: eyebrows, and you know, I have to assume it would of because it's a higher number, even though it's literally the same thing, or weekly pricing has helped us defend pretty easily without any like pushback whatsoever, the price increase because it was such a small number.
• 3:26
  [SPEAKER_00]: Now,
• 3:28
  [SPEAKER_00]: Again, going back to the whole kind of like fear thing, this is this is what you guys worry about and we did too, like, but when I did the math again, everything's data driven here.
• 3:38
  [SPEAKER_00]: I looked at the increase.
• 3:39
  [SPEAKER_00]: I looked at what we were kind of making per month already.
• 3:43
  [SPEAKER_00]: You know, we could lose about 23, 24 members and really be in the same place financially.
• 3:50
  [SPEAKER_00]: Um, and we didn't lose anybody.
• 3:53
  [SPEAKER_01]: Yeah.
• 3:54
  [SPEAKER_00]: We didn't lose anybody.
• 3:55
  [SPEAKER_00]: So it just hit on March 1st.
• 3:56
  [SPEAKER_00]: It's like, middle of March now.
• 3:58
  [SPEAKER_00]: Had a couple payment cycles and really just everybody's like, cool, no problem.
• 4:02
  [SPEAKER_00]: Not a big deal.
• 4:03
  [SPEAKER_00]: So that one decision has netted us, will net us over the next 12 months over six figures in additional gross and net revenue because it's going to go to the bottom of my mind.
• 4:15
  [SPEAKER_00]: Right.
• 4:15
  [SPEAKER_00]: Because we're already in a profit.
• 4:17
  [SPEAKER_00]: So the good news is this.
• 4:19
  [SPEAKER_00]: Um, usually the the the hesitation for a gemotor not to raise rates really isn't true.
• 4:26
  [SPEAKER_00]: It's like in your head if you think about it, right?
• 4:28
  [SPEAKER_00]: In sure, you're going to get some squeaky wheels.
• 4:30
  [SPEAKER_00]: You're going to get some people like, hey, you know what, I've been here for X, Y, Z.
• 4:33
  [SPEAKER_00]: And, you know, at some point, you have to understand like, hey, you know what, I've increased my value over the last five years and you're still on a five-year-old plan, like Miss Miss Johnson, we've got to raise your rates to, you know, what everybody else has paid.
• 4:46
  [SPEAKER_01]: Yeah, and I think you know that when it comes to the fear and it's always the fear of the numbers of members, right?
• 4:52
  [SPEAKER_01]: It's not you don't look at if you looked at the potential gain, you probably wouldn't feel the same way about it.
• 4:58
  [SPEAKER_01]: But even at that, I mean, 24 members, you know, that's that's a that's a ton of people that you could lose and still be That's not neutral, you know what I mean?
• 5:10
  [SPEAKER_01]: And so like that's the biggest thing and we use that example a lot when it comes to kind of mitigating fear.
• 5:15
  [SPEAKER_01]: right, it's an emotional response of our frameworks.
• 5:18
  [SPEAKER_01]: Yeah, absolutely right.
• 5:19
  [SPEAKER_01]: You apply logic to the situation, look at it through logical lens, and it helps mitigate that.
• 5:24
  [SPEAKER_01]: And I have this conversation with clients all quite often.
• 5:26
  [SPEAKER_01]: I mean, in our coaching program, this is almost a weekly.
• 5:29
  [SPEAKER_01]: conversation and it's amazing how many gyms do hold on to old pricing legacy pricing or just remain where they're at year after year after year because they're afraid of losing science.
• 5:41
  [SPEAKER_01]: Yeah, you know and and of course I mean the relationship's hurt you know does suck when you when you do lose some people but at the end of the day we have to remember the what is the premise of the business and it's to have run a profitable business.
• 5:54
  [SPEAKER_01]: In a business that serves not only your clients, but your coaching team and you is the owner.
• 5:59
  [SPEAKER_00]: Yeah.
• 6:00
  [SPEAKER_01]: And you can't do it when you're bootstrapped.
• 6:01
  [SPEAKER_01]: You can't do it when you have no cash flow.
• 6:03
  [SPEAKER_01]: You can't, you know, how many more people can you go and serve if you're chasing from behind every month trying to just keep your head above water.
• 6:11
  [SPEAKER_01]: And so the logic to me is the thing that takes you through helps dissolve that fear and put you in the right position.
• 6:18
  [SPEAKER_01]: I mean, to your point, you, you continually, your team is being educated.
• 6:22
  [SPEAKER_01]: You're probably paying some, you know, some form of continued education for your team every year.
• 6:27
  [SPEAKER_01]: Yeah.
• 6:28
  [SPEAKER_01]: At what point can you, can you consider all of those things when it comes to the decision to raise your
• 6:35
  [SPEAKER_00]: Yeah, and, you know, the extra revenue we're going to be making out of this decision is going to float of the coaching staff because we've got, you know, great team, they're doing a hell of a job.
• 6:45
  [SPEAKER_00]: It's just probably one of the best teams like, you know, you get teams that kind of come and go, one person leaves when person comes on and like, this kind of core groups been with us for several years now and it's feels pretty good, you know, like everybody's hitting on the same cylinders, I feel, you know, jolly's in a great spot and all the team and everything.
• 7:00
  [SPEAKER_00]: So,
• 7:01
  [SPEAKER_00]: Like, that's just going to roll down and be able to keep our coaches longer, which is, you know, in the grand scheme of things, again, going back to Joey Coleman, that's where we need to be putting our attention.
• 7:11
  [SPEAKER_00]: It's keeping your employees as long as possible, right?
• 7:14
  [SPEAKER_00]: People are going to move on whatever, but like make sure it's a great place to work.
• 7:19
  [SPEAKER_00]: People love it.
• 7:20
  [SPEAKER_00]: You know, they're not, you know, a great, it's Monday, you know, you hate that feeling.
• 7:24
  [SPEAKER_00]: You hated it when you were, you know,
• 7:29
  [SPEAKER_00]: I love Mondays.
• 7:30
  [SPEAKER_00]: I hope these coaches love Mondays too.
• 7:31
  [SPEAKER_00]: It's just, you know, we got a great environment in here.
• 7:34
  [SPEAKER_00]: And that's just really what the end of the day.
• 7:36
  [SPEAKER_00]: That's what we're trying to do is create a great environment for our staff and for our clients and for yourself.
• 7:41
  [SPEAKER_00]: So this is like the trifecta.
• 7:43
  [SPEAKER_00]: You most likely are under charging.
• 7:45
  [SPEAKER_00]: I don't know if many people over charging.
• 7:47
  [SPEAKER_00]: Let's put it to you now.
• 7:48
  [SPEAKER_01]: Yeah, there you go.
• 7:49
  [SPEAKER_00]: There's not many people like, man, I charge so much money.
• 7:51
  [SPEAKER_00]: But, you know, it's really the top of my market.
• 7:54
  [SPEAKER_00]: And I couldn't get it penny more because I'm just at the top.
• 7:58
  [SPEAKER_00]: mostly the case.
• 8:00
  [SPEAKER_00]: You may be top in your market, but you probably undercharging still.
• 8:04
  [SPEAKER_01]: And one of the things that comes up quite often is like, you know, oh, I don't think the people in my area can afford it or the fear of, you know, can I find people?
• 8:13
  [SPEAKER_01]: You have to remember, right?
• 8:14
  [SPEAKER_01]: You could have a town of hell, 10,000 people.
• 8:18
  [SPEAKER_01]: You need 200 to have a really successful business.
• 8:21
  [SPEAKER_01]: I mean, we're talking fractional.
• 8:22
  [SPEAKER_01]: I mean, you know, we worked with ABC markets and I actually think that the the B&C markets have the greater opportunity.
• 8:31
  [SPEAKER_01]: Less competition, less market saturation when it comes to ads, all like all of the things.
• 8:37
  [SPEAKER_01]: And we've said it probably as long as the podcast has been around.
• 8:40
  [SPEAKER_01]: I'd rather be the top.
• 8:41
  [SPEAKER_01]: you know, the most expensive highest valued service in the area than play somewhere in the middle and just play the competition game.
• 8:49
  [SPEAKER_00]: Yeah, that's no man's land.
• 8:50
  [SPEAKER_00]: So listen guys, the real key here is two to fold.
• 8:54
  [SPEAKER_00]: Number one is the weekly pricing allowed us to
• 8:57
  [SPEAKER_00]: You know, make us, you know, a relatively simple increase in exponentially, you know, grows over the month, right?
• 9:05
  [SPEAKER_00]: That was the first thing.
• 9:06
  [SPEAKER_00]: You're not on weekly pricing.
• 9:08
  [SPEAKER_00]: This something should, should look at why do we do weekly?
• 9:11
  [SPEAKER_00]: I mean, there's, there's probably five reasons, but the two major ones is that, you know,
• 9:16
  [SPEAKER_00]: It usually aligns with your frequency of training.
• 9:19
  [SPEAKER_00]: We're on limited, but at our point in time, we had a 2 and a 3x per week.
• 9:24
  [SPEAKER_00]: And what happened was when we were building monthly, it was like, what happens on that little like one-off extra week of the month where somebody is getting an extra session, they're getting nine sessions instead of A and it's like this big mess, mitigated all that.
• 9:36
  [SPEAKER_00]: Number two is very easy to sell.
• 9:38
  [SPEAKER_00]: Yeah.
• 9:38
  [SPEAKER_00]: uh... you know but there are some concert we talk about it in another episode like with the weekly pricing is a content if you're not like ready to go weekly there's a biweekly option and there's a 28 day cycle option to that basically gets you to the same in result uh... you know if you're on a 28 day cycle then that ten dollar a week increases a really forty dollar right so you're saying they weren't we're increasing rates by forty dollars a month
• 10:04
  [SPEAKER_00]: and oh well you know I can't afford it now right all of a sudden so so like those are the kind of the reasons why it was pretty smooth and you know I've talked to enough clients in the last couple weeks after array they don't care they know it sure they they expect it you know every other industries a lot of arrays rates uh without any pushback really and you know fitness is like that one industry it's like you can't do it sometimes and you get a lot of kickback so
• 10:31
  [SPEAKER_00]: you know, I get it, uh, I don't like it, and I don't think it's right, uh, but I understand where you're all coming from because this is, you know, this is, I've been in the industry as long as most of you listening, so I get it right, you know, these fears and you do hear it.
• 10:44
  [SPEAKER_00]: You know, I, you know, I'm just not going to be able to afford it.
• 10:47
  [SPEAKER_00]: Okay, we understand we're not for everybody, right?
• 10:49
  [SPEAKER_00]: And so the big kicker, and again, it's a math equation, and I'll spit it out real quickly.
• 10:55
  [SPEAKER_00]: We've got a pen and paper.
• 10:57
  [SPEAKER_00]: Here's what you do.
• 10:58
  [SPEAKER_00]: You take what you're making now.
• 10:59
  [SPEAKER_00]: Okay.
• 11:00
  [SPEAKER_00]: Let's just say you're making $30,000 a month.
• 11:02
  [SPEAKER_00]: Again, I'm not going to do the math.
• 11:03
  [SPEAKER_00]: So don't worry about it.
• 11:04
  [SPEAKER_00]: In our prices are our, I don't know.
• 11:08
  [SPEAKER_00]: $100 a week, right, $90 a week and we're going to go to 109 a week, right?
• 11:15
  [SPEAKER_00]: All you do is you take your monthly revenue, like if you take that 109, you multiply it by 4.33, that's what you're really collecting in a given month.
• 11:26
  [SPEAKER_00]: You divide that new number into your $30,000, what you were making is going to give you a number of members.
• 11:34
  [SPEAKER_00]: And let's just say, you know, it's 50, 60 members, and you had 75 to get you to the current 30.
• 11:44
  [SPEAKER_00]: Well, that you can lose 15 members and still be in the same place.
• 11:47
  [SPEAKER_00]: And that's that's the numbers.
• 11:48
  [SPEAKER_00]: So when you do take a loss or two losses or five losses, because people cannot afford it or they you didn't communicate it well enough.
• 11:56
  [SPEAKER_00]: I don't see the value anymore, when five, six, seven people walk out of the door, you're unaffected because we're still ahead in the long run.
• 12:05
  [SPEAKER_00]: And it's not the number of members, it's the revenue per month.
• 12:08
  [SPEAKER_00]: So hopefully that helps you guys kind of get your mind right around like doing this.
• 12:13
  [SPEAKER_00]: go raise your rates guys charge what you're you should be charging in your market and let that flow downhill to the coaching staff and you know and it's okay to make some money guys this is uh you know we're trying to be here for the long haul this is not a one year or two year operation you want to be here for a decade so hopefully go go do this and we're coming into the months why would recommend it and we've talked about the past like yeah
• 12:37
  [SPEAKER_01]: Don't shake it up in January 1st when, again, we're now through that, right?
• 12:42
  [SPEAKER_01]: But I would say like beginning a Q2, maybe Q3 before we get back into the kind of bread and butter months and so forth.
• 12:49
  [SPEAKER_00]: I would say early Q2 to early Q3 would be it.
• 12:53
  [SPEAKER_00]: That would be the time to leverage a price race.
• 12:56
  [SPEAKER_00]: Again, every market's a little different.
• 12:58
  [SPEAKER_00]: Sometimes your summer months are, our people are gone.
• 13:01
  [SPEAKER_00]: So it's kind of hard to do then too.
• 13:02
  [SPEAKER_00]: So it's just,
• 13:06
  [SPEAKER_00]: All right, guys.
• 13:07
  [SPEAKER_00]: Well, that's it for this episode.
• 13:08
  [SPEAKER_00]: Hopefully that helps you guys.
• 13:09
  [SPEAKER_00]: I just want to give you kind of a feedback.
• 13:10
  [SPEAKER_00]: It's a seven of six for you.
• 13:13
  [SPEAKER_00]: It was a six figure decision to the business top and bottom line.
• 13:18
  [SPEAKER_00]: Went over fairly smoothly.
• 13:20
  [SPEAKER_00]: It will in for all the reasons we just spoke about and you know, guys, it's it's time.
• 13:24
  [SPEAKER_00]: So go raise your rates.
• 13:25
  [SPEAKER_00]: Let's not how you do.
• 13:26
  [SPEAKER_00]: That's it for this episode until next time.
• 13:27
  [SPEAKER_00]: Keep changing lives.
• 13:28
  [SPEAKER_00]: We'll see on the next one.
• 13:29
  [SPEAKER_00]: Bye.