I know I’ve posted about pricing in a previous post, but, as it is part of a presentation I will be doing (Fitness Sales: Strategically Price and Sell Your Services) at Club Industry Show in October, I thought I would revisit this important topic. Pricing your service is not simply choosing what you think the going rate is. There are a lot of factors that go into intelligently setting your prices. Here are a few of them.
Target Market: First, let’s start with who your target market is? This may or may not set a limit on what you can charge. If you are out to help low-income families become healthier and more fit, you will be limited by what they are able to afford (unless you are seeking grant money or sponsorship to subsidize). On the other end of the spectrum, if your target market is the rich and famous, you have the ability to charge much more.
Your Competition: You don’t need to charge what your competition does, but what they charge tells you two things. It tells you what your lowest price should be (If you believe yourself to be as good as they are, why would you charge less?). It also let’s you know what the market’s perceived value will be. You can certainly charge more, but you will need to sell your value and why you are worth more.
Your Time: What is your time worth? Now, this is often times a big problem with service providers. They think that because they book sessions by the hour, that they have to fit some expectation of hourly rate. One of my favorite stories (and I can’t remember it verbatim so here’s my paraphrasing of it) is one where Picasso was painting on the sidewalks of Paris. A woman walks up to him and, impressed with his work, asks if he would paint her portrait. He agrees. 10 minutes later, he shows her the finished piece and she is thrilled. “How much do I owe you?” she asked. Picasso replied, “5000 francs.” She was exasperated. “But it only took you 10 minutes.” “No…” said Picasso, “it took my entire life.” The point is that you are giving more than time. You are giving the sum of all of your education, practice and experience.
Your Operating Expenses: Do you have operating expenses (most of us do)? Maybe it’s travel expenses (this should include travel time), or marketing, or booking software, or whatever else there might be. These expenses need to be paid and you need to make enough to cover them.
Income Needs: Above covering expenses, you also need to think about what you need to make a living. If, after you pay expenses and hold out your payroll fees, you are not making enough money to make the kind of living that you want, you are charging too little.
As you can see, there’s a lot that goes into setting prices and there’s no one answer that fits everyone. It is an art. Take into consideration all of the above, choose a price that you believe in, and then test it out for a set period of time and see the reaction. Then come back to the table and reevaluate it. Does it satisfy your needs and are you able to build your clientele?
Let me know if you have any questions or insights that you’d like to share.