As a fitness business owner, one of the biggest questions you’ll ever ask yourself is: “How much should I charge for my classes?” It can be tempting to consider competing on price, to lure away customers from the competition, or to go big and bold and brand yourself as the next big “trend” experience. The truth is, there’s a science to pricing group fitness classes right. And hitting that sweet spot for your market can make all the difference between full classes and empty ones.
First, it’s helpful to know some basic wellness industry numbers that can get you in the ballpark of per class pricing.
In the U.S., the average cost of a yoga class ranges from $15 to $20, on a drop-in basis. In large cities, and at upscale facilities, the price of a group fitness class can be much higher. For example, in New York City, a single ride at SoulCycle costs $34; a boxing class at Rumble is $36; a run at Mile High Run Club is $34; a dance class at 305 Fitness is $34. On the super high end, Tone House costs $45, and a Megaformer SLT class will cost you $40 but for the most part, classes all seem to fall within the $30-$36 range. It might seem like an arbitrary number, but there's a calculated reason for it.
If you’re offering private training sessions, the American Council on Exercise (ACE), estimates that, “In larger metropolitan areas where the cost of living is high, it is not uncommon for trainers with years of experience to charge $100 to $200 an hour for their services. However, in suburban and rural areas, where the cost of living and average income are a little lower, it might be more common for trainers to charge $40 and $60 per session.”
Secondly, it’s important to know your brand. There’s a big difference between an instructor who’s just starting out, and is renting space, and one who’s invested hundreds-of-thousands-of-dollars in a spa-quality studio space.
“Do you want to run a volume play or focus on an exclusive experience? If your brand is high-end or has limited spacing, you should price accordingly,” said Lindsay Junk, president of Yoga Six. “It's also important to do your research and make sure you're not entering a market you cannot compete in. This includes shopping competitors, knowing your demographics, and researching your real estate landscape.”
Next, you need to take into account the cost of doing business. What’s your monthly rent? Payroll (including yourself!) Take your total expenses for the year, and divide that by the number of classes you offer. That will give you the amount of revenue per class you need. Then look at your attendance goals, and whether or not you’re meeting those. For example, if your average revenue needed per class is $200, and you’re averaging 12 students, then your average revenue per student needs to be at least $16. Of course, this number is an average across all of your class pricing – including drop-in rate, class passes, and monthly memberships.
If you've set your prices appropriately, your pricing tier will start with the drop-in rate as the most expensive. Then you'll give a slight discount for a small punch card (say five classes), and a slightly higher discount for a larger punch pass (say ten classes). Your biggest discount will be for the unlimited, auto-renewing membership pass.
For example, Core Power Yoga, the nation’s largest yoga studio chain, figured out that the sweet spot for attendance among their students was twice a week, or eight times a month. Using the guidelines we laid out above, if we take their single class drop in rate of $22 and multiply it by eight, we get $176. The company’s five-class pass is $104; it’s ten class pass is $194. Its monthly membership is $109, a substantial savings off of the ten-punch pass, and just five dollars more than five classes. This allows staff and instructors to ask customers one simple sales question to help guide them in their purchase: How often do you want to practice? If it’s twice a week or more – the frequency recommended most by fitness and yoga instructors to maintain health, strength and wellbeing, the membership becomes the obvious choice.
Once you’ve identified a target price for your membership, check out your competition and honestly assess where you stand. If you offer more value through services, quality and amenities, charge more. If you offer less, perhaps fewer class times and a simpler facility, charge less. Resist the urge to compete on price. It’s hard to increase your prices if you’ve set them too low, and it’s usually a losing proposition in the long run. We know you’re awesome, and you work hard. We want to see you build value and gain loyal customers who will pay you for what you are worth!
“Setting pricing is both an art and a science. It's important to balance local competitors and national competitors with your value proposition,” said Junk. For longevity, you need to price to succeed financially. Saying that, be careful not to price yourself out of the market until you've earned the right to command a higher price point.”
That said, don’t sell yourself short! Be careful about undermining your value by pricing your classes too low, or by offering too many discounts and special coupon offers, said industry experts.
“While we will periodically offer discounts to bring new members into our gym, we try to focus on what separates us from the competition,” said Donna and Lauren, co-owners of Arenal Fitness in Baltimore, MD. “We pride ourselves on the high level of experience and education that we feel far exceeds a great deal of our competitors. We don't want to devalue the high quality of training that is offered in our gym. If you are always offering the best "deal", potential new members may begin to focus on price rather than value.”
So, go be amazing, ask for what you’re worth, and give your customers an exceptional experience!