Number seven on our list is pricing your services! Pricing your service (tuition) is extremely important. “How much is it?” is usually the first question a customer will ask and—while you don’t want them to gasp for air at your answer—you want to be profitable and competitive with your market.
Your tuition cannot out-price your target market, yet a profit for your company must be made in order to keep your lights on. There are several approaches to pricing; ours is just one version for making pricing decisions that take into account your costs, the effects of competition and the customer’s perception of value.
- Cost is the total of the fixed and variable expenses (costs to you) to provide your service. (Rent, payroll, utilities, etc…)
- Price is the selling price per unit (monthly, 6-week session, a year etc…) customers pay for your service.
Price has to be set higher than the cost in order to turn a profit. How the customer perceives the value of your service determines the maximum price customers will pay.
Perceived value is created by an established reputation, marketing messages and your facility’s environment/personality. What do parents want for their children? What do parents value? Students learn life lessons, goal setting, courage, the humbleness of defeat and the glory of winning, etc. Parents know that these traits are valuable to their children and will more likely pay for those skills in addition to their child learning a back handspring. How are you different and what does your gym do better than your competitor? This will play into perceived value as well because your customer will compare you to other gyms.
Use cost-based pricing along with value-based pricing to come up with a price that is fair to your customer and profitable for you!
–Carrie Harris & Stephanie Beveridge