Fitness professionals routinely undercharge

Discounting, incorrect packaging and incorrectly structured margins are impacting fitness business owners across Australia, leading to many professionals not generating enough revenue.

In an opinion article, Is undercharging killing your Fitness Business?, published by Fitness Australia, NPE Coaching founder and Chief Executive Sean Greerley explains "far too many fitness business owners ... are vastly undercharging for their services.

"(And this) can take many forms: charging too little; poor packaging and incorrectly structured margins are just a few of them.

"(And) all these mistakes lead to slim to zero profit in your business."

Greerley suggests businesses need to “recalibrate” with appropriate "pricing ... the first step in getting profitable."

He advises "don’t keep scraping by every month or discounting your services.

"If you value yourself, your business, and serving your clients, you must charge what you’re worth.

"And once you get your pricing and packaging right, you’re well on your way to closing bigger sales, delivering what your clients need, and growing a profitable fitness business."

Greerley outlines two major packaging and pricing mistakes

1. Clients don’t commit to the length of time required to hit their goals.
"It’s very likely that five or 10 session packs won’t get your clients to their goal.

"As a fitness professional, it’s your responsibility to recommend a realistic program to your client to best serve them.

"And your clients will be much more committed to achieving their goal if they invest in a long-term package."

2. You have to constantly resell your services.
"Many trainers get psyched when they sell a five or 10 session pack. But when the sessions are used up, they have to sit down with the client and sell them again on their services.

"That’s not an effective use of your time and can quickly turn into a major problem.

"The more clients you get, the more time you’ll spend chasing them, tracking them, and reselling them. And it’s not easy for a client to maintain that initial enthusiasm that comes after first signing up.

"After a couple months, fitness is less glamorous ... and more about consistently doing the work."

The Solution
Greerley suggests restructure programs to stop selling a set number of sessions, advising "for best results, both you and your clients are best served by creating packages that are tied to solving the prospect’s problem and achieving their goals in a specific timeframe.

"This is critical because it also helps give your business predictable cash flow.

"And you deliver what your clients need to achieve their goals.

"Regardless of the type of programming you offer, the best packaging we have ever tested - it’s been the 'control” since April 2010 - is three, six, and 12 month commitments for all of your training services - and when you’re really advanced, our top clients are selling six, 12, and 18-month packages.

Pricing and Value
Greerley adds "before we talk about how to fix your pricing, let’s figure out how and why you created your current pricing.

"Many people base their current pricing model on: what they’ve seen their competition charging; what they’ve always charged or they’ve got no idea how they came up with their current rates.

"None of those are good strategies to base your business around."

Greerley sees that many fitness professionals and business owners resort to discounting their rates in a race to the bottom of the market, with the view 'the other guys are now charging $120/month for unlimited classes? Let’s charge #105/month'."

He suggests that it is vital for businesses to know their margins, suggesting an example such as "private training sessions priced at $75 per hour, and you set the coaching pay at $25 per hour, the margin would be 67%" as a "good margin". There are margin guidelines for each type of training, which we discuss more in our coaching programs, but for now just know that for private training, your margins need to be over 60%. It’s nearly impossible to make the economics of a fitness business work with less margin than that.

He adds "plan and set your pricing from the beginning so that when you do hire, you don’t have to change the entire business model. Use your best guess of what you’re going to pay (your staff)."

To fix bad margins Greerley advises "if your margins are below where they should be, you can either decrease coaching pay or increase your session rate.

"(And) if you think your clients would never pay the rate that will give you healthy margins, you need to change your mindset on value."

Greerley highlights 'The Value Equation' as "Client Experience plus Relationship plus Results you deliver."

"(And) when you’re delivering more value than people expect for their investment to work with you, well then you have a great value proposition, and that is everything in sales.

"Focus on delivering value and price becomes irrelevant. Serve your clients so they love doing business with you and couldn’t possibly imagine going anywhere else.

"If you haven’t been charging what you’re worth and your pricing for your services is incredibly low, you have to raise your rates in order to grow a sustainable fitness business.

"Remember, you’re selling on value, not price. If you don’t feel like you’re providing that value yet, then give more first."

Click here to read the original article on the Fitness Australia website.

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