There are many things to fear in today’s world:
The zombie apocalypse. Burpees in The Open. A worldwide coffee shortage. Bloody scary stuff! But there’s one fear I hear of every single day that’s entirely unfounded, a complete waste of time and about as silly as Anatidaephobia (the fear of somewhere, somehow a duck watching you. For real.)
The Fear Of Raising Prices
Every day I talk to Affiliate owners who tell me that they need to make more money, they know they’re worth more than they’re charging, and they intend on changing their prices soon. But when I suggest that we put a plan in place to raise their prices they feed me a litany of bullshit excuses why they can’t do it just yet: The box down the road is still cheaper, The Open is coming up, Mercury is in retrograde, whatever. The truth is this is fear, defined the following way…
False Evidence Appearing Real
None of the above excuses (or the 100’s more I’ve heard) has any basis in reality. They are imagined outcomes (False Evidence) that you have convinced yourself will happen (Appearing Real). They’re no more real than the boogie man or my cardio It’s your confidence in yourself, your team, and your product (CrossFit classes) that you truly doubt. But you shouldn’t and I’m going to show you why and exactly how.
4 Steps To Raising Prices (Without Fear)
1. Write A List
Fill a whole page with reasons why you’re worth more today than when you opened or last raised your prices. Include both the physical stuff (nicer bathrooms, better equipment, etc.) and the member experience (better coaching, solid systems, etc.).
2. Do The Numbers
Work out the following:
How much do you charge right now? If you have multiple memberships, use the average membership cost.
What do you want to charge? Don’t be shy; this is a thought experiment, not a contract. Go big!
What is the difference between your current and new prices?
Difference Per Class
Divide the Total Difference by your Average Member Attendance for that period. If you’re not sure of your AMA, use 3x per week.
Multiply the Total Difference by your number of active memberships. That’s how much better of you’ll be.
Members You Can Lose
Divide your Net Gain by your Current Price. This is how many members you can lose before you break even (not that you’re going to lose anywhere near that many).
What do the above numbers tell us?
- That the rise is minimal when considered per class. Ask yourself “Are our classes really $3 better than when we opened?”. You bet your arse they are!
- That the Net Gain is significant. What could you do with that much extra revenue? Pay coaches? Pay yourself even? *gasp*
- That even though you’ll do everything you can to keep everyone, you can actually afford to lose a few and still end up on top.
3. Raise New Member Prices
Now that you’re confident that a) you’re worth it and b) the numbers add up, raise prices on new members. The next one to walk through the door, gets the new price. It’s that simple.
4. Raise Prices On Current Members
This takes a bit more strategy and consideration depending on whether you’re ready to raise your prices now or you want to increase your value a bunch more first.
Ready To Raise Prices Now?
- Write an email to every member detailing the price rise. Explain that as costs increase so must your prices, but you’ve worked very hard over that last year to increase value (detail a few examples) and have minimised the rise for current members as much as possible, with most if the increase going to new memberships.
- Film a video explaining the above information in your private Facebook members group. This is a must to show authenticity and integrity to your members.
- Briefly explain the rise at the end of every class for a week. Don’t make a big deal out of it; just 30 seconds to say “prices are going up slightly, the details are in your inbox, and if you’ve got any questions or concerns, please come speak to me anytime”.
Want To Increase Value First?
- Write a list of every improvement to the member experience you can make for free. Examples: Retention systems, better coaching, a tidier gym, etc.
- Write a list of every improvement to the member experience you can make for less than $250. Examples: A reception area, nicer bathrooms, repainting the gym, etc.
- Write a list of every improvement to the member experience you can make for more than $250. Examples: A well-stocked pro-shop, a receptionist to welcome members and make them feel special, a kids area. Etc.
- Start with the first list (the free one) today. Pick whatever’s at the top and do it now. As soon as you’re finished, do the next task. Once you’re finished with the free list, move on to the “less than $250” list. Once that’s done, move on to the “more than $250” list.
Once you’ve worked through all of these improvements to the member experience, you will have an unshakable confidence in your value (as will most of your members) and a price rise will be a breeze.
And that’s it’s. That’s how you get over your nonsense fear and raise your prices. Don’t get me wrong, it’s certainly a big-boy (or big-girl) decision, but there’s absolutely nothing scary about it.
Now get to work charging what your’e worth!