It is not easy to price your class offerings in a way that encourages commitment and growth. Many studios start out offering a single class at a competitive rate, so the conversations at the front desk are easy and the client gets what they want — low commitment and great prices. However, we’ve found that studios are best served when they consider the lifetime value of a client rather than per-class revenue.
This means studios should price single classes — the lowest commitment option — in a way that discourages people from purchasing it, or at least doesn’t reward them for doing so with a great deal. Consider pricing the highest commitment option as the best deal on a per-class basis, while realistically considering attendance habits — which are usually less than we think they are.
This thinking can also help if you are considering trying dynamic pricing or a daily deals site to promote your studio. Ask yourself: What is the lowest you are willing to go, on a per-class basis, and what is the highest? Not sure? Look at each of your pricing options and calculate the cost per class. This is pretty simple for options that have a limited or set number of sessions:
Single class $20 — $20 per class.
10-pack $160 — $160/10 = $16 per class.
But what about unlimited class packages? This is where it is often overestimated how much customers are actually visiting the studio. We have found that yoga studios best optimize revenue when they are able to get their medium and highest users to commit to higher commitment options such as monthly unlimited class packages or a higher class count card. The medium user is key here, as many studios price their highest commitment option too high, assuming everyone will attend way more than they ever do. Instead, consider pricing your highest commitment option based on those who come to the studio two times per week or more (medium users) — meaning you should divide unlimited packages by eight visits per month:
Monthly unlimited membership $149 — $149/8 = $18.63 per class.
If the above was your current pricing structure, you can see that the lowest price you’re currently willing to go is $16 per class and the highest is $20 per class. Consider these as your parameters when deciding to try dynamic pricing or daily deal sites to help you fill last-minute spots and bring in more revenue.
When using these tools, be strategic in what you offer and analyze what is working, and what isn’t. Modify and adjust until you find the pricing formula that works for your studio — one that brings in revenue and fills spots, but doesn’t offend existing clients or undercut your goals.
At the end of the day, it can take many different marketing strategies and revenue streams to optimize your studio’s revenue. Approach these pricing partners and technologies with an open and informed mind, and they can certainly help your studio grow and thrive.
Roxanne Borger is MINDBODY’s director of client education and leads the MINDBODY University (MBU) program. MBU hosts three-day conferences around the world featuring high-impact business education for MINDBODY clients. For more information, visit mindbodyonline.com/university.