How to Raise Gym/PT Prices Without Losing Clients

Summary:

1. Raising prices is necessary to avoid undervaluing your service and risking your business.
2. Align your pricing with increased business and living costs over the years.
3. Base your rates on the life you want, not competitors’ prices.
4. Implement annual price increases and simplify service offerings.
5. Communicate price changes confidently and professionally, without over-apologising.

Action step from this article: raise your prices!

Raising the prices of PT sessions, classes, or gym memberships is one of the scariest things a fitness professional can do.

But you know what’s even scarier? Realising that every year you don’t raise prices is like giving yourself a pay cut—and if you keep undervaluing your service, you’ll soon have no service to provide because you’ll be out of business.

You’re giving yourself a pay cut because, while your service costs the same, the price of everything else has gone up.

Let’s look at some figures from the last five years.

The cost of running a fitness business has increased, with commercial property rent increasing by 28%, staff wages by 14%, insurance by 24%, water by 16%, electricity by 19%, and council rates by 19%.

It’s not just the cost of business but the cost of living. Mortgage repayments have gone up by 40%, residential rent by 16%, a new car by 28%, the petrol to put in the car by 46%, and your weekly grocery shop by 20%.

It’s no wonder so many fitness business owners I work with are stressed about money. It costs much more to run a business and live. Yet, many are charging the same for their services as they did before the pandemic.

To put it in perspective, just to keep up, a PT should have increased their hourly rate from $100 to $120, a 24-hour gym membership should have gone from $30 to $35, and an all-access class pass should have gone from $70 to $80.

Have your rates increased by this much? Honestly, ask yourself that question.

If not, you’ve given yourself a pay cut. It’s no wonder you’re struggling and stressed about money.

And I get it. Times are tough, people are struggling, and you don’t want to add to their costs by upping the price for your service. You’re a thoughtful, empathetic, compassionate person, or you wouldn’t be in this industry in the first place. But if you don’t do something, your business will die. And then it doesn’t matter how kind you are, you won’t have the vehicle to help people.

So hopefully, I’ve convinced you that you need to raise prices to stay alive.

Let’s talk about how to do it.

And I want to kick this discussion off by talking about your mindset around money.

The amount of money you earn each month is the best measure you’ve got of how much value you’re bringing to people and how much positive impact you’re having in the world. People pay you because you’re solving their problems. If more people pay you more money, it doesn’t mean you’re a greedy capitalist sell-out; it means you’re solving more problems and helping more people.

There is nothing wrong with earning more money. I repeat. There is nothing wrong with earning more money. Money is a scoreboard that’s updated every month that tells you how valuable you are to other people. And if the number on that scoreboard isn’t increasing, you’ll eventually lose the game—selling your gym or leaving the industry.

So now that you know that your earnings are a mirror to your value, let’s take a slightly different approach to pricing your service.

Here’s the mentality most people have:

1. Decide on the service they’re providing. For example, Personal Training.
2. Look at what other people charge for Personal Training and copy that.
3. Use the money you earn to live your life.

For example, I want to be a Personal Trainer. PTs seem to charge around $100 an hour. After all expenses, that means I’ve got about $500/week to live on after the cost of living, and if I don’t work, I don’t earn.

I think that’s completely backwards. And I hate that this approach is so widespread. It’s destroying businesses and careers.

Here’s the three-step model people SHOULD follow. Let’s flip the script.

1. Decide on the life you want to live. What does your ideal life look like? What will it cost, and where will you allocate your precious time?
2. Work out how much time that leaves you for work and how much you need to earn per hour.
3. Design the service that you need to provide to give you this hourly rate.

For example, I want a long weekend every week, I don’t want to work afternoons, I want a two-week family holiday every year, and I want two one-week breaks every year. I want to work for a maximum of five hours a day, four days a week, 48 weeks a year. I need to earn $200,000/year to allow myself to live that life, which means I need to charge a fraction over $200 per hour. How can I design a service that people will pay $200 an hour for?

See how we’ve flipped it? Instead of starting with the price and then living as best you can with your earnings, we’ve started by designing your life, then creating a service that gives you that life.

So the question you need to ask yourself is, what would you need to change to make your clients and members happy to pay 20% more? Or 50% more? Or 100% more? Then make that change.

One of the business books I most commonly gift to the fitness business owners I mentor is called ‘Someone Has To Be The Most Expensive, Why Not Make It You’. And the punchline is right there on the cover. The title of the book tells you almost everything you need to know. Almost everything—because it’s not enough to be the most expensive—you also have to be the best. So design that service that gives you the life you want, but design it in such a way that your clients and members still feel like they’re getting a steal.

Before I give you the exact process for increasing your prices, let’s touch on one more point around value.

People value things more when they’re more expensive. And we know that to be true because of a clever experiment done with painkiller medications. In the experiment, participants were given an electric shock and then offered a painkiller tablet which was actually a placebo. The participants were split into two groups: one group was told that the tablet cost $2.50 per dose, while the other group was told that the tablet cost only $0.10 per dose. Of course, the tablets were identical, with no active ingredients. People who were given the expensive option reported significantly improved pain reduction.

People perceive more expensive things as better—and this includes your service.

Ok, psychology aside, let’s get practical. Here’s the exact step-by-step process I follow myself and advise business owners on to raise prices.

Step one: When should you increase prices?

The short answer for you, probably, is right now. It’s been too long. You don’t need me to tell you that. But you’re scared, I get that. You’re just going to have to be brave—or you won’t survive.

So ‘increase prices now’ is the short answer. Let me give you the long answer, to really make sure you do this right.

Here’s my favourite strategy, and something I use personally in all my businesses.

I do everything I can to get close to capacity as quickly as possible. You get to capacity by being good at what you do—it’s that simple. If you’re struggling to attract and retain customers, the problem isn’t that you’re charging too much; it’s that you’re not good enough. So be better. This makes your service more valuable because your time is scarce. It’s then simple supply and demand. Because your time is scarce, it becomes more valuable, and you can justify charging more for it. Because you’re now selling a rare commodity, you can increase your prices.

So, firstly increase your prices for all your clients or members (I’ll talk about how much to increase your prices by in a moment). The second thing you should do is to replace any departing clients with higher-paying clients. Let’s say you’re charging $130 an hour at this point. A client paying this amount moves away and can no longer train with you. This coveted spot is now available at $140 an hour because it’s rare, and rare things are valuable. As long-term clients slowly leave (which they will, because no matter how good you are, that’s how the world works), you’ll gradually replace them with higher-paying clients.

Step two: How much should you increase prices by?

Ok, this step is a little tricky. Chances are, you’ve gone way too long since your last price increase. I’ve worked with many businesses that have been around for five years and have never done a price increase. And this puts you in a difficult situation because you really need to do a big increase to catch up with the rest of the economy. But if you’re a PT who’s undercharging for Personal Training at $40 for 30 minutes, an increase to a more reasonable $60 per half hour is massive—and too much for your clients. You’re your own worst enemy—your previously low prices have set an expectation that’s going to be difficult to overcome.

So you’re going to have to make a smaller increase than you really should. The economy grows at around 2.5% per year, so that’s the absolute minimum your service should increase by—a 12.5% increase over five years, or an increase from $40 to $45. But remember, that’s a minimum because you’ve got to make up for the overly low prices you were charging. I’d probably split the difference. Instead of just jumping from $40 to $45 based on 2.5% annual increases or making a massive jump from $40 to $60 to bring you in line with fair rates, you’re probably going to have to be somewhere in the middle—let’s call it an increase from $40 to $50.

In my opinion, that’s still too low, but remember, you’re an enemy of your own initial low prices.

Let’s say you didn’t set your prices too low initially. A good general rule of thumb is a minimum of 2.5% increase per year. So if you haven’t raised prices in three years, increase them by 7.5%. Notice I said this is a minimum increase. Think about how much better your service is than it was when you first introduced your new pricing. Think about how much more experience you have. How much you’ve learnt and grown. You’re a better problem solver, which means you’re more valuable. It’s hard to put a price on the improved experience you provide, but I’d look at an extra one to two percent per year on top of the 2.5%—so let’s call it a 3.5% increase. So there’s your number. Increase your prices by 3.5% per year.

Step three: Reduce the number of options you have available.

I have a rule in business that helps to keep things simple. Given two options that seem equally good, I go with the most simple option—the one with the least complexity and the fewest moving parts. It’s because I’m lazy and I want things to be easy.

Raising prices is also an opportunity to consolidate your service offerings. I’ve worked with gyms that have different rates for people who attend casually, one class a week, two classes a week, three classes a week, four classes a week, five classes a week, unlimited classes a week, off-peak rates, on-peak rates, rates for founding members… and the list goes on. It’s messy.

The problem with this relates to the “paradox of choice,” a concept explored by psychologist Barry Schwartz. Having too many choices can lead to decision paralysis, decreased satisfaction, and increased anxiety.

If, like me, you’re old enough to remember the days before streaming services, you had the option of only a couple of movies, so the choice was easy and you felt good about it. But now, there’s so much choice that by the time you’ve chosen a movie, your pizza has gone cold, your ice cream has melted, your wife is asleep, and it’s time for bed. Speaking from experience.

So pare it down. Fewer options, happier clients and members.

Step four: Build in annual price increases.

There’s an interesting psychological phenomenon around how people deal with bad news.

Let’s say you’ve borrowed someone’s car and reversed it into a wall. And on the same day, you lost the book they lent you.

You decide you want to spread out the bad news. You tell them about the car today and break the news to them about the book next week.

There’s a better way.

Generally speaking, people don’t actually judge how bad the news is by how bad the news is, but by how many times they receive bad news. Telling them about the car and the book separately is two bits of bad news. Telling them about the book and the car at the same time is only one piece of bad news.

It’s the same with pricing.

Something I’ve recently been implementing is a pre-communicated annual price increase. Instead of having to go through the stress of increasing prices every year, you should have a built-in policy that at the same time every year the price will increase. Then, when that time of the year comes around, it’s simply a matter of reminding them of something they already know.

Maybe you can go with the 2.5% increase or maybe the 3.5% increase we’ve already discussed, or if you prefer, you could link it to the Consumer Price Index, which measures the rising cost of goods and services. Every year, you can increase by national economic growth from the previous year.

If you can build the price increase into your systems, you’ll be protecting the financial future of your business.

Step five: Tell people about the price increase.

Here’s where people really struggle. They are absolutely terrified of asking for more money.

But this is actually the most simple step.

The big problem I see is that people write overly complicated, overly apologetic emails.

Here’s the first draft of an email that a business owner I mentor wrote:

Dear Valued Members,

I hope this email finds you well. I am writing to inform you about an important update regarding our membership pricing, and I want to begin by expressing my deepest apologies for any inconvenience this may cause.

Starting on January 1st, we will be implementing a slight increase in our membership fees. This decision was not made lightly, and I want to assure you that it was a last resort after exploring every possible alternative. We understand that any increase in costs can be difficult, and we deeply regret having to take this step.

There are several reasons behind this necessary adjustment, including rising operational costs, an increase in the service we’re providing you, increased staff wages, and inflation.

We understand the impact this may have on you, and we are sincerely sorry for any inconvenience this increase may cause. We value each and every one of our members and are grateful for your continued support and understanding.

If you have any concerns or questions, please do not hesitate to reach out to us directly. We are here to listen and help in any way we can. Thank you for being a part of our gym community and for your understanding as we navigate these challenging times.

With heartfelt apologies, Steve.

Can you see the problems with that email?

The general tone was overly apologetic. People understand. They get it. You don’t need to be condescending and explain how the world works and all the reasons for the price increase. Steve (not his real name) just sounds desperate, which is just going to make the client worry that the business isn’t going well and might not be around for long. They’ll start looking elsewhere.

Let’s contrast that with some price increase emails I’ve received over the last few years:

Here’s one from Google:

We’re writing to inform you that the pricing for your Google Workspace Business Starter subscription changed on February 15, 2024.

To view the new pricing details, sign in to your Google Admin console.

Thank you for choosing Google Workspace. We value and appreciate your business.

No justification, no over-explaining. I’ve got no idea what the price increase was, because this is a service I need, so the price doesn’t matter.

Here’s one I got from Apple:

Thank you for subscribing to Apple Music. We wanted to let you know about an upcoming change to this subscription.

Apple is raising the price of this subscription from $11.99 per month to $12.99 per month. Your subscription will automatically renew for $12.99 per month starting 26 November unless you cancel at least one day before. To learn more or cancel, review your subscription.

Regards, Apple

Now, I can guarantee you that Apple and Google have the smartest minds in PR writing these emails. Every word that’s included would have been carefully considered, and every word that’s left out would have been even more carefully considered.

Here’s the last price increase email I sent:

Hi Joe,

From 1st Jan 2024, I will be implementing a small $5 price increase for all half-hour Exercise Physiology services.

Please let me know if you’d like to discuss this further, and I’m more than happy to make time for a chat.

Kind regards, Dan

Come the 1st of January, each amount hitting my bank account was $5 higher than it had been on the 31st of December. I could have made this email even better by mentioning an annual increase of 3.5% on the first of Jan every year.

Step six: Dealing with the aftermath.

Let me tell you the story of my first ever price increase about 15 years ago.

I put it off for months. I was stressed and anxious. I knew it needed to happen. But I was certain I’d lose all my clients, and I just hoped that the increase would cover the lost income from all the people who left.

I sent the email on a Monday morning.

No one replied.

I didn’t sleep on Monday night and kept checking my email.

Still no replies. This wasn’t good news. People were angry and were deciding whether to stay or go. By Tuesday night, still nothing. I checked my ‘sent emails’ folder to make sure I’d actually hit send. Unfortunately, I had. It was too late.

On Wednesday morning, after another sleepless night, I nervously asked one of my long-term, trusted clients if they’d received the email. Their reply? ‘Yep, all good, no worries.’ I felt a little better, and to be honest, a little surprised. But then my heart sank a few hours later when I saw a reply had come in from one of my high-value clients. I opened the email, already calculating the lost income I’d be hit with when they left. I read their reply. ‘About time, you’ve been undercharging for way too long. To be honest, you’re worth more.’

I’d pulled it off. No one left, and that single email earned me an extra $10,400 per year without doing anything different.

So the aftermath of the price increase was that I earned more money. That’s it. No downside.

People will either deal with the increase or leave. If they leave, your problem isn’t what you’re charging; it’s what people are getting. You need to be better.

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So that’s the six-step process to increase prices. It’s pretty simple—and it should be.

Remember, always choose simple over complicated.

I know you’re probably still a little anxious about raising prices. But please, don’t be.

You work so hard, it’s time you started getting some reward for this hard work and everything you do for people.

You’ve earned it, and you deserve it.

If you liked this article, you may also like:

• Work less and earn more as a PT: a blueprint for earning six figures in 20 hours a week.
• Should I Put Pricing on a Fitness Website?
• The True Cost of Running a Fitness Business: Your REAL Hourly Rate.