Tag: market

What Influences Price Setting?

Setting prices in your facility, from pro shop goods to personal training services, requires an understanding of the price floor and price ceiling. Based on your costs and desired profit, the price floor is the price below which you cannot sell and still make a profit. The price ceiling is set by the market and determines the maximum price at which the product/service will sell.

Both internal and external factors affect your price floors and ceilings. Understanding where to gather this information can target your pricing and eliminate random shots in the dark.

The most important internal sources you have are your members — those who purchase your goods and services. Encourage not only your managers, but also your front-line staff, such as personal trainers, massage therapists and front desk clerks, to solicit feedback about pricing.

Train your staff to ask members why they purchase the product/service — what motivates them? Do they patronize the pro shop or restaurant out of convenience, or do they prefer the quality and/or service there? Why do they use your facility’s nail technicians or laundry service?

Also ask how much they value the product/service. Is it seen as an absolute necessity, or as an occasional luxury? How do your members feel about the worth of the product/service? Do they feel as though they are paying a reasonable price? Would they prefer volume discounts or packages?

Other sources of internal information are overall company developments, such as shifts in strategic goals or financial targets. Introduction of new products/services also will affect overall pricing. Past financial records for your facility, including sales reports, will give you a history of pricing and average actual selling prices.

External factors, such as your competition, economic fluctuations and consumer behavior, also greatly influence pricing. The better you understand your competitors, the more strategically you can position your facility. Although market research can be costly, the information you learn is worth the cost. You can even do an informal market research by sending “spies” to your competitors to gather facts.

Discover whether competitors are developing new products/services or programs, or if they are changing existing packages or special deals. For instance, if other clubs in the area have begun to offer spinning classes for free, you’ll have difficulty charging your members for these classes. If every nearby facility offers free parking, attracting new members or retaining old ones will be challenging if you charge for valet parking.

Finally, determine if your competition is expanding into new markets that you do not serve. Are local clubs offering senior’s or children’s programming and thereby attracting more families or making better use of traditionally slower periods? Are other facilities providing special services like physical therapy or nutritional counseling to serve as more of a wellness resource? Those with a wide array of goods/services that appeal to different markets usually can be supported by higher prices.

In addition to watching your competitors, you must consider the economic climate to help predict consumer spending behavior. Naturally, a recession will cause lower overall spending, particularly on items that consumers deem special treats or nonessentials. Soliciting economic data on past trends and comparing these to your sales can provide information for forecasting future purchasing patterns.

Also, use your accountant and consult business publications to predict the future economic climate. This will help you more accurately project sales.

Again, the more information you learn about the economy and its influence on consumer behavior, the more likely it is you’ll stay competitive.

Pricing can be intimidating for some accounting-challenged fitness center managers. But with research and careful study, setting prices correctly can become an effective method to boost your bottom line.

Spa Finder Hosts Retreat for Day Spa Industry

Spa Finder, a spa travel, marketing and publishing company, inaugurated its Spa Finder Partner Program with a retreat attended by day spa owners/managers who represented more than 160 day spas nationwide. The retreat, held recently at Red Mountain Adventure Spa in St. George, Utah, brought together for the first time many of the leaders in the day spa industry to plan new marketing strategies and share best practices.

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