Determining what fees to charge for services
Shout it from the rooftops: After five years of Y membership, I have joined an upscale, brand-new club opening up around the corner from my office.
Before signing on the dotted line, I scanned the list of fees for extra services and gritted my teeth. Massages are a good $50 more than what I now pay at the Y. And training is more costly. So will I take advantage of these services and some of the others my posh new health cub offers? I don't know yet. But I did wonder, "Why do services like these cost what they do when members already pay a hefty initiation fee and monthly dues?"
After speaking with a few experts, I began to understand. And as I become used to my new club's fees and start to experience those back and shoulder spasms that occasionally plague me, I will likely pay twice as much for a massage - especially since I can sign up for a sports massage.
But charging extra for certain services and programs is always a delicate balancing act. "Part of my feeling in setting fees is how much do you want to tap a member before you go over the edge?" asks Kate Brill-Daley, general manager of The Clubs at Charles River Park, in Boston. "I always look at it from my point of view: 'Would I pay that for a service?' "
Adds Scott Lewandowski, director of health and fitness at Gold Coast Multiplex, in Chicago, "I don't want members to become overburdened in terms of price. We want to be able to offer quality programs at a price that one, pays the instructor, and two, doesn't empty a member's pocket."
Here are some factors to consider before you list a price next to specific services at your club.
* Do your homework. Check to see what comparable facilities in your area are charging for comparable services. Have your staff call and ask what the going rates are, advises Brill-Daley. "You may be taking a gamble setting your rates a little higher, but if you provide a service you feel is worth that, you can get away with it."
* Strike a balance between your dues and your fees. "Some of our fees for classes and programs are low, but our dues are high," says Brill-Daley. "Members are paying dues already and the one thing I want to do is encourage them to participate in group activities," adds Lewandowski.
* Set your fees wisely. Lewan-dowksi has found that charging people in the $8 to $12 range per class is acceptable. "Normally I look for a minimum of eight people in the class," he says. "If a class were to meet for one month twice a week I would charge from $65 to $96 per person."
* Let the background of the instructor and the size of the group be your guide. "If the instructor is a personal trainer, I might charge $12 per person," says Lewandoski. "But if one person - such as a dance instructor - is teaching a large group, I might charge only $8."
* Don't underestimate the psychological pull of a fee. "If you charge for an event or a service, people will feel more of a commitment to it," says Lewandowski. "If they don't complete it, they feel badly about it. Charging a fee is a way of getting a strong commitment. It puts a worth on what they're doing."
* Institute a tiered fee schedule. Personal training is a lucrative venue for clubs, but the fees can scare people off. To make it more widely available, Gold Coast offers three price schedules. Depending upon educational background, years of experience and certifications (trainers are classified as master, progressive or standard trainers), a trainer may cost $55, $60 or $65 per hour.
"Sixty-five dollars is one of the top prices in the area," says Lewandowski. But the $55 fee for a standard trainer is comparable to what similar clubs in the area charge. "If you want a progressive or master level trainer, you will pay more but you are going to get years of experience," adds Lewandowski. "Much of our competition doesn't offer that."
* Offer a discount for a large block of classes. "Any type of discount will drive people to purchase in volume," notes Lewandowski, whose club essentially offers one free session for every 10 a member buys.
"In fitness as in life, there is no quick solution," he continues. "To see any type of bodily change, you need a minimum of five to seven weeks. We offer a block of 10 training sessions, which averages out to training twice a week for five weeks. A member can reassess from there."
* Offer a nutrition program. The 12-week nutrition program at Gold Coast includes two group personal-training sessions a week, cardio monitoring, field trips and a one-hour-per-week lecture as well as a dinner out. The average class size is 10, and the fee is $540. "Right from the get-go, members are cutting their personal training costs in half," says Lewandowski. And after paying the nutritionist, the trainer and the restaurant (the restaurant offers a cut rate of $12 per meal), the club makes a 20 percent profit.
* Don't count on extra fees to make your fortune. "Where a club succeeds financially is in the dues line," believes Lewandowski. "Our goal here is to keep members from canceling their memberships. So if we can offer quality services without them having to pay much more, that's what we want to achieve. We want to be able to adapt to what they want and need as their age and life expectancy increase."
* Personal Training. It's by far the most lucrative service a club can offer. "Training will bring you anywhere from $60,000 to $100,000 a year gross," says Kate Brill-Daley, general manager of The Clubs at Charles River Park, in Boston. "For a facility like ours with 1,200 year-round members, that's not bad extra revenue."
* Event-specific training. At the Gold Coast Multiplex, in Chicago, an ongoing marathon-training class is a favorite. Class size ranges from 12 to 40 and costs $100 to $300 depending upon the length of the session. (Ses-sions run for six to 20 weeks.) Classes meet three times a week for 60 to 90 minutes.
* Ballroom dance and salsa classes. At Gold Coast, three two-hour salsa classes cost $45. Four-to-six-week ballroom classes, which meet once a week for two hours, cost $90. Typically, the club and instructor split the profit, with 60 percent going to the instructor and 40 percent to the club.
* Physical therapy. The Clubs at Charles River Park rents out space to a physical therapy company, which bills out a little more than a million dollars a year. The club grosses about $40,000 a year. In return, the therapists do free screenings for members and will refer injured members to a local orthopedist if necessary.
* Tennis courts. The Clubs at Charles River Park's outside tennis courts bring in about $35,000 per year, after a 50/50 split with the instructor. Court fees average $20 to $30 per hour per person. Private lessons cost $40 an hour for members, $55 an hour for nonmembers. Five one-hour group lessons (four people to a group) cost $100 for members and $140 for nonmembers.