Charging for the True Value of Your Club

I was trained in this industry in the 80's style high-volume, low-service clubs, so selling on price was all I knew.

After a while, however, I not only questioned the business practice of selling on price, I began to resist it. Constant turnover of staff and members, unending member complaints and limited financial growth started to take its toll on me. So I searched for a better way.

I found a very simple, yet challenging, way of operating a health club — charge more money!

Charge what you are worth, not what is dictated by an underpriced, under-serviced industry. And raise your dues every year for your existing members.

When my partners and I opened Hatfield Athletic Club in 1997, we basically re-opened a failed facility, a club that had been selling $99 annual memberships. Even though I knew what I had to do to succeed, I still held my breath the first time I sold a $35 a month membership.

When I look back at that now, I laugh. Today we are charging a $119 enrollment fee and $56 per month. Our sales and retention are better than they have ever been, and continue to grow on a monthly basis. But believe me, charging more wasn't an easy journey.

Price is perception. Value is perception. The problem with our industry is that the price has always been set too low, often by people who are in it for the short term, or who hope to sell an endless volume of memberships.

You can sell your club on one of two categories: quality and service, or price and pressure. When you are not selling on quality and service, you have no choice but to sell on price and pressure.

Most prospects enter a health club expecting to negotiate. At Hatfield Athletic Club, we take the “Saturn” approach to selling health club memberships. By not selling on price, not discounting memberships and not negotiating, our community now knows that they can enter our facility without having to haggle and they know that they truly are getting the “best” price.

There were several times over the years when I stepped back and questioned if we were taking the right approach. When you lose a potential sale due to price or existing members complain due to a price increase, it is only natural to question yourself.

As club operators, we often hold ourselves back by the “gym rat” perception we created. In other words, fitness enthusiasts who have only ever paid $19.95 a month think that is all a club is worth. The deconditioned population, on the other hand, doesn't have these preconceived notions — these people have never belonged to a club before — so price is usually not an issue.

I am very sure there are many of you saying, “That sounds good, but my market is different.” Don't be held back by self-limiting beliefs. Consumers will usually spend about 1 to 3 percent of their gross household income on a health club membership, yet we usually charge much less than that.

Determine who your market is and then educate them. Like the Nike ad states, “Just Do It,” and as Pat Croce, the ever-positive co-owner and president of the Philadelphia 76ers would command, “Just do it now!”

Dan Horan has been in the fitness industry since 1992 as a fitness instructor, personal trainer, general manager, sales and marketing director, motivational speaker and owner/operator. He is on the board of directors of the Delaware Valley Alliance of Health & Sportsclubs and can be reached at (215) 822-6177.


Membership Pricing

Charging a higher price for your memberships may be scarey at first, but if you offer your members quality services, they will see the value in their membership. Here are some issues to take under advisement, if you are considering raising your membership rates.

  1. As your rates go up, so does your retention rate.
  2. Let your members know their rates will go up every year. (After all, name one other bill you have that doesn't do the same.)
  3. Be more concerned with what your net dollar amount per member is, not your gross dollar amount. How much money are you actually receiving per member? Is your net dollar amount per member going up or down?
  4. Out-service your competition. This will help justify a better price. Look outside our industry for standards.
  5. Have at least five profit centers doing 20 percent or better. This way your club is not as dependent solely on monthly dues. A higher-priced market will support this ancillary revenue.