Problem Solvers

Have a question? We have the answer. Submit your questions to us, and we'll have an industry expert respond. The question must relate to business/management issues at fitness facilities (for-profit, nonprofit, corporate, university, government/military).

Submit questions to: editors@clubindustry.com.

Questions by Topics

Pricing

Q: What is the proper pricing for a start-up club?

Answer from Rick Caro, Management Vision: Actually, the answer is not that simple. In fact, it is often a question that club developers ask themselves at the outset, answer it too quickly without proper thought and may have to live with less than ideal consequences.

Pricing is one of the elements of marketing of a club, but actually one of the lesser issues. The methodology should start with a concept for a club at a proposed location. An independent market analysis—using supply vs. demand methodology—is critical. If the conclusion by the outside expert is a “go,” then a business plan needs to be created.

Marketing is a key component of the business plan and helps develop some fundamental conclusions to serve as the basis for the projected financial statements for the new club.

Marketing now is comprised of 5 P’s: positioning, product, promotion, place (or method of distribution) and pricing.

Actually, if the club developer knows who he is targeting, how he will differentiate his product, where it will be located, how he will advertise and promote it, then the pricing of it becomes much easier. The pricing has to be consistent with all of the above. Obviously, a high-end, high-service, family-oriented club targeted to a 3-mile radius around a suburban site where no such similar club exists locally may command a very different price than a 3,000-square-foot personal training studio or a 10,000-square-foot pure fitness equipment-only offering aimed at the masses.

One needs to know a lot more about the concept and the market conditions before properly answering such a question.

Rick Caro is president of Management Vision Inc., a club consulting firm that specializes in market feasibility studies, club finances, valuations, expert witness testimony as well as helping with the selling or purchasing or a club. Caro can be reached at 800-778-4411 or at mgmtvision@gmail.com.