Pricing Lessons for Personal Trainers
This article is an excerpt from Katie's newsletter addressing personal training issues. You can subscribe to the free newsletter here.
Three months ago I wrote about some experiments I was making with products on our site. Because our exam prep course and business plan products are so unique, I really struggled to figure out how to price them. I took the blind leap and decided to price them at 50% off compared to our nearest competition.
But this decision has always nagged at me. Am I giving too much away? What are the products really worth? And the same doubts plague personal trainers when they try to determine their rates.
So I developed some tests to help figure out the market. And you may be able to take some of the lessons I have learned and apply them to your personal training business. My tests were to cover the entire month of June. I wanted to get enough data to be able to make conclusions. The tests were:
Lower the price on our Business Plan Generator from $34.95 to $24.95, and
Offer a Double your Money Back Guarantee on our Exam Prep Course if the student failed their exam
First, the business plan generator... I expected that revenue might drop because of the price reduction, but I wasn't prepared for the number of sales to stay flat. I had hoped that the lower price would increase the volume of purchases. But it turns out that the price of my business plan generator is really inelastic (my Economics Professor would be proud!). All that means is that people will buy a good product at a reasonable price. I wasn't losing sales when I sold the product for $34.95. And lowering the price wasn't a deciding factor in the purchase.
So in July I raised the price back up to $34.95. And here is the really surprising part. Since I raised the price, sales have increased by 50%. Now I realize that there are other factors at play, but 50% is a very healthy increase. My only conclusion is that the higher price better communicates the high value of the product. The same applies to our personal training services. I see a lot of new trainers charging as low as $30 per hour for their services. But if they focused on providing a high value service, they can easily charge $50 per hour and not lose clients. One of the things that has been keeping me so busy this summer, is developing our nutrition engine that will allow you to offer nutrition and workout tracking online.
More Surprising Results
The double your money back guarantee was a huge leap of faith for me. The idea of refunding more money than the customer actually paid seemed too generous. But I was ultimately convinced after reading a very challenging book called the 4-Hour Work Week. So I kicked off the double your money back guarantee in June and have extended it to July and August (and likely indefinitely).
The results? I was expecting to have to give refunds right and left. But it turns out that people have been passing their exams. In fact, in the last three months I have given one refund! So I essentially refunded an extra $25.
But during that same three month period, sales of the course have increased by 34%. Now imagine what your business would look like of sales increased by 34%. How can you apply a winning guarantee to your business? I recently saw one trainer advertise that clients paid nothing up front, they only paid for results. Not a bad strategy for somebody who is struggling to get clients. It will be interesting to see how it plays out over time.
So the lessons here are... don't be afraid to take a chance. Run tests on your business. Figure out what works and what doesn't. Of course none of this works without a valuable product so invest in your education and continually strive for improvement.
You can add your comments to this discussion below.
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