TALKBACK


Kath Hudson • Journalist • Health Club Management EVERYONE’S TALKING ABOUT . . .


Putting prices up P


lenty of other industries are bullish about putting their prices up, pointing


to infl ation and rising costs to justify their decision. But with the advent of budget clubs in the health and fi tness industry making it harder than ever for other operators to get their share of the 12 per cent of the population who will pay for a health club membership, it has become a price war. In this economic climate, and with


consumers ever more price-sensitive, how can a health club operator raise prices? Is it possible to introduce an increase in membership fees without adding value in some way to justify this? Will even the budget operators have to consider price rises in the future?


Are you charging the right price at


your club? How do you know when is the right time to put prices up, and how much should they increase by?


One has to question quite how long they can sustain rock-bottom membership rates with rent and energy prices rising – but does a price increase go against the very ethos of a budget club? Another consideration is whether


a price increase will even improve the profi tability of a club. There’s a chance that a letter informing members of a price hike could prompt sleeping members to cancel their memberships, while price-conscious or unhappy


members might go elsewhere. If this is the case, will attrition – and the cost of replacing lost members – negate the benefi t of the price increase? If you’re going to raise


memberships, how do you go about it? Is a letter enough, or does there need to be face-to-


face discussion with members? Should price rises be universally


implemented, or should loyal members get preferential treatment? And what research needs to take place prior to a price increase? Are high satisfaction levels a vital prerequisite, and should clubs fi rst survey members for their thoughts on the service and facilities? What about the competition? How


much do your fees depend on what others are charging locally? We ask the experts.


TELL US YOUR EXPERIENCE OF PUTTING UP MEMBERSHIP FEES – EMAIL US: HEALTHCLUB@LEISUREMEDIA.COM


GILES SHAPLEY Network Research • Customer development director


“P


rior to a price increase, it’s critical to understand the local


competition and what other clubs are charging for a comparable membership, so that a price increase does not render your club uncompetitive. However, it’s also very important that the club is fulfilling


the expectations of its members at the current price. If not, it becomes very hard to justify a price increase. The only real way of knowing if members are satisfied is continuously asking for feedback. You need to know what your customers are thinking and saying about the business before progressing. Members should ideally be informed before any price rise,


perhaps notifying them in writing some time in advance. This should outline the increase and emphasise the benefits members are getting from the club, specifically those that differentiate it from other gyms in the area. Managers must also be equipped to deal with any isolated complaints. Chains have the choice to implement price rises nationally,


locally or to a specific group of members, such as new members. It’s vital to monitor the impact of raising prices and the resulting membership churn, which could be ascertained through single club trials before rolling out to the rest of the estate.


” 30


JOHN TREHARNE The Gym Group • Founder and CEO


demographic and postcode analysis pricing software and map this against local markets to ensure our pricing remains competitive. As a result, our membership fees vary geographically and even from site to site. There’s less scope for a price rise in the budget sector. It’s


“W


interesting to note that Germany’s largest low-cost operator, McFit, has only increased prices by €1 in its 16-year history. If the demographic in an area were to change, or the business


were to be hit by significant and uncontrollable cost increases, we might be forced to consider a marginal price increase for new members. However, we believe in rewarding loyalty, so increasing the membership fees of existing members will always be a last resort for us. Through experience gained when operating the chain of 22


Dragons Health Clubs in the 1990s, I’m conscious of the fact that the short-term financial gain achieved by a mandatory fee increase across the board is often offset by an increase in member attrition. The decrease in membership income and the increase in marketing costs associated with attracting new members often cancels out the benefits of the price increase.


Read Health Club Management online at healthclubmanagement.co.uk/digital


hen setting membership fees for our sites, we use data from


” July 2013 © Cybertrek 2013


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