Pricing: How Do You Determine What It’ll Be?
So, I thought I might write about an experience I’m having with trying to sign up for a gym membership and the business questions it’s raised for me as a consumer because I think it’s quite interesting.
Anyway, I used to be a member of a particular gym and when I signed up to join it, they were offering a special discounted price of $100 dollars a year for full membership, which included use of all their equipment, classes, showers, etc…
The membership to this gym expired this December and I decided to start looking for another gym (for a number of reasons) — but mainly because I wanted a gym with better amenities overrall.
So, this week, I finally found a gym that had what I was looking, but their pricing structure left me baffled. However, first, let me give you a little background on the owners of this gym. It’s a couple of former trainers who decided to venture out and open up their own business — offering classses, workout equipment and I suppose their advice if you wanted it. Okay, fine. What’s not fine (at least to me) is their pricing structure, which appears to have been determined straight out of planet pluto.
They have decided to charge $300 dollars per month when other gyms offering the exact same amenities would typically charge between $30 and $60 dollars a month. Why? I have no idea. It’s lunatic pricing so completely out of touch with reality that I’ve become fascinated by these two owners.
Additionally, lately, I’ve developed an obsession with trying to figure out what businesses will succeed and what won’t and this gym is one that I firmly believe will not succeed (unless their prices come down dramatically). I’m so convinced of their utter failure, that I’m willing to wait a few months and not join any gym while reality sinks into the minds of these two owners. Then, in a few months, when they have exactly zero clients and are totally desperate, they’ll be forced to drop their prices dramatically and that’s when I’ll walk in and sign up - at the dramatically discounted price
I once had a friend who wanted to hire a personal trainer at a cost of $10,000 dollars and she asked her parents if they’d pay for it and they told her to eat less!
So, anyway, if you own a business, how do you determine what prices you’ll charge? Do you look at what your competitors are charging? Do you just think your so special and to heck with it, you’ll charge more than anyone else and people will just pay you? Do you drop your prices if the number of clients you have starts dropping?
While I wait for reality to sink in for these two owners, I’ll sample your answers.