Pricing your Services |
Learn More About Pricing Your Services
What You'll Learn
In this lesson we talk about how to understand different pricing models, the problems you might face, how to increase the value of your service in the eyes of the client and how to price your services for maximum profit.
Why is This Important?
When pricing your services, it can be very easy , especially if you are new to the game, to undervalue your service or at the other end, price yourself out of the market. That isn't to say you can't command a great salary from either option, but there may be a compromise to be made.
In this lesson we talk about how to understand different pricing models, the problems you might face, how to increase the value of your service in the eyes of the client and how to price your services for maximum profit.
Why is This Important?
When pricing your services, it can be very easy , especially if you are new to the game, to undervalue your service or at the other end, price yourself out of the market. That isn't to say you can't command a great salary from either option, but there may be a compromise to be made.
Understand Pricing Models
Here are 7 industry standard common pricing models that work well for personal trainers and their various services. let take a look at how they work.
1. Limited Functionality with Upgrade
Just a cut above a “sample” version of a product, this model relies on the customer wanting more features and voluntarily upgrading to the “Business” or “Professional” version of your product/service. Works well with online services.
2. Tiered Pricing
True tiered pricing is actually volume-based. “Order two, get one free” is one example. “Three sessions for £240 or £90 each separately” is another.
1. Limited Functionality with Upgrade
Just a cut above a “sample” version of a product, this model relies on the customer wanting more features and voluntarily upgrading to the “Business” or “Professional” version of your product/service. Works well with online services.
2. Tiered Pricing
True tiered pricing is actually volume-based. “Order two, get one free” is one example. “Three sessions for £240 or £90 each separately” is another.
3. “Razor and Blade” Pricing
This strategy got its name from Gillette, the razor company that first came up with the idea of selling the shaver for almost nothing and making money off the replacement blades.
4. Freebie Marketing
Most personal trainers are only too familiar with this model: Offer a free session/product that is perceived as valuable to the target customer or client, and be presented with upsells and “OTO” (one- time-only) special offers.
Think free challenges.
5. Value-based
You can price more than your competitors if you offer higher-value – especially if that includes a unique service or feature your competitors haven’t been able to provide. For example, perhaps you include nutrition in your package, while other PT's don’t.
6. Flat Fee
This model is often adopted by service providers – especially in today’s economic climate where struggling clients badly need fixed prices in order to stay competitive and make a profit.
Clients know exactly what they’re going to pay, regardless of the amount of work a program takes, so they can accurately budget.
An example would be someone who charges £500 for fitness package, or a nutritionist who charges £1000 for a lifestyle overhaul..
7. Hourly Rate
This is the industry standard adopted heavily by PT’s.
What to charge for your hourly rate will depend solely on these unique factors:
- Your expertise level
- Your authority status and visibility in the industry
- Your industry, and what it can bear
- Provable referrals and recommendations
- Your already-proven results
- How well you market yourself
- How many clients you need
- What your competitors are charging
How Your Location Can Affect Prices
Location is everything – especially when your “storefront” often lives online or among other PT’s.
In real life, a crappy PT can be selling over-priced, unexciting PT and a rather unsubstantial service near the gym entrance. So that the potential client who loves exercise doesn’t have a chance to find out that your service, at the back of the building, has a superior product at a better price.
So how can you position yourself at the door?
Here’s how...
1. Extend your reach. Promote your service in a variety of ways:
2. Be visible. Frequent health and fitness forums, social media and blogs regularly and consistently. Be there with advice on making getting fit, when people bewail on Facebook that they’re feeling sluggish and overweight. Answer questions. Discuss fitness every chance you get. Be approachable. But above all – be there.
Most important factors: Compete on your unique advantages -- service quality, ability to meet deadlines, ability to meet expectations, ability to throw extra skills into the mix and last but not least, your persona (is it matched to your client base’s communication preferences? Are you “one of us”?)
Don’t compete on price alone. Clients who are out for the bottom dollar are more likely to bail ship on you when someone cheaper comes along (unless you’re underpricing yourself so drastically that using you is a no-brainer: In which case, you’re not likely to be making a profit at all).
And no matter what economic strata they’re coming from: Clients who demand “cheap” are usually the most demanding and unrewarding to work for.
Focus on the client you want – not the client you can get.
In real life, a crappy PT can be selling over-priced, unexciting PT and a rather unsubstantial service near the gym entrance. So that the potential client who loves exercise doesn’t have a chance to find out that your service, at the back of the building, has a superior product at a better price.
So how can you position yourself at the door?
Here’s how...
1. Extend your reach. Promote your service in a variety of ways:
- On your blog
- In article directories
- Throughout every social media your client is likely to be browsing through and lurking in
- Commenting on other weight loss blogs and forums
- Buying ads, to make sure you reach a wider segment of the
- general public
- Sending out local flyers, in case your client lives in your area
- Mailing postcards or emails to your previous clients, in case one of this particular group has a thing for your service
- Sell the sizzle, not the sausage1
- Sell the sausage as well (i.e. emphasize its exceptional
- quality!)
2. Be visible. Frequent health and fitness forums, social media and blogs regularly and consistently. Be there with advice on making getting fit, when people bewail on Facebook that they’re feeling sluggish and overweight. Answer questions. Discuss fitness every chance you get. Be approachable. But above all – be there.
Most important factors: Compete on your unique advantages -- service quality, ability to meet deadlines, ability to meet expectations, ability to throw extra skills into the mix and last but not least, your persona (is it matched to your client base’s communication preferences? Are you “one of us”?)
Don’t compete on price alone. Clients who are out for the bottom dollar are more likely to bail ship on you when someone cheaper comes along (unless you’re underpricing yourself so drastically that using you is a no-brainer: In which case, you’re not likely to be making a profit at all).
And no matter what economic strata they’re coming from: Clients who demand “cheap” are usually the most demanding and unrewarding to work for.
Focus on the client you want – not the client you can get.
Price Your Services
A simplest way to decide on your pricing structure starts with your offer.
Offer your clients the minimum you need from them to get a before and after pic.
Here's what I mean:
Write down what your clients NEED to get results. This list is non negotiable and might include:
The trick here is to create a list where, if you removed or reduced just one feature, that would have a negative impact on their results.
Then figure out how long they'll need those things for to achieve results. I can't imagine most people can make serious change in 14 days so why offer that unless it's part of a well thought out marketing strategy?
Work out how much all of that will cost you in time and resources, how much profit you need to make on it and that's your price tag (we have a calculator for this in the resources section of the site).
The main take away here is to not offer your clients LESS than what they need to accomplish a result with you.
Or you'll end up with a lot of walking billboards that say your services don't work.
Here's a handy calculator to help you gauge your pricing better.
Offer your clients the minimum you need from them to get a before and after pic.
Here's what I mean:
Write down what your clients NEED to get results. This list is non negotiable and might include:
- They must do 3 x workouts per week
- They must adhere to some nutritional advice
- They'll certainly need some habit coaching
- Accountability (email, text, etc)
- Workout videos (if you're online)
- Etc
The trick here is to create a list where, if you removed or reduced just one feature, that would have a negative impact on their results.
Then figure out how long they'll need those things for to achieve results. I can't imagine most people can make serious change in 14 days so why offer that unless it's part of a well thought out marketing strategy?
Work out how much all of that will cost you in time and resources, how much profit you need to make on it and that's your price tag (we have a calculator for this in the resources section of the site).
The main take away here is to not offer your clients LESS than what they need to accomplish a result with you.
Or you'll end up with a lot of walking billboards that say your services don't work.
Here's a handy calculator to help you gauge your pricing better.
Making Adjustments
The next step is to test and tweak. This takes time and your prices are always subject to change as the amount of value you can provide goes up (or down).
To test your pricing structure you need to get as many eyes on it as possible. Ask friends and family what they think, run it by existing clients and compare it to competitors to gauge what you're being compared to.
Remember, it's not final. You're allowed to make mistakes and you're allowed to make revisions.
Pricing at its most simplistic level is easy. A super simple way to look at your pricing and make adjustments for groups, drop outs and change in circumstances.
Time - refers to the actual time spent with a client or programming for a client.
Space - may include your gym rent or the amount of work you have to do to obtain space to train a client in.
Resources - equipment, software, stationary and pretty much anything physical that needs replacing or maintaining.
Expertise - programming and professional development. The more you know, the more value you can add and the more you can progress.
So if you're a personal trainer who's just starting out and works in a commercial gym, you may charge $50/hour.
But now your client wants to add in a friend.
This is also a really simple way of explaining to clients WHY the fee is more.
And with some percentage adjustments based on your current business model, you can apply it almost any circumstance.
To test your pricing structure you need to get as many eyes on it as possible. Ask friends and family what they think, run it by existing clients and compare it to competitors to gauge what you're being compared to.
Remember, it's not final. You're allowed to make mistakes and you're allowed to make revisions.
Pricing at its most simplistic level is easy. A super simple way to look at your pricing and make adjustments for groups, drop outs and change in circumstances.
- Time 25%
- Space 25%
- Resources 25%
- Expertise 25%
Time - refers to the actual time spent with a client or programming for a client.
Space - may include your gym rent or the amount of work you have to do to obtain space to train a client in.
Resources - equipment, software, stationary and pretty much anything physical that needs replacing or maintaining.
Expertise - programming and professional development. The more you know, the more value you can add and the more you can progress.
So if you're a personal trainer who's just starting out and works in a commercial gym, you may charge $50/hour.
- Time (1 hour) = $12.50
- Space (gym rent) = $12.50
- Resources (forms, software, etc) = $12.50
- Expertise (programming) = $12.50
- Total = $50
But now your client wants to add in a friend.
- Time = $12.50
- Space = $12.50
- Resources = $12.50 x 2
- Expertise = $12.50 x 2
- Total = $75
This is also a really simple way of explaining to clients WHY the fee is more.
And with some percentage adjustments based on your current business model, you can apply it almost any circumstance.
Increasing Prices
.One final key area to consider, when pricing your services, is how you are going to raise your prices.
The whole key to doing this without alienating existing clients (or stressing yourself out completely, if you’re not the assertive sort) lies in giving them advance notice of changes and training your clients to expect price increases – suddenly springing a hike of £5 per hour on your best client is only going to end in tears... for someone, anyway. Whether you get your way or not.
If you’ve already got regular, recurring clients, but you’re dying because (a) you’re not assertive (b) you’ve never raised your prices in five years – and your clients are now publicly stating they’re making millions, the most minimal action you should take for your fitness marketing is to raise those prices now.. but make it such a small increase, they breathe a sigh of relief.
After that, raise your prices regularly – always at the same time of year (e.g. January 1st) or at clockwork-regular intervals. Use the steps and example script below to write an effective price increase email/letter:
The whole key to doing this without alienating existing clients (or stressing yourself out completely, if you’re not the assertive sort) lies in giving them advance notice of changes and training your clients to expect price increases – suddenly springing a hike of £5 per hour on your best client is only going to end in tears... for someone, anyway. Whether you get your way or not.
If you’ve already got regular, recurring clients, but you’re dying because (a) you’re not assertive (b) you’ve never raised your prices in five years – and your clients are now publicly stating they’re making millions, the most minimal action you should take for your fitness marketing is to raise those prices now.. but make it such a small increase, they breathe a sigh of relief.
After that, raise your prices regularly – always at the same time of year (e.g. January 1st) or at clockwork-regular intervals. Use the steps and example script below to write an effective price increase email/letter:
- Explain but don't apologize
- Talk about your value
- Offer loyal customers a better deal
- Manage expectations (communicate the price increase well ahead of time and repeatedly)
- Offer choices (stay on the same fee but get less value)
Dear [NAME],
It has been a pleasure to serve you in the past, and we look forward to doing business with you in the future.
As you may know, [STATE REASON FOR PRICE INCREASE].
Our priority is to provide the best possible service to our clients. However, we will not be able to serve you if our business incurs losses. Unfortunately, we are left with no rational alternative but to increase our prices. We are confident, nonetheless, that you will find the quality of our [products/services] even in light of these new prices to be quite reasonable and competitive.
Enclosed, please find a copy of our new price list, which is effective [DATE].
While we are not happy about this announcement, we are confident you will continue to be pleased with our superior [products/services]. We look forward to continued business together.
Sincerely,
[YOUR NAME]
It has been a pleasure to serve you in the past, and we look forward to doing business with you in the future.
As you may know, [STATE REASON FOR PRICE INCREASE].
Our priority is to provide the best possible service to our clients. However, we will not be able to serve you if our business incurs losses. Unfortunately, we are left with no rational alternative but to increase our prices. We are confident, nonetheless, that you will find the quality of our [products/services] even in light of these new prices to be quite reasonable and competitive.
Enclosed, please find a copy of our new price list, which is effective [DATE].
While we are not happy about this announcement, we are confident you will continue to be pleased with our superior [products/services]. We look forward to continued business together.
Sincerely,
[YOUR NAME]
If you’re still not comfortable with that (and if you’re so timid your “raises” don’t even pay for a book of postage stamps) you could try a different option: Renegotiate your terms.
- Suggest payment per package, rather than by the hour. Position this as an advantage to the client and make sure it is also an advantage to you.
- Suggest a monthly retainer, if your monthly payments are fairly fixed – ask for fifty per cent
- Upgrade your prices when you add or upgrade services; or introduce new staff
- Give your clients the option of working with your new junior staff member, if they don’t like your new prices. (Most clients will quit grumbling at this point, and capitulate)
Finally, remember that most clients know when they are ripping you off so if you are one of those helpful service providers who haven’t raised their prices in years, it might be time.
Having all the information at your fingertips should go a long way to help you set prices confidently, so that you really do get paid what you are worth.
That’s the best way to ensure your services return you maximum profit – right from the start.
