Ronnie from Tampa, Florida asks, ”We have seen a surge in low cost gyms ($9 a month) in the Tampa area. I’ve owned my gym for almost 10 years, and I am definitely losing members to them. My question is, should I try to compete with them on price, or just wait it out? I can’t imagine that they’ll stay in business with prices like that!”
Well Ronnie, I hate to be the one to tell you this, but these types of gyms are here to stay (at least for the next decade I would say), so if you don’t want to wait 10 years or more for them to go away, you better believe you need to do something about it! Remember back when all the airlines were losing money except for Jet Blue and Southwest? Well the same thing is happening in the fitness industry today … while Bally’s goes bankrupt (again) and Gold’s struggles to reinvent themselves, Planet Fitness and many others like them are kicking ass and taking names!
So now that I’ve sufficiently scared you in to realizing that if you don’t do something, you may end up going down with the ship, the real question is what do you do about it? The fitness business, like all other businesses, operates on basic principles of supply and demand – which I like to break down as:
- Is your club at 100% member capacity? (supply)
- Are you giving your members what they want? (demand)
Look around your club at the busiest time of the week (typically Monday night after work). At its peak time, your club needs to be busting at the seams. Think about a really good restaurant on a Saturday night at 7pm. If you go there and get seated immediately, wouldn’t you agree that there is a problem? It is no different in our business – we need a packed house at peak times. So let’s assume that you have established that you are only at 70% capacity – how do you fill the place up?
I would submit that lowering your price is the easiest way to get more members. Many people in the industry are against this concept, saying that you need to differentiate yourself against competition, and keep your prices high. I would suggest that if your club was truly different than the competition, and even more importantly that you were delivering members what they really wanted, they would in fact pay a higher price – and you probably wouldn’t have asked your original question. But consumers are fairly savvy – they are looking for value. And if all you have is a gym that when you break it down is not that different from the gym down the street that costs less, where do you think the member is going to go?
So in summary, if you are feeling the heat from a low cost operator, here are a few things you may want to consider. First, take a tour of their gym to see what you’re up against. If they have newer equipment, cleaner facilities, and a strong marketing program all at a lower price than your gym, you need to get to work! First by renegotiating all of your expenses (especially rent) – and then by putting a huge marketing effort in yourself. And yes, in more cases than not, I do advocate lowering your prices.
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