Should You Increase Rates for Long Time Members?

by Mark Fisher

Yes. Yes, you should!

Listen, I’m all about loyalty; at times, to a fault. But if there’s one thing I’ve learned (the hard way), it’s this:

When you prioritize individuals over the group, the group suffers, and then it’s still a bad outcome for individuals. 

This is a tough pill to swallow. Because it’s a rare individual that won’t be 95% focused on their immediate best interest. 

Whether it be a trainer who wants special scheduling consideration or a long time client who wants to keep their pricing from five year ago, the individual will not appreciate your loyalty to the business at large. They can’t see the second and third order impacts of prioritizing their needs over the needs of the “organism.”

And this suuuuuuucks.

But alas. You decided to open up a training gym. 

So you get to learn fun/ painful things!

Now to be honest, I love the idea of honoring your most loyal members. After all, they’ve stuck with you. Shouldn’t they receive some benefits?

Totally. They should get oodles of love and care. Too many training gyms spend their time chasing prospects without constantly working on their relationships with their long term members. You should actively look for ways to honor and reward long term commitment.

However, they still need to pay you more money.

Because your landlord isn’t “rewarding your loyalty” as a tenant by keeping your rent the same year over year.

Your team is not “rewarding your loyalty” as an employer by never expecting a raise.

Your vendors are not “rewarding your loyalty” by keeping their prices static on all the products and services you purchase.

The cost of business will go up year over year. And you’ll need to increase your rates or you’ll get in an ugly jam; particularly if your business makes it to 5-10 years and beyond.

(Perversely, the one way this could work is if you have horrible retention. But that’s a whole other issue we can address in another email.)

Now my dearest {Contact}, come sit on Papa Mark’s knee to learn of another blunder of yesteryear…

The reason I feel so strongly about this is because I made this same mistake myself (read: loyal to a fault). When we opened MFF, we were committed to never raising anyone’s rates. But as we approached our sixth year, it was clear this wasn’t tenable. 

Not only was our original pricing structure pulled out of our butt (read: not actually that profitable), but over time, our costs continued to increase. And since our retention has always been unusually strong, even with an influx of new members paying higher rates, our average revenue per member wasn’t growing fast enough to keep up with our increased costs of doing business.

Furthermore, it made our back-of-house a total administrative nightmare. At one point we had something like 40 plus (!!!!) different active memberships. This had massive costs in complexity and time — and therefore money — to manage all these different options. It also created lots of opportunities for back-of-house mistakes (and pissed off Ninjas) when we needed to adjust billing.

So in the summer of 2016, we ripped off the band-aid. And YOWZA, it stung.

We wanted to honor the terms of our original agreement. And since Ninjas had made the commitment with the expectation that they would keep their rates forever, we didn’t want to hold them to auto-renewing agreements since we changed the terms.

(Yes, our contracts DID say we could raise their rates. But that wasn’t the social compact we had made. So that would have felt crappy.)

In order to “delay the pain,” we gave our members a heads-up in July that rates would go up in the new year. Since our oldest members were now seeing pretty significant increases, we also offered some of them discounts for the entire following year. Finally, we asked Ninjas to sign new agreements to confirm their understanding of the new world. In practice, we were letting everyone out of their agreements.

All in all, there wasn’t actually too much pushback. We weren’t forcing anyone into the new rates, we gave them plenty of time to emotionally adjust, and we also offered discounts to those seeing the steepest hikes.

But by asking all Ninjas to “re-sign up” for their membership, we saw a massive dip in members for a six month period. 

In MFF lore, we call this period of time The Red Wedding.

Things got reeeeal gnarly.

Ultimately, we obviously sorted it all out.

But the amount of time and effort that went into making the change AND the short term hit to revenues was not fun.

I rarely speak in absolutes, but I will here:

If you’re attempting to reward loyalty to your members by never raising their rates, you’re making a mistake.

Unless you’re committed to truly terrible year-over-year retention, the math just doesn’t work.

Will your members love it? No. Of course not. But they’ll get it. 

Raise your rates every single year just like every other business in the world. 

I believe in you!

PS And if you’ve promised your members you’ll never raise their rates and your heart dropped while reading this email, I can help.

I’m fully booked and not currently adding new clients, but I can sneak a call to help you create a plan. Details HERE.

Comments

0 Comments

Submit a Comment

Your email address will not be published. Required fields are marked *

Related Posts

A (Counter-Intuitive) Facilities Tip…

Here’s a quickie pro–tip to best nurture your facility. When making improvements, don’t do everything all at once. If you’re anything like me, you like to get THINGS DONE. FAST. (I have many lovely qualities. Patience is not among them.) So when I’m thinking about...

“It Worked So Well, I Stopped Doing It!”

First up, want to give you a gentle reminder, you have until tomorrow to sign up for my upcoming time management workshop and save $200. I’ll be hosting it over Zoom on January 7th from 10am est to 5pm est. Although live attendance is strongly encouraged, we will be...

Who We Are

We’re just a few days away from the closing of the Early Bird window for the Unicorn Society’s 2023 enrollment… So I want to shamelessly talk about the humans who provide the BFU coaching magic.  If you’re looking for support in growing your training gym, you have one...

Exactly What I Track (Personal, Financial, Business)

First off, reminder: this is one of your only chances of the year to join a crew of some of the fitness industry’s most successful gyms AND get personal coaching from Michael Keeler, Pete Dupuis, Ben “the Secret Weapon” Pickard, and yours truly.  To learn more about...

Top Lessons From A Unicorn Society Member Turned COO

Today we have a guest post from BFU coach (and now COO!), Ben “The Secret Weapon” Pickard.  Ben was a client for many years. Since we just opened up enrollment for the 2023 Unicorn Society, I’ve asked him to share a bit about his experience. He also includes one super...

3 Takeaways From My #1 Tool [I Legit Cried To My Wife]

I had a pretty intense experience recently… For the first time in years –– possibly since I wrote them –– I went into old journals and reviewed my planned 5-year goals from ten years ago. The years described were 2017- 2020 (written in 2012-2015). As I flipped through...