Should I drop my prices in a recession? 🤔💪

If we're gonna lower a price, I want you to add another membership in. So now we have 3 packs and we have our, our, our normal, which is now in the middle, which most people are on. Then we have a higher one, then we have a lower one. Because the same time that you might lose people into low one, the same time you might gain people in the higher one. Welcome back to the Marketing Muscle Up Podcast Show. I'm your host, Richard Toutounji, and in today's episode, I want to talk all about raising prices, cutting prices. Should I lower my prices? What should I do with the rising cost of inflation? It's affecting my studio. It's affecting my members. I don't know if I can compete anymore. Well, thanks for tuning in. It's been a minute since I've done a solo episode, and you may ask, where have I been? Just been working, just been helping our clients grow and just been in that zone for a while. And, you know, when I started this podcast, I said, I'm gonna do an episode every day. And I certainly did for a while, but at the same time too, I'm loving the concept of flow and making sure that I am in flow, making sure that, you know, I can have enough data and I feel like I've really just, you know, been deep in a lot of people's businesses. I've been deep in giving a lot of different presentations and creating some new content. And I'm really pumped to do this episode and I'm pumped to continue sharing this with you guys on this podcast show. And if you have liked this and you do like these episodes, please be sure to share it with a friend. That's the best way that you can get this content out. And if somebody is Needing a bit of help or need it, and that episode's like, hey, that's that'd be perfect for them. Just just go and share that. Just literally copy the episode. Hey, you should listen to this, and I really appreciate for you doing that. That's why we put these episodes on. We don't charge for them. There's no fee. So yeah, give give share the love. Now in today's episode, this is coming directly off a client conversation just last. Friday. And give you some context, this client has been growing year on year with, with our program called Marketing ever since they started with us. And they're probably at around 400 members, around that mark, studio, boutique studio. And the question is, I'm losing a couple of my members. They're asking me to pause. They're asking me to cancel my membership because directly because of the rising cost of inflation and they need to cut back expenses, rightfully so. I think we're up to, in Australia, I think we're up to like something like 10, 11, 12 interest rates hikes every month. And if you've got a mortgage, and you get the letters, whatever month, whatever you think, well, how can we continue this? Now, if you were on a wage and you have clients that are on a single wage, this is a very serious problem because that means then any— if they're already tight in their budgeting, already tight in their cash flow every single week, They have to cut things out of their world. There's no real way around this. If you're in, if your mortgage goes up and it's going up $500,000, $600,000, well, and that was their buffer that they have to cut some things out. There's just no way around this. And so You're sitting there as a business owner going, well, hang on, how can I help? Because that's what we do, right? In the fitness industry, we help people. We go, well, I just need to lower my prices. I just need to cut my prices out. That will be the easiest thing to do. I mean, heck, they're saying they might join Planet Fitness at $10 a week or $5 a week, wherever they are. And so that's what I wanna address today. What do we do? Talking about Planet Fitness for a second. Revenue is close up to close— revenue is close to billion dollars. I read something in Active Management Group, 17 million members around the world. And if you want to compete with Planet Fitness, you might as well close your doors because you won't be able to complete— compete with Planet Fitness's revenue model and structure model. So it's best not to compete. There's a saying there that says, if you're going to, you know, if you're going to go the cheap model, well, go the cheap model, be the cheapest around. But know that if you be the cheapest around, you can calculate that model and go, well, will I be in business? Probably not. So if we can't go the cheap model, And we're running a studio that is a, that is a boutique studio, meaning that we provide a high-level service. We provide amazing results. We provide a community. We just not our price. It's just not our model. So how do we get around this? What do we do? Well, let me take you through what I, what I went through with this client and a couple scenarios. Number one, if you are getting people that are saying to you, I need to cancel membership. Can't afford it. First of all, you need to make sure that you need to be really clear. Is it because of rate rises? Is it because they can't afford it? Or is it because they're simply just moving? They're changing some things around that are out of your control. And, you know, a lot of people are moving, they're changing their situations like that. So have a look at that too. Now you should be also recording how many people you're losing every month, how many people you're— how many new memberships you're getting. And you might be in a position where you're losing and gaining that they're equally out the same. I get 5 in, I lose 5. I get 10 in, I lose 10. It's like a roller coaster. So just have a look at that scenario first. Now, if you are, you know, it's consistently been happening. This particular client, we've had these conversations multiple times. They've only got one price. They've got one price. That's it. One price. One price, single price. So I wanna talk to you that, cuz a lot of you have single prices, like one price, unlimited, $50, $40, $60, $80, whatever it may be. It's that one price you have, and there's really no other options for somebody to move into, adjust, to downgrade, and that kind of stuff. So this particular client, we had a few conversations around this in the last few months, and we decided then to make the shift. The shift to going from one price to multiple prices. I wanna take you through how we did that. And is this something that you could do if you feel that you are in this situation as well? First of all, we looked at, are you selling the services? Like she also said to me, Richard, I'm getting— I, I, I'd usually be able to sell pretty much everybody, but people are coming and saying, it's just too much. I cannot afford it. These are new people coming into the studio. Into the studio. So number one is that you've got to make sure that in times like this, we're able to sell and you understand how to sell. You can't just say, hey, here's the studio, here's the paper form, sign up. So we need to sell better. And this is exactly what we went through, went through our sales core framework. And we talked about number one, selling better. Number 2 is how to market your experience, how to market your uniqueness much better. And that also connects to how how to market that as well. So if you're not even touching on your uniqueness, you're not touching on why, you know, why it's best to come to you than a Planet Fitness based on the avatar, based on the client you're getting in, that is something that you wanna drill down before you make an adjustment like this. Number 3, if you are gonna make an adjustment like this, you really need to know what they're actually getting at the moment in their memberships. And if they're just getting unlimited services, well, that's not really gonna cut it in today's marketplace. That used to be able to cut it, but it's certainly not cutting it now. So we wanna make sure that you, they, you, you're really clear of what they're getting. And over the years, you may have put in services, you may have put in like body, you know, body scans, you may put 'em in challenges and they're all bundled and every, everybody gets this one, everything for this one price. And so first of all, you wanna really list down what exactly your clients are getting, your members are getting when they're coming to you. If, if they've got, if you've got a one price model, which, you know, most people do in the studio space, right? So if you're doing that and you think, yep, I could, I could sell better. Okay. Go and, go and sell better. Learn how to sell, you know, better. There's episodes on that we can talk about. Number 2, if you've never marketed your uniqueness, understand why you're the biggest, the greatest for that audience. Well, you need to learn how to do that. That's number 2. And number 3, if you never explained what you actually get in the membership, well, that is something to do too. Now, if those 3 items— sell, market, an explanation of the packs— if you're doing that and you're doing it well and that's still not having the effect, well, this is when we can actually start talking about let's add some multiple price tiers into membership. And this is exactly what we did just last week with this client because she You know, we looked at those numbers and the selling and the market and explaining, and that was definitely being met. But we wanted to make sure that we had another level of options for people. And there was 2 things. There was people coming into the business, right? So there was people coming into the business, and there was also people that were wanting to like pause or cancel and things like that. So there was 2 reasons why we're doing this. So My big thing is that, and first of all, you don't want to lower your prices. Okay? So if you're at $50 and you say, right, I'm gonna lower everybody to $40, I'm gonna lower everybody $30, that's not— I think that's just quite stupid. You don't want to do that. You don't need to do that, right? Because not everybody has the same problem as, let's say, client A, who's like really in financial hardships. Not everybody's in that world. Okay? So it doesn't mean that just because you've, you're hearing 10, 15 people go, oh my gosh, I need to stop, it doesn't mean everybody else in your studio does. Okay? Yes, everybody's hearing the news. Yes, everybody is understanding that, but not everybody's in the same financial positions. So you don't wanna just assume that's the case for everybody. Okay? Now, if you've got one pricing option, We are talking about in this episode is, should I add some more in? And, and it's the concept of the good, better, best, the GBB pricing. I didn't make that up. I found it on Google. It was quite good. I liked it. The good, better, best, good, better, best pricing. And if you are doing the good, better, best pricing, you know what it's about. It's about the bronze, silver, gold, the bronze, silver, platinum, all that kind of stuff. You've seen it before. Let's take the concepts of how this actually works. The gist of it is that one pricing includes a lot of things and includes a lot of features and benefits and all that kind of stuff. And the other pricing is like the basic model, the basic version. This happens in cars. It happens in Uber. It happens in pretty much everything you do. It happens in movies. Everybody's got a good, good, better, best to a degree. Okay? Now you may have one pricing model, but the good, better, best concept is like we'll say, okay, Let's, let's say your pricing is $50 and that's for unlimited at the moment, which is kind of possibly normal for quite a lot of people. And you might say, listen, they can't afford that. So you put a pricing model of $30, let's say $29, right? And the $50 is the unlimited you got at the moment and you gotta add a $30 mark in there. Well, what do I add in the $30? Well, if you've got $50 and you know that most of your members, and this is what you have to understand before you just throw prices in there, Do you know what percentage of members are actually coming? How many times they're actually coming to you? Is it 4 times? Is it 3 times? Is it 7 times? Right? So let's say, for example, they're coming 4 times. Okay? And you're gonna put this other model, which is $30, and they're gonna, and they're gonna say, okay, $30. Well, they can't come unlimited because they're paying a less amount. So in this concept here, you wanna reduce the amount of sessions. Let's say it's 2 sessions, right? And you got the $50 model, you got the $30 model, that's 2 sessions, right? Um, now there's a few problems that's going to arise when you just throw a $30 mark in there, right? You gotta be really careful because if a lot of your members are only coming 2 times a week and you put a $30 price point in there, that dramatically could say, well, I'm at risk of losing the majority of my clients to a $30 model because they've just realized I've got a $30 model, why don't I move down to that? So number one, you really wanna look at the percentages of how often people are coming. Are they coming 4, 3, 2, 1? Look at that first before you look at the just throwing a model in there and say, okay, well, I've only got most people coming 4 times. There's only a majority of people coming 2 times, let's say 20%. So it's kinda like, okay, I'm at risk of losing 20% of people into this model here. Okay? And there's no problem with that because they're in the right model. Okay? Things must evolve. But at the same time too, the good, better, best, you might think, okay, that $50 is my best option I have. That's everything. I'm putting my challenges in there. I'm putting my body scans in there. I'm putting unlimited in there. They get everything. They call me up. I get whatever I want. But what I want you to think about now is actually to raise, so to put another price on top, let's say the $50, put another price on top of that. And that's your better price. So it's good, better, best. That's your best price, I should say. Sorry. You might think, Richard, I can't put more than $50. We're in a recession here. Like, people can't afford my services. Well, no, not everybody. But what we do here is that we add another layer up to that. So think about this concept. Airline companies used to have just a standard economy, and used to have first class and business. Well, in economy, they put the economy— like the— lost my word. They put the higher end of economy, extra legroom in economy, right? You pay an extra $20, $30, and you get that extra legroom. So think about that concept. Have you ever done that? I've certainly done that before. And I quite like that kind of that, that version there. Do you know what I mean? Not everybody does. Some people do. And so what we wanna do is we want to, if we're gonna lower a price, I want you to add another membership in. So now we have 3 packs and we have our, our, our normal, which is now in the middle, which most people are on. Then we have a higher one, then we have a lower one because at the same time that you might lose people into low one, At the same time, you might gain people in the higher one. Does that make sense? And so what we want to do here is we want to create a new category price line in both sides. And you might think, well, who is going to do that? Think about, and this is how you sell it, of course, but think about the concept of when you ever hired a car and they say, would you like the insurance? And you think, oh, I've got that car for a really cheap rate. They say, would you like the insurance? And you forget about it. How much is the insurance? Well, if your excess is $1,000, it's going to be whatever it is, $60. But if your excess is $0, it's going to be $100. You go, oh, oh, on a slight chance, I'll take the $0. You know, it kind of depends on the personality you are. And That is exactly what I'm talking about here. If you explain what you get in the individual packs to the T, like really explain to it, people will go to the model that they want to go to based on their personality types, right? And but if you just say, oh, it's just 2 sessions, that's unlimited, that's more than unlimited, whatever you're gonna think that is, right? And you can't go more than unlimited, guys. That means then you're actually explaining what you do better in the best price. It's like, is it towels delivered? Is it waters on tap? Is it the challenges are included in for free? You, you gotta add things in, you know, is it premium times, whatever it may be, right? You gotta add things into that, that top tier that you didn't have before. That's like, wow, this is awesome. I get that. Because a lot of the time we're thinking about our client that is screaming the loudest, which are the ones that are saying, I need to pause my membership. But in fact, if we think about the other side of things where there is gonna be a percentage of people, 10, 15, 20, 25% of people that do want that higher, that more prestigious level, they can go into that too. Hope that makes sense. Now, the other thing I wanna talk about is that if you are uncertain and think, you know what, I think all my clients are going to go the 2 sessions pack because I'm in a— I'm in an environment at the moment in a community that they were really struggling, and rightfully so. That may be happening into your community. What I'd do in this, what I'd do in this is I'd actually look at this, and we did this scenario around COVID time. I'd look at this and I'd say, you know, put this And if you're against putting extra tiers, right, you wanna put this extra lower tier into it, but put it for a limitation. So for example, 6 months, 4 months, 8 months, and say, this is a, this is an interim due to these uncertain times. We're gonna put that here for the next 6 months, and then we're gonna review it. Call it a financial hardship membership, or you don't have to advertise the membership. But if people ask about, is there another option? You can have that other option ready to go. So you don't have to publicly display this on your website by any means. And if you are publicly displaying the information on your website, you think, well, how am I gonna get around this? I'll just take the price off your website. And then what you can do is you can just put a contact page or an appointment page where they can actually make an appointment and have a conversation with you. And, and that sort of goes back to the selling better. We need to be able to sell better and explain To the personality, the member that's coming in. We need to understand what they want, what their needs are, what they're looking for, and then put them into the right category for that market. And you don't want to turn people down if you think they're a great client and they just simply can't afford it. You want to have a membership there. However, at the same time too, that if your model to get results is I've got to train four times a week or five times a week or unlimited. Well, you've got to tell them that to get the best results that they want, this is what I'd highly recommend. And this goes back to the concept of like, as a boutique studio, you know, you got to treat yourself like a, like, like a, like an expert, not just like, oh, I'm just going to, you know, take the order and, you know, let's just take the order and give them the membership. No, you, you're, you're telling, you're, you're listening to them what they need, and then you're explaining them How your clients have got great results in the past, and this is how they did it. They didn't do it on the come to the sessions twice a week pack. They did it on, okay, this is the pack they're gonna repeat. This is the— you can come 4 times a week, whatever it may be, right? But even if they're gonna come the 2 times, you're gonna have to set them up the program for the interim where they're really struggling financially, and then get them back into where you'd like them to be. You know, they might go for a walk, they might come to you twice. but get them back to the program they need to be. You've gotta reinforce how your clients get results, and it's not on the pack of 1 session a week. Just so they're really clear. And if anybody says, hey, I wanna go to that pack, well, you gotta be really clear of how you get the results. It's not that pack. And that goes back to making sure that you have a solid process, a solid method. We have a concept called the My Method, and we get, we, you know, create these for our clients to make, to make them super unique where they can compete in The harshest of times. And that's why with this particular client, I said, are you using and explaining your uniqueness? Are you explaining your My Method correctly or not? And they said, listen, Rich, I could do a way better job. Let me get into that. And that really made a massive difference where it's like, yes, I can get people into that, but I need to sell in a different manner. I need to sell in a different way. I need to explain what I'm doing. I need to give examples of how these clients got results using our method, method, using our process. Okay. So a couple of things here. Let me just make sure I've got all my points out here. Number 1, don't drop all the prices to cater. Don't just drop every price. Don't go from $50 to $30. That is not what you wanna do. You wanna bring a new price line in, go a lower price, but also put a premium price in there as well for the small percentage or larger percentage that's gonna go into that, right? Understand that all these offerings have different— all these pricings have different offerings, I should say, right? And if you're gonna look at, you know, pricing, you know, what you should charge, just calculate. Like if you've got a casual rate, let's say for example, you're going from 50 to 30 and your casual is, you know, $25, that's okay. So you gotta look at everything and go, is it safe? What will people do if they get a 2-pack and then they want a single? And they go, oh, well, the single is even $5 more than the unlimited. I might just go the unlimited. And so just by knowing that your, your single rate is like, let's say $25, and you're at $30 for 2 sessions, and you're at unlimited $50, and they go, oh, 3rd session, I gotta pay more. This also shows them, clearly indicates them that this is the better option. Okay? There's things like, you know, your, your studio, if it is open just in studio times, it might be a concept to actually open it up and open up if you are there, and you might open up till 12 o'clock, or you might open up on certain days so your members can come in and actually train in those times because they might just be looking for those extra times to train outside the session. And then so they're deciding, oh, should I join the gym? Should I join a Planet Fitness or whatever? Or should I actually You know, stay at the studio and maybe you've got some other services that you can offer there that don't actually cost you any more to have open. Some other things that just, just some to think about where you can look at some other options is like bundle memberships, off-peak memberships, memberships by age, junior, seniors, family plans have worked really well in the past for some of our clients. and trial memberships. And so sometimes, yeah, if you've been in that one model, you can look at some different scenarios to get through these times, to make sure that you're not losing people, you're still growing the business. And to grow the business, you may need to open up new revenue source to do that, new membership lines to do that, team. Hope that helps. And I'm really confident in this process that knowing that If you— and the most important thing, price is really, yes, it's a part. It is a part. However, when we really look at what our clients are paying outside this, right? And if you really look at financial hardship, right? Proper financial hardship. If your client is going to buy, you know, 2 coffee frappés every single day, like $10, $12, $15, whatever that's going to be, $20. Well, we've gotta look at things properly and go and make those hard conversations. Say, listen, you wanna get these results. You can get these results here. Can you save money here, here, and here? And your job to make sure they get results is to really look at their lifestyle and go, well, where can they cut back? Where can they adjust if they're making unhealthy lifestyle patterns? And they may not understand that, you know, They're not, not, they're not seeing that. They're just simply not seeing that. It's not, you know, they're going to the gym 4 times and they're still losing weight and they're still not losing weight. It's the other things they're doing in between that, that is, that is really stopping them from getting to that goal. So sometimes, you know, what I also like to do, and, and a third part here is that, so we tell a lot of our clients to do at this point, it really works well, is to actually reach out and say, listen, I would like a reset session, a reset session. And this reset session, you take them through what are their goals, what are their priorities for this year, what do they need to work more on, what do they need to work less on? And a lot of the time when you do a reset session, they actually just get plugged back in to your studio, to your gym properly, and they don't mind paying because they now understand what they're paying for. If you've got a client that's been there for years and years and years, sometimes they just forget what they signed up for. They forget what's included. What is included? I didn't know there was challenges included. I didn't know I could do this. I didn't know I could do that. They just weren't brought in with— maybe some new clients have been brought in with. So just have a look at your clients and always say, if you're, you're worried about, you know, they don't understand the value, well, tell them the value. Be really clear with the value. Book them in for a reset session. Book them in for a session to actually show them how they're gonna get— generate the results. And that's on you, not them. So if you are sitting there worried and going, what am I going to do? Literally just, just call your clients and book them in for a session to get them back on track, to go from 2 to 3 sessions, to go from 4 to 5, to go from not doing the challenge to the challenge. And all these things are retention mechanisms. If you've been running the same challenges every single quarter and you get the same results, you get the same people in, That means that challenge is not working for a lot of other people. So get those working and change up the names of the challenge, change up the inclusions for the challenges to get your model working well. Team, I hope that helped to give you some ideas of what you can do in these times, because this is not a time to dig your head in. And you may think, oh, Richard, I've been through such a challenging time over the last 2, 3 years with COVID Yes, certainly have. And if you're still here today, it means that you've, you've got through the toughest times, and now's the time to look at your business and go, what does my business need to get through the next stages? That is what it needs. Because if you need help with that, please don't go to websitecommarketing.com.au and check that out. We've got a lot of different options and ways to get involved. to make sure that you can be seen. And I was having this conversation, another conversation with, with a, um, with, um, another coach in the industry. And, you know, talking to them and saying like, if we look at any industry, right, we look at a trade industry, we look at a real estate industry, right? It's not that— I don't think this is a saturated industry at all, by the way. I just think that smart people are catching on and going, hey, I'd like a business that gives me recurring revenue. I don't want to be running my retail store. I want a business that gives me a recurring real— I want to invest in that. So just people are catching on to the industry, that's all. But it also means that we as fitness professionals, we need to look at things and go, well, we are running a business and we need to do better marketing. We need to do better sales. We need to invest in marketing, and I'm going to do another episode on this, by the way. And we need to make sure that yeah, like every industry invests in marketing. So if you're not investing in dollar into marketing or very little of it, your time or money, it is now time to realize this is an industry that has now got everybody's attention, and it's an industry that people are getting into if they're. in the industry for 20 years or they've been in the industry for 2 minutes. It's an industry people are getting into, and that's just life. And so you can do 2 things right now. You can do, oh, it's unfair. You get the chip on the shoulder. Oh, I can't do it. Or you can just say, hey, yeah, I'm ready to rip in and I'm ready to, you know, make a shift here and I'm ready to make some adjustments. I'm ready to get some help. I'm ready to spend money on marketing. I'm ready to learn how to do sales properly. I'm ready to change my pricing just like my client did. Straight away. I'm ready to jump in. It's your choice. So we've realized at this time, if you haven't— if you didn't want to be around here and it's all too hard, listen, there's lots of studios up for sale. And that may seem harsh, but at the end of the day is that if you're— if you're in a bad financial position already in your studio and something like this happens, You're gonna be in a worse financial position. So it's time. Now it's time. It is time. That's for sure. I remember going back very, very early when I just got into internet marketing back in the day. Like, I put everything I could just in learning how to do it. Like, every dollar and money I didn't have in doing that. No, not to say you should be doing that, but what I am saying is that You either got time or you got money. If you don't have clients, you don't have time. When you got money, you got a lot of time to learn, to study, to listen, to get smarter in this because this business or the fitness business is a business. And if you're not willing to run it as a business and you're running it as a hobby, it probably won't work out that well. So now is your time, team. Plug in, get into it. Go back and listen to every one of these podcasts and learn. And study. It's all free. But if you really want, you know, get someone to go, hey, let me analyze your business, you can definitely do that. Go to website commarketing.com.au and book in for what we call a marketing muscle up, and I can analyze your business and give you a one-page report on it and give you 3 scenarios of how you can make adjustments to get through The darkest of times. It's an exciting time ahead. As a recap, team, have a look at how you can sell better, market better, explain what you do in the packs, and then go through and check out what I talked about in regards to multiple levels. I'll catch you next time on the Marketing Muscle Up Podcast Show. Bye for now.