As a fit pro, how many times have you needed to raise rates because our rent or lease payment went up, or to accommodate for inflation, or because we’ve needed to simply upgrade equipment? Or perhaps you haven’t raised your rates at all!
I personally have made plenty of errors since 2008 when I started teaching karate and then again since 2015 when I rolled out ShayTheCoach. The best way to determine how to raise rates while still retaining clients is to list what NOT to do first (based on my own experiences, at least):
How Not to Raise Rates
1) Abruptly/without notice
2) Without prior and adequate communication
3) Too high, too fast
4) Double rates to cover new certifications/credentials
If you blindside your clients or appear to be gouging them, they will be offended, put off, and potentially run for the hills rather than confront you on it.
Ways to Raise Rates Mindfully
1) If you want to adjust for inflation, put it in your waiver. And don’t forget to give your client a copy for their records!
I’ve seen some people word it like this in a “please initial” section:
___I understand to keep up with inflation, rates for __(your business name)__ services may increase by 2-3% annually. __(your business name)__will take all steps necessary to provide advanced notice, but this may not always be possible.
Some businesses just follow this protocol year after year and adjust rates accordingly.
ShayTheCoach has been open since 2015. Now that it’s 2021, I have finally started adjusting for inflation. It’s something I wish I’d learned and implemented earlier on because if inflation is 2-3% every year, then as a fitness professional, I’m needing to generate 2-3% more work each year without raising rates. This doesn’t sound too bad, but now multiply that percentage for each year I’ve been in business:
6 years x 2% = 6 x .02 =.12 x 100=12%
6 years x 3% = 6 x .03 =.18 x 100 = 18%
That’s a 12-18% increase in work that I’d have to do to stretch my earnings without raising my prices. It’s not very sustainable as years in business continue to pile up.
Inflation doesn’t necessarily hit a small business during year 1 or 2–it accrues over the course of several years.
If you haven’t been adjusting for inflation all along, you can start adding it in your waivers (ideally you’re having clients renew and resign waivers annually, or keeping them up-to-date per your state’s requirements).
Once you choose a day or time of the year to start the new rates, either put signs up in your physical space if you have one, or write a letter and give it to each client letting them know when it will start. Alternatively, you can send a newsletter in an email blast.
However you choose to approach it, do not feel badly about raising your rates. Despite the connections we develop with our clients, it is still a business relationship foremost and, if they respect you as their fitness coach, they will respect your business decisions.
Many businesses will announce their rate increase after the holiday rush. The fitness industry is known for the mad-dash of client onboarding in January because of New Year’s Resolutions. This might be a good time to implement a change, and coincide it with the new year. For example, in January, make the signs, write the letter, send the newsletter or figure out how you’ll do it and notify the clients. If it’s already in the paperwork, it shouldn’t be a shock.
Then, raise the rates in a couple of months. Usually March is a good month because by then, people are settled into the new year and doing taxes so they know things will change and hopefully they have tax money coming.
2) Implement raised rates for new clients. Another way to raise rates is to let current clients know that you’ve got new rates for new clients and will honor the long-term clients’ initial rates as a thank you for one renewal cycle. After that, everyone’s rates will go up.
For example, if you were charging $65/session and plan to go up to $75/session, all your new clients will be at the $75/session. Tell your existing clients about this price increase and let them know you’ll keep them at the $65 for one renewal cycle. After that, everyone will go up to $75 session.
This is important because it will explain why there is a price discrepancy between a new client and an existing client’s rates. Sometimes miscommunication around this can lead to disgruntled clients going elsewhere, lowering retention.
3) Let clients know what the raises will do for them. Think about their potential mindset of “What’s in it for me?” When I raise rates, I will tell them where the extra money is going. Adjusting for inflation is a very easy one to communicate but that’s typically 2-3% or whatever the statistics are indicating.
Reasons to raise rates:
- Facility upgrades and repairs
- Raised rent/lease term increases
- Equipment upgrades and repairs
- Staff pay increases (it tends to go over well if your clientele is loyal to the fit pro’s on staff and love them, clients are usually agreeable to pay increases for their trainers)
- Increased amenities
- During COVID-19, to cover costs of increased cleaning supplies and to ensure the government regulations and CDC guidelines are being followed
Explain that you are doing it to cover costs. My reasons for a recent rate increase were to accommodate for inflation and also for costs of extra supplies to uphold CDC guidelines and local governmental regulations. It’s up to you about how transparent you’d like to be with clients.
If you’re raising rates for reasons other than inflation, be careful not to raise them so high that you lose clients and need to completely rebuild, unless a brand-new clientele is what you’re going for!