I recently tried to join a new gym. When I arrived at the information desk to seek information about the gym, the lady asked me why I wanted to join a gym.
I responded that fitness was a part of my daily routine. Since I recently moved to the area, I needed to maintain my regime.
She asked what specific exercise did I do when I am at the gym, I informed her that I mostly did cardio and weight.
Based upon this information, she proceeded to tell me all the activities they had at their gym and the cost of monthly subscription. I informed her that in the entire list, the only two things I wanted was the gym and sauna.
She informed me that for a start the sauna was not included in the price she quoted me. If I needed to use the sauna, I had to pay an extra seven pounds a month.
I said since I am not going to be using all the other extra stuff she spoke about, I am only interested in the gym and sauna, would she be so kind to include the sauna into my membership?
She said no. Their price included all the other bits if I was not interested in them, it was my problem.
I left the gym, asked someone if there was another gym nearby, they directed me to another gym which had similar facilities, with a sauna for half the price the first gym was charging.
There is something instructive about this information for small business owners. The majority of small business owners set their prices based upon the market price.
They do not give consideration to the value that is provided to the customers. Value do not necessarily mean something tangible, it can be something as intangible as the atmosphere you create for your customers.
The example I always make is with the retail industry. There are really cheap crappy stuff sold in some retail stores. However, tier one and two retailers and luxury retailers sell more or less the same quality of things.
So why are luxury retailers able to charge twenty-thirty times the price of similar quality of merchandise? It’s because of the way they sell it.
So if you are going to make the decision to price your products or service in a certain way, you need to consider adding things that will make the product or service appear valuable in the eyes of your market.
I did not see any logical reason why I should pay sixty pounds per month to the first gym. I went into the gym, I did not notice any equipment that I could not get from another gym that is priced far less than sixty pounds a month.
This is an important lesson you need to consider when you set the price of your product or service.
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