Tuesday, May 7, 2013

Are Anytime Fitness Enrollment Fees Too Low?

Are Anytime Fitness Enrollment Fees Too Low?
Are Anytime Fitness Enrollment Fees Too Low?
Here's a question you don't often hear asked: are Anytime Fitness enrollment fees too low for their own good?

Too low for WHOSE own good, you ask? After all, people joining as new gym members of Anytime Fitness surely don't mind if prices drop.

But from the standpoint of a small business owner, and specifically as a health club owner, are Anytime Fitness enrollment fees too low right now?

Anytime Fitness "regular" prices may vary depending on where you live, but some sources have quoted these averages:
1 year Membership: $33 a month plus a one-time $39 key-fee for anytime access,
2 year Membership: $29 a month plus a one-time $39 key-fee for anytime access.

Take a look at the picture posted to the right. This is a real promotion being offered by Anytime Fitness in my area. For a very limited time, you can join for $1 + 1 month free. I took this picture today. While I'm sure this promotion may indeed "make the door swing", there are two distinct drawbacks to running a health club promotion where you DRAMATICALLY drop the price:
1) The existing health club members who paid more than a buck for their membership will feel like they were ripped off. At best, they will feel disappointed that they missed out on a good deal because they joined too soon. Some of them who joined very recently may ask the gym owner to honor the sale price for them as well and give them a partial refund.
2) The second drawback to running a health club promotion like this is that, for SOME people, you effectively (and permanently) lower the value of the membership. Many customers keep a "running tally" in their mind of how much things should cost. When a price drops to a new low, what you've done is set that price mentally lower for the price-conscious customer. You've lowered the bar, so to speak.

Many potential customers who haven't yet joined the health club, but WANT to join, will refuse to join the gym until the price is back down to that "new low" of $1 + 1 month free. It's a mental game of sorts, where people take pride in achieving the lowest possible price on their purchases. They'll remember that price, and some of them will remember it for a long time. So next month when Anytime Fitness offers memberships for $10 (or whatever), those price-conscious consumers won't bite.

This concept that the customer remembers the lowest market price and waits to buy until they can meet or beat that price isn't exclusive to the fitness center industry. Many consumers "stock up" on groceries when they can get a great price. I've been known, for example, to buy ten tubes of toothpaste when I see it on sale for less than I've ever seen it before. I remember that lowest market price and buy accordingly.

Another great example is the purchase of stocks. Many traders will analyze a stock and look at the 52-week high and 52-week low. If nothing intrinsic to the business has changed since it hit that 52-week low, then I may decide to wait and buy when it hits that 52-week low again. Why pay more for the stock than the 52-week low?

To summarize, the major drawback to running a great health club sale is that you run the risk of angering existing gym members who recently paid more while at the same time "cheapening" the value of the membership in the minds of some cost-conscious consumers.

So, back to the original question: are Anytime Fitness enrollment fees too low?

Despite the theory that this $1 sale can backfire, Anytime Fitness has been doing quite well for itself: "The chain of franchised gyms spans 14 countries. As No. 14 on our list, the company notched steady growth even as sales climbed to nine digits. Revenues approached $500 million last year, nearly double the company’s 2009 take" (SOURCE: http://www.forbes.com/sites/jjcolao/2013/02/06/americas-most-promising-companies-the-top-25/)

The bottom line is that there are probably better ways to run a health club promotion. But that fact doesn't seem to be hurting Anytime Fitness, who was recently awarded a #6 ranking in Entrepreneur's "Franchise 500 List".


1 comment:

Tricity said...

This is really awesome your fitness club provide very cheap enrollment fees thanks