As a Mastermind coach and a full time martial arts business owner, I've been getting this question asked to me a lot lately by other Martial Art school owners. The question is: “Should we raise our rates on our existing members?”
My successful high level coaching clients already know the answer, however, I wanted to take a few moments and clarify my opinion on this topic for all.
The short answer is no. Absolutely not.
It is my professional opinion, that raising rates to your current members is probably one of the single worst things that you could do in your martial art based membership business. There is a far better solution to make raising rates a win-win situation that I will explain in a moment.
But first, allow me to expand on why I say no:
…..Imagine you are a customer at a service based business and you've been there for awhile, you've been a loyal customer, you're mostly happy. Then, one day, the owner of the business comes to you and says, “Thank you for being a loyal and dedicated member, we value you and we appreciate you but we also want to/ need to raise your rates."
Think about that, just for a moment……
How would that make you feel?
And that's the point. As a smart business owner it is imperative that we put ourselves in our customers shoes, stop thinking with our “Black Belt” eyes and start thinking with our customers eyes.
And It’s important to note, I understand both sides of the argument. I’m fascinated by the people who think they should raise their rates to their existing customers. To me, as a business owner for over 35 years, it just doesn't make sense in the long term.
Yes, it'll put a little short term money in your pocket, very little. Math it out, 100 members by $10 month increase = $1,000 extra a month if EVERYONE agrees. Sounds like a good bump, but let’s play this all the way out.
How many will quit?
How many will do it begrudgingly?
How many will think twice when you ask them for a referral of a friend or family member or a review of your business?
See, I'm in this business for the long haul and for the overall goodwill, not the bad will that raising rates could potentially cause.
This of course doesn’t even account for “turn over” or attrition” Which is yet another reason why there is NO NEED to raise rates on current members.
By simply starting a new pricing model, within 12-24 months you will have a business that is 80% full of people paying the new rate. Again, I hear the school owners who will then say to me, “NOBODY quits at our school.” That statement is simply a bad check written out by your ego.
They do. It’s a natural cycle of ANY membership based business.
Bruce Lee and Chuck Norris had people quit when they were teaching, so check your ego at the door and focus on growing your business in the best and most ethical way possible.
I also understand and empathize with the owners who say, “Well, our rates have been low for (X years) and now we're providing more value and more service to our people. Or the “We invested (X # of dollars) into our facility for upgrades”…. Ok, well to that I say, GOOD. you’re supposed to, that's part of doing business, and running a professional operation. That's our job as entrepreneurs.
Now, please don’t misunderstand my position, I’m not saying you shouldn’t raise your rates. You should raise your rates and you should audit your price point carefully and adjust yearly or as needed and with 100% certainty we should be paid what we are worth.
WE should charge more.
WE are worth more.
In the Martial arts, we’re providing our members a truly life altering experience and a service embedded with life values, that they can't get in any other sport or activity.
WE should charge more.
WE are worth more.
The self defense we teach is priceless!
How do I know?.. Ask any parent this question: If someday your child has to defend/protect themselves and they use the moves we taught them and it helped them or potentially saved their life, How much would that be worth? (This is a rhetorical question because as anyone with a child knows, the answer is: PRICELESS.)
Here’s the solution that I believe is a win for everyone.
When your current customers quit and they decide to come back to training, they get to pay the new increased rate and every new member who who comes in starting tomorrow… well, they pay the new rate too.
Now, for your current members, what you can do is upgrade their experience, there's black belt club, there's master's club, there's leadership, there's elite team, there's competition team, there's a dozen ways to upgrade someone's experience with you, (increase the experience, increase the price) but don't jump over dollars to chase dimes!
This is more than my opinion, our company Red Dragon Karate has been around for 55 years and during that time we have made our fair share of mistakes and learned many lessons the hard way. I’ve just outlined one of those “hard” lessons in this article. One of the reasons why we continue to grow and prosper is because we continue to learn, adapt and get a little better than we were yesterday.
YES! Raise your rates to your new members because you're worth more, you are getting better, you are learning, but do not raise rates on your existing members. Just raise their experience (new programs, new opportunities) and give them more added value options to choose from.
I hope that helps, If you have any questions please let me know.
To your success,
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