When to Raise Your Membership Prices

It's generally a good sign that you can increase your membership price if more than 15% of your memberships are paid in full. Another ideal time to raise prices is when you can justify the increase through recent investments, such as new equipment, hiring additional staff, or adding new services and fitness programs. Highlight these improvements in your member price increase letter to validate the price change.

How Much Should You Charge?

Raising your prices too much can lead to losing members, which could leave you worse off than before. Here’s an example to illustrate this point:

  • Let's say you have 100 members paying $100 per month, generating $10,000 in monthly dues.
  • You decide to increase the fee to $150 per month. If everyone accepts, your gross revenue jumps to $15,000, a positive gain of $5,000.
  • However, if half of your members drop out, you'll have 50 members paying $150, totaling $7,500, resulting in a net loss of $2,500.
  • If you lose 30 members due to the $50 increase, you’ll have 70 members at $150, generating $10,500 in dues, a gain of $500 but with 30 fewer members.

Losing members means fewer referrals, retail sales, event attendees, and additional service purchases.

Steps to Determine Your Price Increase

  1. Know Your Competitors' Prices: Check their websites or send a "silent shopper" to understand their rates and service quality.
  2. Know Your Members' Current Payments: Use member management software to track current rates. A small price difference from your highest to lowest rates gives you less room to move, while middle-range rates provide more flexibility.

Communicating the Change to Members

  1. Give Advance Notice: Notify members at least three months before the increase. Update your marketing materials immediately to reflect new prices for new members.
  2. Write a Personalized Letter: Avoid impersonal emails. A letter is more professional and shows that you value your members. Explain the increase, when the rates were last changed, and justify the new rates by highlighting new equipment, services, or classes.

Justify the Change

Ensure you can highlight the benefits and differences your services offer over competitors. If you can’t justify the rate increase with tangible improvements, it may not be the right time to raise prices. Being better than your competitors and knowing their rates and your unique advantages are crucial.

By following these steps and effectively communicating with your members, you can successfully raise your martial arts school’s membership prices while maintaining a strong, satisfied member base.