How often do you raise your rates? How do you tell clients that you are raising them?
Tricks of the Trade:
Increasing rates is a sensitive subject for all of us. Let’s face it: no one wants to pay more for anything. Everyone wants to feel they “got a deal” and are saving money. Plus, in this economy, we feel squeezed in every aspect of our lives. You need to decide when you feel is an appropriate time for a rate increase. Is it yearly, every other year or more often? I have been running an in-home personal training and wellness company for over 20 years, and we increase our pricing every 2–3 years.
For us, the magic comes from doing it simply and nicely. By acknowledging our existing clients as valued and important, we “gift” them the increase for 3 months into the new year. This way they know it’s coming, but they feel special, too. We have never lost a client due to these increases. Given that, know that we do have exceptions. If a client is having difficulty with the rate increase, we try to work with him or her to find a happy medium.
Below is an example of a letter that we sent in November 2009 to announce 2010 increases. We personalized it and sent it to all of our clients via e-mail.
Your commitment to improving your health using Solo Fitness & Wellness is greatly appreciated. As Solo Fitness & Wellness continues to grow, our commitment to you and to providing the best and most advanced exercise approaches grows as well. At the heart of this commitment is the support we provide our exercise and allied health professionals.
For the past 2 years we have not raised our prices. We know that in these tough economic times everyone needs a break, and keeping you healthy is our number-one priority. Solo’s prices have been the same since 2007, despite very substantial cost increases. We now find it necessary to mildly adjust our prices to keep providing the outstanding training and service we strive to give you. Our new prices will take effect on January 2, 2010.
_________, you are a valued and important client to us. Therefore, we are happy to waive this fee increase for our current clients only for 3 months. This means that your pricing will stay the same until April 1, 2010 (really, no foolin’)!
I greatly appreciate your understanding. Please call me if you have questions.
Thank you for your continued support of Solo Fitness & Wellness.”
Lisa Hoffman, MA
President, Solo Fitness & Wellness
New York, New York
I usually raise my rates every year in January. I prepare the clients with a letter that I present to them when I meet with them in November. The letter states that as of January 1, their new rate will increase to $______ per session. I go on to explain some of the expenses that require me to raise my rates, so clients get a better understanding of why I am doing so. Sometimes the reason I give is a cost-of-living increase. I find that when I give clients the letter personally and I explain to them why there is an increase, they are more receptive to it.
If the rate increase poses a financial problem for someone, then we work together to figure out a workable solution. Perhaps we meet every other week, instead of every week, and do a virtual fitness call-in between sessions to keep them on track. Offering other services is helpful, so you can provide some alternatives.
How much should you raise your rates? When I started hiring other trainers to work with me, their rates were lower than mine. I actually increased my rate considerably because I did not want to do as many “one-on-one” sessions. My other trainers’ rates were at least $15–$20 lower per hour than my rate. I was able to fill their time with clients and make more money per hour for my client sessions.
Now I increase rates from 3%–5% per year. However, sometimes it makes sense to make an increase of $4. People do not tend to complain if you increase $4 instead of $5. It is not substantial enough for them to make a fuss, and they just accept it.
The most important thing is to talk to your clients personally about the increase and communicate with them. Clients don’t want to just receive a letter telling them of the increase. We provide a personal service to people. You have to keep it personal with your business practices, too. The better your communication with your clients, the more understanding they are when you raise your rates.
Owner, Fitting Fitness In™
We raise rates for new clients every year. However, as long as existing clients continue training with us, we honor their existing rates. (If they discontinue training for more than 3 months and want to come back, then they return at new rates.)
The only exception to this policy is if a trainer has been with us for a long time and deserves a raise, but the margin is tapped out (essentially equal to or greater than 40% including payroll taxes, 401(k) matches, health care and more). We then will approach that particular trainer’s clientele and explain the situation to them in person and in a letter. In this situation, we have never lost a client and have rarely received any flak about the rate increase. Clients understand that if they want to keep their trainers for the long term, then this is what we have to do. We handle this situation very discreetly and with the trainer’s full knowledge and support.
From my experience, raising rates arbitrarily across the board for personal training clients results in a loss of a few clients, which decreases the benefit of the blanket rate increase anyway! During poor economic times, we actually launched lower-dollar personal training options and decreased our basic membership rate. Clients were thrilled that we offered some lower-cost options to keep personal training affordable for their budgets. It also created a lot of goodwill and resulted in a lot of referrals coming in!
Dale Huff, CSCS
Owner, Athletic Republic
St. Louis, Missouri
I came to personal training 12 years ago after a long career in the insurance brokerage business. The annual negotiations for our fees were never easy, and while I do not negotiate fees any longer, fee/rate discussions and their timing are still stressful!
I do not offer packages. Right now, there is only a $10 spread between my lowest- and highest-paying clients. In general, my newer clients are paying my current rate, and my longer-tenured clients lag $10 behind.
Before 2010, I had not raised my rates for more than 2 years, owing to the state of our economy. I had absorbed two rent increases and my other expenses were also increasing, so, while the economy is not yet robust, I knew I could no longer absorb those costs! In January 2010, I increased my rate $5 per session for clients who had not had a rate increase in 2 years. (This change impacted only four of my clients.) The bulk of my clients will have gone 2 years without an increase this July and August, and they will also be asked for an additional $5 per session.
Before I initiate a fee/rate change, I always call around or visit the (many!) clubs in San Francisco and learn what trainers with my credentials and experience are charging for sessions. Then I tell each client of the pending increase at least 30 days in advance. I often find myself sharing what the “competition” is charging, because my rates are usually lower. Depending on the client, I present some justification. It could be simply that I have not raised my rates in 2 years or that my expenses have increased. I always ask clients if the increase would be a hardship, and in 12 years no one has ever said yes.
I specialize in working with clients who have significant health and physical challenges. Exercise is critical to their continued good health and, fortunately for me, a modest cost-of-living increase is expected for the services I provide.
Joan E. Glick
Owner and Personal Trainer,
Fit For The Ages
San Francisco, California.
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