The 3 Major Problems with Pricing Personal Training Too Low
Let’s talk about pizza, because this story could have more influence on your personal training career than you might think.
Let’s say you want to open a pizza restaurant in a city that already has successful local pizza franchise — Manciano’s Pizza House.
If you open your pizza restaurant (Patty’s Pizza Place) and present it as the “cheap” option, most of the people in town will assume you sell lower quality pizza than Manciano’s. Some people will be okay with that, but many would rather pay a little more for “better” pizza at Manciano’s.
Important note: Whether Manciano’s pizza is actually better than yours is irrelevant. Based on the price point, everyone has decided your pizza is lower quality. A lot of people won’t even try it.
Now, let’s say you charge $8 for a large pizza and Manciano’s charges $12.
Manciano’s has 5 locations and has been established in the community for 15 years. What I’m saying is:
They have a lot more money than you — and they don’t want you on their turf.
So Manciano’s decides to run a promo, “$8 pizza for 8 months.” (They figure it will only take about 8 months to run you out of business. After that, they’ll raise their prices again.)
Now, they’ve taken away your only advantage. People can now get “better” pizza (Manciano’s) for the same price as yours.
Let’s consider another scenario. Let’s say your strategy works for a year or two and business is good enough to keep the restaurant open. Manciano’s decides not to lower their prices and just lets you have that part of the market.
But then an out-of-town franchise (Cheesy Pizza Pie) notices you have a stranglehold on the cheap pizza market. They decide they should come to your territory and offer large pizzas for only $6 apiece.
In both scenarios, Manciano’s and Cheesy Pizza Pie have taken away your only advantage in the market — low price — and run you out of business.
But let’s pretend neither of those happen. Let’s pretend you open Patty’s Pizza Place, where you sell large pizzas for $8 and it works perfectly.
Sure, Manciano’s has better pizza, but it costs 33% more than yours for a large. And there are a decent amount of people who love pizza, but are trying to save cash. They’re your customers!
But eventually, you decide your pizza is good enough to compete with Manciano’s, so you raise your prices to $12 for a large pizza.
And sales drop dramatically. Why?
Even though you’re making more money per pizza sold, people have mentally positioned Patty’s Pizza Place as a restaurant that serves cheap pizza. It doesn’t make sense to them that $8 pizza could turn into $12 pizza overnight — even though you’re actually serving better pizza now.
They bought your pizza not because it was the best, but because it was the cheapest. Now, you’ve taken away your unique selling point and alienated your customers in the process.
Okay, let’s talk about training now, because I’m getting hungry.
The Patty’s Pizza story should highlight one extremely important point for personal trainers:
Don’t price your personal training services too low.
If you’ve read my last article, you know market-based pricing is the way to go for your digital flagship programs, but it can be hard to determine where to set your price.
It can be very tempting when you’re starting out to feel less confident in your products and to set your price too low. You might think:
“I’m just starting out and I don’t really know where to price, so I should just price my programs lower than other trainers (the market) to try to entice their potential clients to come to me instead.”
While pricing lower than competition can work, particularly in the short term, it isn’t always a great way to build your business for the following reasons — all of which were illustrated in our pizza example:
1. Pricing below the competition can present your fitness program as low-quality compared to the higher priced alternatives.
(Patty’s Pizza Place was perceived as serving lower-quality pizza than Manciano’s, because it was cheaper.)
Think about the last time you booked a hotel room. You may not have wanted to pay $500 per night for the Ritz, but you sure as hell didn’t want to pay $15 for a shady motel on the other side of the airport, either.
Likewise you probably wouldn’t choose the absolute cheapest divorce attorney, plastic surgeon, or accountant. People (including potential clients) usually associate cheaper with lower quality.
After all, you get what you pay for, right?
2. Any of your competitors can lower their price temporarily just to put cheaper options out of business.
(By running a promo — “$8 pizza for 8 months” — Manciano’s was able to run Patty’s Pizza Place out of business.)
And any new competitor can enter the market at a price lower than yours at any time.
(Cheesy Pizza Pie was able to do the same thing with their $6 pizza.)
That strategy doesn’t require any special skill or knowledge. While you may want to offer a reasonably lower-priced alternative where you see a niche in the market, don’t make your brand the “cheap” brand.
There’s always someone else who can be cheaper and squeeze you out. Unless you’re prepared to win a “race to the bottom,” don’t go there.
3. It’s hard to increase your price once you’ve already established a price point.
(Even after changing its recipe and charging a higher price for their pizzas, Patty’s Pizza Place couldn’t win any more customers. They had already positioned themselves as a low-quality pizza restaurant in people’s minds.)
If you start out too low and give off a low-quality vibe, why would anyone continue to pay you if you increase your price? Why wouldn’t they just switch to someone who they perceive as a higher quality alternative?
If your competition has been the “expensive” or high-end brand the whole time and you raise your price to their level, there is no incentive for anyone to sign up with you.
You can always go down on your price or offer discounts once you’ve built a client base if you feel the need to do so, but don’t start from a low position.
Pricing at or above the market can be scary, especially if you’re just starting out. But if your value proposition is comparable to the competition, your price should be too.