MA Business Success 15: Martial Arts Pricing Strategies

Alex: Today we're going to be discussing pricing your martial arts service, which, I guess, is...well, where do you start with that one, Graham? Graham: Look, it' know, having traveled the world and speaking to lots of different business owners, they get nervous about putting their fees up, or charging, you know, a premium for what was traditionally considered like a hobby. But, it's important now in this sort of new economy, in this new age, to look around at what other parents are spending on other activities. For example, how much would it cost for gymnastics? How much would it cost for dancing? What about another sport like football, or a private training guitar lesson? And just get a general understanding of what other sports and activities are charging in your area. You may be actually quite surprised at what the dance studio is charging versus what you as a martial artist are charging. And you ask any martial artist, the service we provide isn't just kicks and punches. There's so much more to it that changes lives. And I'm sure dancing has its own merits, but it also has a different culture to it. But, if both are on par, so be it, but I definitely know that dancing nowadays is quite a premium in what they charge versus some other schools that are out there, which is a little bit disheartening sometimes. Alex: So, do you look at what other martial arts businesses in the area are charging, or do you just look across the board at different activities? Phil: Well, yeah, I would say it's a good activity to do that, just to check out what other martial arts schools in your area are doing. But we've always said our biggest competition isn't other martial arts, because if people are doing martial arts, that's great. Whether it's your school or someone else's school, martial arts is a good activity that we believe the whole community should do. Alex: Sure. Phil: Our biggest competition is other sports. Alex: Okay. Phil: Yeah. And, so...but when we're looking at different prices, and I've got young children and, yeah. Gymnastics and swimming and all that sort of stuff is quite expensive. And then, when you do, you compare our business, martial arts and the value, I believe, that we charge and what we teach, completely undermines our supposed value of what you're at. So, it's important that you don't underestimate your value. Yeah, absolutely, don't underestimate your value. And it's actually a really good activity. We usually, when we get new staff or program directors or whatever it may be in our school, we get them to go and find these things out. So, it might be once a year, or whatever we might do and say, "As an activity, can you go out and find three different activities and see how much they cost, or ring up this martial arts school as an inquired person, and find out how much they cost." And then we bring it back... Alex: Do your research... Phil: Do our research, and go, you know...And it's not that we want to go, "Oh, we should be comparing and being there." You should have your own value of what you believe you're worth. Alex: Yes. Phil: And, we believe that the skills and abilities and the life skills that we teach people within the community far outweigh any other sort of sport or industry of that sort of manner. So we price ourselves as a premium. We, you know, want to make sure that, when started raising our fees, the only thing that changed was the different cars that came through the driveway. So, instead of the Corolla, it was a BMW. Alex: Okay. So, you're not undervaluing... Phil: Absolutely not. You know, we're a professional martial arts school, and we teach professional skills. We teach how to change people's lives. We've talked in past podcasts about the difference between just teaching martial arts and communicating as a leader, etcetera, etcetera. And how much of an impact that can make in a person's life, not just at school, at university, or in everyday life. So we truly believe that the value of a student, or the value of the content that we're teaching them, is way up there compared to some of these other sports and industries that we're talking about. Graham: Look Alex, I know there's going to be a few listeners that are listening going, "Yeah, but I'm in a bad area," or, "Yeah, but...yeah but...yeah but..." and all these excuses are going to start rolling through. Alex: Yeah. Graham: I remember very clearly my early days of doing martial arts. It was two dollars, put it in the ice cream tin for three and a half. And, you know, you look at that. Jeepers, that's, you know, it's minimal compared to, obviously, what we charge nowadays. But, I guess, whether you're a part-time school, if you're operating out of a hall, you're a full-time location...yeah, there may be a few factors in there. Obviously, your full-time rent is definitely going to play into how much you charge, but don't think of it as, okay, the location is the only factor in costing yourselves out, because something I look at wholeheartedly is, think of the amount of time that you've invested in learning your art, whatever that may be. And you look at other areas, or other experts in their field. So for example, a psychologist or a doctor or a physiotherapist or whatever it may be, you know, they're getting paid some very, very big dollars in comparison, but they've probably spent just as much time training and learning and perfecting their art. So, why is it that we charge so little while they charge so much? It's because again, it's what society gets to be the norm. So, why don't we start breaking that sort of mold and realizing, "Jeez, I'm worth it," you know? I talk about, often, we're a psychologist as a martial arts instructor. Every day, someone comes in who needs a problem solved and help them out. Alex: Sure. Graham: You know, we're a fitness trainer, we're a life coach, we're so many different hats that we wear. If you have a look at each and every industry and calculate an hourly rate and add it all together, goodness, I guess that gives you a starting point. Now, obviously unrealistic in charging that, but it just shows you. Wow, okay, if I am only charging myself out at X dollars or my student fees are quite low in comparison, why? You've got to start asking the question "why." Alex: And then are people going to walk in the door and go, "Oh. They're cheap. Maybe they're not very good." Graham: That's right, you know. It's that confidence within yourself to go, "I am worth it. And I will value myself appropriate. And then just maybe a little bit more than that to start pushing the envelopes." And, the hardest thing, myself and Phil at being right at the bottom of what we charged to now where we are, and the thing is convincing yourself and then believing that, and taking one step in front of the other to increase your value. Something that...a really good tip, if you are going to look at increasing your student fees, is to increase it with the new students, not your existing members. Alex: Okay. Graham: So, that way no one knows any different, and you're not going to have an upheaval or a mutiny on your hands. Because, I know instructors often tell themselves, "Well, Phil has been with me for 10 years. How can I put his fees up?" You know, well, you don't have to do his fees. You can start with the new people who walk in, because they know no different. Therefore, you can get a little bit of momentum with your confidence, and then obviously let Phil know that in six months time when they do a review, the fees will be going up five dollars, or whatever it may be. So, starting little bits will help you get that momentum and start pushing yourself upwards. Alex: And how often do you do that? How often do you revise your pay structure? Phil: We're every 12 months. We will...everyone's fees go up every 12 months. Whether it's a little bit or a lot, and as Graham mentioned. If it's new members, it might go up two dollars a fortnight for every two weeks, you know. If it's old members, they might go up five to try and come up to where the new member fee is, depending on where they're at. So that's sort of the structure or the strategy that we use to get those 10-year-plus members that were paying very little up to what the new members are paying. So, that's important to remember. One of the other things you've got to make sure you really practice is your pitch. Because, I know, Graham and myself have been in the trenches and someone will say, "Right, fees are going up. Tell everyone." And you're like, "Well, what's changed?" Alex: Yes. "What else am I giving them?" Phil: Yeah, yeah. And you're sort of like, "Here's the fee," and you're like, "Oh, are they going to say yes?" So, practice your pitch. Believe in what you're charging, and always role play that, you know, with your staff. If it's your program director or maybe yourself, you're doing it, you've got to wholeheartedly believe it. And, then, also have a procedure for when someone does say, "Well, that's pretty expensive." So, something that we tend to say, as a generic thing is, like, "Well, what were you expecting to pay?" Alex: Okay... Phil: So, then they come back and they go...they didn't know. They don't know. And it's not a problem. If it's too expensive, it's okay. It's all right. It's not going to be for everyone. It doesn't matter what you charge it at, it's always going to be too expensive for somebody. So, it just depends on, you know... Alex: Do you ever drop those fees? Phil: No, not at all. Absolutely. It is what it is. Because, if I start making an exception for you, and then someone who I signed up a week ago gets wind of that, well... Alex: Cheesed off. Phil: ...mutiny is going to happen. Graham: Alex, as a, I guess a business ruling here, by having those fees slightly higher, it means you're getting more investment from your students or your clients. And I don't mean just financial investment. You're actually getting them going, "Well, if I'm paying more, I want to come and get the value for it." If you're cheap, people don't necessarily care, and therefore they're not as committed, whereas, if they're paying a premium to train with you, they're more likely to want to turn up and get the value from that. Alex: I think you're absolutely right. From a parent's point of view, I know that, you know, when my kids are doing three activities each and you know what you're paying for that, it''ve got to make them go. Graham: You definitely do. Phil: You just take a look at the fitness industry. And I know, you can argue what price they charge, but it's not that much, and that's why people are happy to have their account going for 12, 18 months, not to... Alex: And never go, yeah. Phil: There's no commitment. If it was charging more and they felt like they were missing out on the money that they're making and the value of classes, then they're going to want to come. Alex: Sure. And then they get the, you get the commitment and they make the commitment, and then they see the results. Phil: You've got to look at it as a holistic thing, you know? Like, our job is to get a student, whether it's a child or an adult, to black belt and above. It takes four years, minimum, and that's training twice a week, maybe three times a week. And if you're not turning up regularly, well, you're not going to get the value, and we're not going to be able to teach you and help you along your journey. At the end of the day, that's what it's all about. We always say, "Does it affect our students?" first. You know, it is our decision, if we're going to be charging more for something, you know, what's the benefit to our students? So, if a student says, "Oh, that's a bit much." Well, we've got new pads, we've got more instructors, you know. These are the reasons why. Then, does it help us be the better martial arts business for you? And, bottom down line is, is it making us more money in the end? So, those people who are thinking, "More money, more money, more money, is more money in my pocket," probably the wrong decision. You've got to think of all the reasons why you're doing it. Alex: Yes. Phil: And, in the end, obviously, you know, you want to be growing your business. That's why we're in business, to grow financially as well, as in growing your business into different locations or more people. But, we've just got to keep those things in mind. Alex: We touched on it in previous podcasts before, when we've talked about you pricing kids at a different level than adults or not. What, just briefly, what's your policy on that? Graham: We used to have a staggered scale depending on the age group of the kids and whatnot, and you know, we have one price which is $94 a fortnight for a three-year-old who does only a half an hour class, or a five-year-old who does a 45-minute class, or an adult who does an hour class. And, some of the listeners may be going, "Hey, what the...How can you do that?" Well, if you look at a three-year-old, for anybody that teaches three-year-olds, are by far the hardest group to teach, therefore needs the most specialized instructors. Therefore, you need to be able to pay good instructors to teach those classes. Again, the five-to-eight-year-old sort of age group, they're a handful, they're a challenge. Therefore, they have 15 minutes less. An adult is easy to teach. But, at the same token, too, it just, everybody flies first class. That's how we do it, you know? We don't differentiate on the service we provide a three-year-old versus an adult, so, therefore, we're not going to differentiate in our costings and what we charge for that. But that's been a slow process. That has only come over the many years we've been in business together. And convincing yourself that, "I'm worth it. I'm worth it. Of course I am." And, look, we've had some great success. We've also lost people because it was out of their price range. That's okay. But, for the benefit to the students now down the track, it' outweighs any sort of cost that we could possibly incur. Phil: Just a quick one to mention. I think we talked about it in previous podcasts, about being consistent. And we talked about, today, about every year we do reviews. You see, if you don't do a review of the fees for two years, it becomes a surprise. So it doesn't matter if it's 50 cents, a dollar, 2 dollars, 5 dollars, 10 dollars...doesn't matter what it is, but every year, something has to go up. Host: Yes. Phil: Because the student will get used to it, and one day you'll look back and go, "Now look what I'm charging." It's fantastic. And that's how we've got to the point we are, by consistently increasing our fees, whether it's a little or a lot, justifying our value, knowing our value, believing in our value, and just giving that value to the students. Host: Awesome. Lovely. Thank you very much, indeed, for joining me, chaps. Phil and Graham. Phil: Thank you. Graham: Take care. Announcer: You've been listening to the Martial Arts Business Success podcast. For more information, please visit our website at

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