Fitness facility owners would like to have control over their own fate, but various forces can prevent sports and fitness business owners from setting their own prices. This is especially true today, as the COVID-19 crisis affects gym capacity.
What should gym owners focus on in 2021?
This economic term describes the effect of a change in a product’s price on the quantity demanded. Your company’s pricing power is linked to the demand for your products or services. If you have a high level of pricing power, you can raise your prices over time while maintaining your customer base.
Who Has the Greatest Pricing Power?
It’s no secret that giants like Amazon, Apple, Walmart, and auto manufacturers wield significant power. According to Vince Golle and Olivia Rockeman of Bloomberg News, U.S. consumer prices are on the rise. They say “In industries ranging from equipment manufacturing and construction to furniture-making, more corporate leaders are pointing to sharp rises in the cost of materials and transportation, after the pandemic upended supply chains.”
Step 1 – Providing a Branded Product or Service
One step toward achieving pricing power is to produce a branded product or service. This allows you to offer something of greater value than your competitors. By having a brande product or service, you can create a higher perceived value not only in the mind of industry giants like Amazon, but also in the minds of consumers.
Step 2 – Innovating
Another path to achieving pricing power is through innovation. Small innovations can often have an outsized impact, helping a business stand out in a crowded field. Innovation that leads to patent production is an excellent way to gain a degree of pricing power.
Step 3 – Offering Exceptional Service
A third option for achieving pricing power is to provide exceptional service. Service that is truly superior to what competitors offer positions your company to achieve pricing power. Deliver services that your cusomters cannot find elsewhere.
There are many marketplace variables that your busines can’t control. They key is to evaluate your business, its potential, and the concrete, practical steps you can take starting today to achieve pricing power.
The Bloomberg article states that corporate leaders are increasingly confident they can charge more for their products without losing buiness. The same increases in materials and transportation costs will push small business owners to do the same. The article continues, “There’s no doubt that at some point that might have some impact on consumer demand. We certainly have not seen that thus far.”
In the short term, consumers seem willing to accept price increases, and the strength of demand is expected to outpace supply for some time.
Contact Jim Bates or schedule a call if you want to discuss the future of your fitness facility; or, if you would like a free valuation for your sports or fitness facility, get our Free Opinion of Value.