The simple fact is that fitness facility owners would like to have control over their own fate, but a variety of forces can prevent sports & fitness business owners from establishing their own prices. This is especially true today when 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 price on the demanded quantity of said product. 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 and maintain your customers.
Who Has the Greatest Pricing Power?
It is no great secret that the Amazons, Apples, Wal-Marts and auto manufacturers of the world exercise a tremendous amount of power. According to Vince Golle and Olivia Rockeman of Bloomberg News, U.S. consumer prices are headed higher. 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 pricing power is to produce a branded product or service. In this way, you are able to offer something of greater value than your competitors. Through having a branded product or service, it is possible to create a higher perceived value in the minds of not just the Amazons of the world, but in the minds of consumers as well.
Step 2 – Innovating
Another path towards achieving pricing power is through innovation. Small innovations can often have an outsized impact and help a business stand out from a crowded playing 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 a degree of pricing power is to provide what could be called “mind-blowing” service. Service that is truly a cut above what the competitors can match, positions your company to achieve pricing power. Provide services that your customers cannot find elsewhere.
There are many marketplace variables that your business can’t control. The trick is to evaluate your business, your business’s potential and the concrete and practical steps you can take starting today to achieve pricing power.
The Bloomberg article states that corporate leaders are increasingly confident that they can charge more for their products without losing business and the same increases in materials and transportations 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.”
For the short term, consumers seem to be willing to accept price increases and the strength of demand is going to out pace supply for some period of time.