You Need to Raise Your Prices — Transcript

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1. 0:00Do you add a credit card processing fee
2. 0:01for every Okay, good. You're doing that.
3. 0:02Are you billing every 4 weeks?
4. 0:04>> That's No, we
5. 0:05>> Do that now. So, that'll add 8% to your
6. 0:07revenue. It'll drop straight down. You
7. 0:08read Gym Owner's Secrets?
8. 0:10>> Uh no, I haven't.
9. 0:11>> Dude, read the book.
10. 0:12It's about gyms.
11. 0:13>> [laughter]
12. 0:13>> It's literally about your business.
13. 0:15>> gyms, really?
14. 0:15>> Yeah, like
15. 0:17uh so, there's a price increase letter
16. 0:18that's in there. You can literally copy
17. 0:19the letter and send it to your members
18. 0:20of how you do it. But, you want to do
19. 0:22like two or three pricing changes all at
20. 0:24once in that one letter, so you can just
21. 0:25like in one fell swoop just knock it
22. 0:28out. Exactly, like And so, when you make
23. 0:29the change, just say um
24. 0:31"Hey guys, effective today, we're
25. 0:33changing the pricing, but since you've
26. 0:35been such loyal members, we're going to
27. 0:36grandfather you for 6 months." And
28. 0:39they're like, "Oh, that's up." But,
29. 0:40you're still going to just bump them in
30. 0:406 months. But, that way they feel better
31. 0:42about it.
32. 0:43>> You give them enough time to
33. 0:44>> Yeah, and dude, all the changes The
34. 0:45thing is they don't even
35. 0:47The thing is is if you're going to do
36. 0:48that, it's like you want to also add
37. 0:49other because going from monthly to
38. 0:51every 4 weeks, no one even
39. 0:52cares. It's nothing.
40. 0:55Doesn't even matter. So, do the the
41. 0:574-weeks one. You can consider putting in
42. 0:59an annual renewal fee, which is usually
43. 1:01you want it to be equal to like 1 to 2
44. 1:02months. So, think like 99 to 199 as
45. 1:06annual renewal, which just So, it's like
46. 1:08you have an initiation fee. It's just
47. 1:09every year there's also a $200 fee that
48. 1:11adds on. It sounds like nothing, but
49. 1:13it's another 16% and if in your business
50. 1:15that, you know, you're running 20%
51. 1:17margins, it's like well, we added eight,
52. 1:18we added another 16, we added 24, we
53. 1:20just doubled profit with two pricing
54. 1:22changes. You had the 4% from the
55. 1:24processing fee thing. The key with the
56. 1:26processing play is you don't want the
57. 1:284%.
58. 1:30If you get it, fine. What you really
59. 1:31want is the second form of payment.
60. 1:34And so, you say, "Hey, it's 200 bucks a
61. 1:35month or whatever, 100 bucks a month, uh
62. 1:37plus a 4% processing fee." And they're
63. 1:39like And they always like No one No one
64. 1:40doesn't close because of it. You've
65. 1:41already seen that. But then, you say,
66. 1:44"Oh, uh if you want, I can waive that
67. 1:46for you." And then they're like, "Oh,
68. 1:47yeah, that'd be great." Like, "Well,
69. 1:48just give me a second form of payment.
70. 1:49We only have the processing fee because
71. 1:51if we have to go chase after you, just
72. 1:52costs us resources." But, the thing is
73. 1:54is that getting the second form of
74. 1:55payment can decrease churn by 30%.
75. 1:58And so if you could decrease churn by
76. 1:5930%, that's worth way more than 3% more
77. 2:02on top line. You
78. 2:04Does that make sense?
79. 2:05>> You mean an alternative social card
80. 2:06other than a credit card or
81. 2:07>> Or a second credit card.
82. 2:08>> Oh.
83. 2:09>> Give me two cards. Exactly. Go to the
84. 2:11second one.
85. 2:12Yeah. Now the 201 play of that is you
86. 2:16get ACH. So automatic clearing house you
87. 2:18that, right. And so ACH does a double
88. 2:20whammy for you because one you save 2%
89. 2:22on the fee because ACH is cheaper. But
90. 2:24on top of that you also now have a
91. 2:26second form of payment. So you reduce
92. 2:27the churn and you get the decrease in
93. 2:30payment processing. You get both.
94. 2:32Again, this stuff doesn't sound like
95. 2:33much but when you add 2%, 5% times like
96. 2:36six different moves, all of a sudden you
97. 2:37go from a 20 to a 50% margin gym.
98. 2:40>> But when you throw in that annual
99. 2:41renewal fee
100. 2:43>> So in the letter, it's basically section
101. 2:45one is what we already do for you right
102. 2:48now that's amazing and that you remind
103. 2:50them of the value. The second is what
104. 2:51I'm going to do with all the money that
105. 2:52I'm I'm not a greedy bastard is section
106. 2:54two. I'm actually going to be
107. 2:55reinvesting in training, getting more
108. 2:56equipment, blah blah blah blah blah and
109. 2:58in the gym it's so obvious like it's so
110. 3:00easy to be like this equipment is not
111. 3:01cheap and you pay 100 bucks each one of
112. 3:03these pieces 10 grand. I like cost a lot
113. 3:05of those.
114. 3:06Right, yeah, all this stuff, right? And
115. 3:07so this is what we're going to do and
116. 3:09then you soften the blow at the end with
117. 3:10the but don't worry we're going to
118. 3:12grandfather you in for the next six
119. 3:13months you get all the benefits and then
120. 3:15you're going to and then we'll bump you
121. 3:16up. And if it feels like it's a big
122. 3:17bump, you can do it in two phases. You
123. 3:18can be like in three months and the I'm
124. 3:21I just wrote a whole thing on this. It's
125. 3:22top of mind. But basically you want to
126. 3:24say
127. 3:25I'm going to give you let's say the
128. 3:27difference was
129. 3:28200 bucks is the total difference over
130. 3:30six months between what they are paying
131. 3:32what they should be paying. You say
132. 3:33okay, I'm also I'm going to give you a
133. 3:35$200 credit to the gym
134. 3:37and and then when you send them the
135. 3:39thing they can see the credit being
136. 3:40applied.
137. 3:42And so people are way more willing to
138. 3:43let a discount disappear than a price go
139. 3:45up.
140. 3:47And so you say the price goes up but
141. 3:48don't worry I'm going to give you this
142. 3:49discount. And so then the discount is
143. 3:51what dis disappears rather than the
144. 3:52price going up. So I mean it sounds
145. 3:54minuscule, but it's actually way softer.
146. 3:57>> there.