How to Actually Set your Yoga Class Prices: A Comprehensive Guide
If you want to know how much yoga business owners charge, that’s easy to tell. The average hourly cost of yoga classes ranges from $9-$30 for drop-ins. But setting yoga class prices wouldn’t be such a challenge for so many business owners if it were as easy as a simple Google search.
Deciding yoga class prices is a delicate balance. On one hand, you want to ensure maximum profit for your yoga studio. On the other hand, you don’t want your clients to feel like they were fleeced. If you set the price too high, you’re selling yourself out, and if you set them too low, you’re selling yourself short.
It is also important to note that pricing a physical product is significantly easier than pricing a service. This is because you can accumulate the cost of all raw materials that go into making the product, but the worth of your expertise and the value of the time you give is subjective
In an industry where there is such an emphasis on health and wellness, it can also be difficult to price a customer’s problems. A one-size-fits-all price might not be the best solution, as it might turn your customers off because every client’s needs will be different.
With so many things to consider, it might seem impossible to price your services in a way where you are looked after and so are your clients. Don’t worry! In this blog, we have put together an exhaustive list of points to consider so you can get desirable profits for your yoga studio:
- Know the factors that impact your yoga class prices
- Choose the right pricing strategy
- Determine the profit margin for your business
- Choose the right pricing model
- Advanced pricing considerations
- 4 mistakes you must avoid when setting your yoga class prices
- Bonus: Updating your yoga class prices
- Parting thoughts
You can click on any of these to jump to that section!
How to price your yoga classes to secure desirable profits
Whether you are a studio owner or a solopreneur, setting the right yoga classes price is the most important aspect of having a business. And it is also the most tricky aspect. You have to make sure that your prices reflect your expertise and the quality of your classes.
Don’t price to please, price to match your performance, experience, and worth.Ned Bryan Abakah
But before we get into the nitty-gritty of calculating prices, there are few things to keep in mind
Know the factors that impact your yoga class prices
These factors are extremely important and should be considered when deciding the prices for your sessions.
Knowing the location quotient (LQ) of the area your studio is located in or the location of your target audience can help you understand the concentration of other yoga businesses in that area.
Higher the LQ, higher the concentration of business. Basically, LQ will help you understand the local competition.
For eg: LQ of California in 2020 was 1.36 where the lowest 10% earned an average salary of $30,000 and the highest 10% earned an average of $99,000.
2. Local Competition
Because of yoga’s popularity, it is natural to expect a lot of competition. Adding LQ to that equation, the higher the LQ is in your area, the higher is the competition.
But competition doesn’t have to mean a bad thing. A competitive market can mean a reference to either create your own pricing structure or to measure the efficacy of your current pricing plan.
This is why it is important to ask the right questions.
- What are the prices for drop-in classes at yoga studios in your area?
- Which are the types of classes (single session, packages, memberships, etc)
- What other services do yoga studios and personal yoga trainers offer?
3. Nature of added services and resources
Depending on whether you’re providing any additional services like prenatal yoga, yoga with pets, or online classes or even aromatherapy, you can have a premium offering. Of course, given that you are offering something the client might not be able to get anywhere closer.
It is a premium offer because it’s a special skill that one acquires separately and practices to maintain. Not only that, but it gives added value to your yoga studio.
Added resources, like mats, bolsters and blocks will also cost your money. If you add the costs of these in your class prices, then the student won’t have to worry about it or spend “extra” money.
4. Studio space
What is the infrastructure of your studio like? If it is a one room studio, then the amount added to your pricing will be less than if your studio has a lobby and multiple rooms that you can allocate at the same time for different staff members.
Additionally, you will also have to factor in your mortgage or the amount you are paying to rent the space that you are taking the class in.
In stressful times like now, fears about the ongoing pandemic can take an emotional and physical toll on your body. And because of this, the demand for stress-releasing activities and relaxation practices, like yoga will be at its peak
It is, therefore, important to know the relationship between prices of services and supply and demand, which is explained by an economic theory called “the law of supply and demand”.
If we keep demand constant, then there is an inverse relationship between supply and prices. This means that, assuming demand is constant, as supply increases, the prices drop. And vice versa.
It’s the main concept behind limited edition goods and services. They’re priced higher, but the rarity of that certain item is what makes it so valuable to the customer, and, thus, the demand is more.
Choose the right pricing strategy for your yoga studio
Choosing the right pricing strategy that matches the value your class provides, is paramount. Your clients are smart and will be willing to pay the right price for the value that your class brings. The pricing strategy is what you will base your pricing structure on and is extremely important to shape your future profitability.
Here are 6 pricing strategies that will optimize your yoga business’ pricing.
1. Cost-plus pricing strategy
This is the simplest pricing strategy. You determine what was the cost of providing the service and then simply add an additional amount for profit. You add the material costs, direct labor costs and the overhead costs.
These costs will include a portion of your resources, like yoga mats, bolsters, straps, your rent, utilities, your admin costs, and other general overhead costs. You need to include these costs so you can reach your break-even point.
- It is justifiable. At any point, if you want to communicate a price increase, then it is easy to explain why the prices increased.
- It is simple and easy to calculate.
- This strategy does not have your clients at the forefront. There is consideration for the value provided and the value perceived by your client base.
- It completely ignores the local competition. Just setting your prices based on your direct, indirect and fixed costs will impact your market share. You may end up pricing too low, foregoing potential profits, or price too high, and lose your rightful place in the market.
2. Market penetration strategy
Sometimes, businesses try to grow their market share by setting their prices low in the beginning and then gradually increasing their rates over time as their client base increases. This is called the market penetration strategy.
This would especially work, if your studio is located in an area where you have a lot of competition from other yoga studios, or even businesses offering pilates, barre and other fitness gyms and studios.
- It definitely helps with increasing sales. You can sell your services at a lower price for a high value to increase the public perception of your studio in your area. This way, when you do finally increase your yoga class prices, your clients will not feel like these increases are unjustified.
- Increased client base by establishing your studio in the market and increasing your visibility.
- There will be initial losses. It will get difficult to cover all your other expenses, such as mortgage, material and labor costs etc.
- The low yoga class prices may lead your customers to believe that the level of service is inferior. The way you can fix this issue is to advertise the value of your classes in the form of qualifications and types, and not show the low prices as the show stopper.
3. Price skimming strategy
It’s exactly what it sounds like. You keep an initial high price for the service, and then lower it over time, therefore skimming it. This is the opposite of the market penetration strategy.
Since this strategy is more useful in an area where there is slim to no competition. This is because the lesser the competition, the more initial interest people will have in your studio. Which is also why this strategy is a short term strategy, because your clients will only be interested enough to pay a high price for a short time.
- This strategy might help you achieve your break-even faster (if not acquire profit) because it has a high return on investment. It will help you recoup all of the yoga class costs, be it material, labor or overhead.
- Your early adopters will become your yoga studio advocates, as you will be building a high quality yoga studio image with valuable sessions.
- It’s not the best strategy if your local market is crowded. If you have a lot of competitors, that means your demand curve is elastic, and initial high prices will not make you a favorable choice for your target clients.
- If not done right, your studio evangelists who initially praised the quality of your yoga classes, will eventually feel like they were stolen from. This will happen if your prices drop too low or too quickly. It is extremely important to skim your yoga class prices consistently, naturally, and slowly.
4. Premium pricing strategy
Usually, businesses that take on this strategy are considered luxury. More often than not, the “premium” value comes from the perceived value of your clients. That means, there is a lot of subjectivity in this aspect.
If you are selling products, like mats and bolsters, then you may decide on the cost-plus pricing, but as a service, you cannot necessarily do that. The important thing is to determine how much your customer is willing to pay, based on the perceived value of your sessions and your expertise.
- Depending on the socio-economic status of your clients and locality of the studio, a premium price list can not only give you increased profits, but also a competitive edge. Most of your clients might equate a higher price with higher quality of service.
- If your strategy is successful, it can raise the barriers to entry in your local market. Your competition will have to sell the same amount of luxury, quality and value, if not more, to compete with your services.
- You will have lower sales volume. As a “luxury” studio, your target market will be confined to the affluent side of your clientele. You will not be able to pursue rapid sales growth if you continue to operate in one location.
- The branding costs of maintaining a premium pricing strategy are quite high. Because your clients need to keep thinking of your services as prestige services, everything, from your infrastructure to your added resources have to seem luxurious.
5. Bundled pricing strategy
You guessed it – this strategy involves bundlings services or products together and charging one price. Usually, the added cost of services added are more, if purchased individually, which gives more value to your client.
If done correctly, this strategy can help you upsell more services, which will eventually turn out to be a profit. It also is a great way to sell your lesser-known services and create brand loyalty, as you’re providing more value for a lesser price.
- Lesser marketing expenses, as you won’t have to market individual types of sessions. You can direct your efforts in trying different marketing strategies for your business.
- You can also bundle specific services, for certain clients to personalise their experience. For example, you can offer prenatal yoga, restorative yoga and hatha yoga for pregnant women.
- If you choose to sell your bundled services only as a bundle, and not individually, it may create a barrier to entry. That is, if your client does not want all the services offered then they will go elsewhere to get them individually.
- Knowing the value of the services in the bundle. If you are combining your hot yoga session which is popular, with a less popular class, then if the sales of your bundle explode, then the popularity of your hot yoga session may dwindle. This means your bottom line will suffer.
6. Tiered pricing strategy
This is also called price bracketing, or even “good, better, best pricing” strategy. The main goal of this kind of pricing is to increase and maximise the lifetime value of clients. This is the same principle as when you go to a restaurant, and they offer small, medium and large sizes.
Especially now, in the post pandemic world, with the economy suffering, a lot of your clients will want a discount but with dignity. What better option, than to offer them 3 tiers of your services. Same quality, but with added benefits or attributes. You can do this, in the form of “silver, gold and platinum” memberships.
- This strategy will attract a broad range of customers. Different customers with different budgets, will have the options to choose from. A client who is new to yoga, might try the “silver” tier, which are the basic yoga sessions, bundled. But someone else, who has a different priority, might take the “platinum” tier, which includes personalized sessions.
- This strategy will also help boost your sales as a client who has tried the “silver” tier will be likely to upgrade to the “gold” tier. There is now a higher perceived value for your service which will push your silver clients to become gold members.
- You could lose out on revenue if you don’t decide and price your tiers regularly. You have to create a perfect client persona for each tier keeping in mind the factors we discussed before.
- Every tier has to clearly lay out the value and difference so your clients are not confused about it. Also, while you can have more than 3 tiers, it is best that you do not add more tiers to avoid confusing your clients.
Determine the profit margin for your business
Things from here might get a little confusing, but don’t worry. We’re here to guide you through this to make it as easy for you as possible. Your goal eventually, is ofcourse, to cross that break even point, and enter the profit zone
Business/Running costs: These are the total yoga costs required to provide your services. So all the costs that you incur when providing your services.
Running costs = Marketing costs + Indirect costs (rent/mortgage, utilities, cleaning supplies, etc) + Employee salaries (payroll, insurance, benefits, YTT training costs, etc)
Net profit margin: This is the percentage of profit after you remove your running costs from your income.
A good initial profit margin would be anywhere between 15% – 20%. Once your studio starts operating in full swing, you can update your profit margin based on your sales.
Net profit margin= [(Revenue – Running costs – Taxes – Time costs)/Revenue] x 100
Example: Assuming that your monthly running yoga costs are $26,000 and taxes + time costs are $10,500. Let us assume you have determined your net profit margin to be 15%.
Total expenses = 26,000 + 10,500 = 36,500
Then, putting the values in the formula
15 = [(Revenue – 36,500)/Revenue] x 100
Revenue = 36,500 / (1 – 0.15) = $42,941.1 (approx. $42,941)
Therefore, the desired monthly revenue would be $42,941 If your studio operates 25 days a month, your daily sales will have to be 42,941/25 = $1717.64 (approx. $1718). Now depending on the number of classes you offer, and the value each class holds, you will have to divide the costs accordingly.
The net profit margin is an important metric to see how well you are doing against your competitors. Keep updating your profit margins to match your goals of growth. A positive net profit margin means that your studio is doing well and is profitable.
Keeping this in mind, you have to mark your yoga class prices high enough to earn a good net profit, but also have to avoid getting a reputation of being too pricey and overcharging. Remember, it’s a delicate balance.
Choose the right pricing model for your yoga classes
Another very important aspect of your business is choosing a suitable pricing model for your yoga classes. We will discuss 3 pricing models. Each has its pros and cons and it is important to consider which one works best for you and your business.
1. Hourly Model
This is what you charge for a session that’s an hour long. This will ensure that you’re getting a return on your time investment and labor investment in catering to your clients. Taking hourly yoga class prices is the best for long-term projects as you can account for the changes in time and any other variables. These rates are usually determined by the amount of expertise and seniority of the instructor providing that service.
Hourly rate = Total costs / Billable hours
Hourly service cost = (Hourly rate x profit margin)+ Hourly Rate
Example: If your running costs are $36,500 for a certain type of class and the number of hours you plan to give per say is 10 hours and you plan to work 25 days. You have decided that you will have 5% to be non-billable hours. And your profit margin is 15%.
Non billable hours = Non billable percentage x Total hours
0.05 x 10 = 0.5 hours.
Billable hours = Total hours – Non billable hours
8 – 0.5 = 7.5
Total employees = 10
Total billable hours = Total employees x billable hours per day x no of days studio is open
10 x 7.5 x 25 = 1875
Hourly rate = Total costs / Total billable hours
36,500 / 1875 = $19..66 (approx. $19)
Profit margin = Hourly rate x Profit margin percentage
19 x 0.15 = $2.85 (approx. $3)
Hourly service cost = Profit margin + Hourly rate
3 + 19 = $22
So to achieve a profit margin of 15%, your studio will have to get approximately $22 dollars per hour. If your average client turnover is 2 per hourly session, then the price per session has to be $11. This is why gauging the client interest in your area is important to set your hourly prices.
These calculations are much easier done in a spreadsheet. But don’t worry! We’ve created a yoga pricing sheet for you with pre-fed formulas just so you don’t have to go through the hassle of creating one yourself, so all you have to do is put in your existing prices!
2. Per Session Model
A per session model is not much different from the hourly model, if your session lasts an hour. And the way to calculate the prices for this model is also the same. Multiple the time of your session with your hourly rate.
So, for the same service, if the hourly rate is $115 per service hour, and every session lasts 1.5 hours. Then.
For 1 hour, 115
For 1.5 hours, 115 x 1.5 = $172.5
3. Flat Rate Model
A flat rate is when you are paid a fixed price for your yoga classes with your client. The flat rate is best when the time you have to provide is finite and guessable.
For a flat rate, you can estimate the number of hours required and multiply that by your hourly rate, and add an additional fee for the value you will provide. In tough economic times like now, some of your clients might want to take your sessions only for a fixed fee.
But you cannot always estimate the time required correctly, which might lead to a loss. The way to counter this would be if they could agree on putting a cap on the hours involved and agree to pay extra if the hours are extended.
Advantage: The best part about a flat rate pricing mode is that it rewards productivity. This will make you want to find the right solution much faster for your client. Another good thing is that flat rates are easy for clients to understand.
Disadvantage: Not only do you require a solid portfolio with all YTT qualifications but also references to justify your flat rate, because having flat rates push people to want to negotiate the prices.
Advanced pricing considerations
1. Service value
Your customer has no idea how much it costs for you to provide a service, because the price of your service is completely tied to the value you provide. You have to look outside of just your incurred costs and competitor costs, and structure your yoga pricing model based on both internal and external variables.
Closely scrutinize your buyer persona. While there is no simple formula to determine your value, knowing your target audience and competitors should be enough to estimate a value in the ball-park. Determine a value that makes your service different, and add it to your hourly or per session price.
2. Instructor qualifications
You and your staff’s experience and qualification should also always be considered. The rates you charge now will not be the rates you might charge 5 years down the line, because as time goes on, you will become a more seasoned instructor. The more educated you are in your craft, the higher you can raise your prices for your yoga studio (for the same incurred costs!)
The more experience you have, the more students will have trust in you and will be attracted to your services and studio. You cannot undermine your expertise and should be charging accordingly.
4 mistakes you should avoid when pricing your yoga classes
Now that you know how to set your yoga class prices and get maximum profits, here are 4 mistakes you should avoid to set yourself apart and beat the competition:
1. Trying to undercut competition
Setting your prices based around the idea of being cheaper than your competitors is hardly ever a good idea. You have to keep your customers at the forefront and make sure their perceived value of your services is an accurate representation of the actual value you provide.
Compete on service, ambiance, or other factors that set you apartOsteryoung
You also want to make sure you are not attracting bargain hunters. As a business owner, you want serious students and not people who will only be after a cheap service.
This, of course, does not mean that you cannot charge less than your competitors. It means that you should not undercharge purely because you want to seem like the “better bargain.” You have to sell your value and your qualifications.
2. Setting the pricing list too complicated
One of the biggest mistakes a studio owner can make is making the pricing list too confusing. Pricing every session separately based on every asana in the sequence is going to make your list unnecessarily complicated.
You can keep the pricing based on single group sessions, drop in classes, memberships and multiple class packages. Or you can set it style based, like Vinyasa session, or Ashtanga, or hatha yoga. You can also keep designated beginner classes, mid-level classes and advanced classes.
You can even have separate online yoga classes because of client needs. They might want to take classes from the comfort of their own home because of any number of reasons, be it the pandemic or being in a different city.
The point is, to keep it simple. To make this process even simpler for you, you can use a yoga scheduling software. You can have a price list that is easy for both your staff and your clients to understand and to choose from.
3. Not adapting profit margins
All pricing roads lead here. Value and market. Different types of classes will have different markets. Simplifying your price list does not mean your profit margins should be the same throughout too.
Plus, different types of classes will require different materials, which would mean different material costs. That would lead to a different profit margin for that type of class. Some classes might only require a yoga mat, but some might need bolsters and pillows, like prenatal yoga classes.
4. Forgetting to update prices
The only thing constant is change. No market is stagnant. There will always be new trends, client needs and tendencies and of course competitors. Always keep a lookout for such changes, and update your pricing accordingly.
If your clients keep saying your services are a steal, chances are, you are undercharging. Never undersell yourself. At this point, slowly increasing your rates is a good idea. The keyword is slowly.
If your yoga trainers are constantly updating their qualifications and your business is evolving, but your pricing policy isn’t, then your prices no longer represent the value you are providing. It is extremely important to update your price list, when the business scenario changes and when the market scenario changes.
Bonus: Updating your yoga class prices
Now that we’ve discussed how updating your pricing is a must, how exactly would you know when to do it? You have to constantly monitor the costs of your yoga classes. This way you can stand up against your local competitors.
As time goes, you will build upon your skill. You will put more hours into your work and get better at your craft. Being strategic and raising your yoga class is a good plan. It will not be rewarding to you, but also help your clients understand the worth of what you are offering.
Another scenario is when you are completely new to the scene and you are disappointed with your client turnover. Setting realistic expectations about your initial sales is the way to go. Having less clients in the beginning does not mean your service is bad. Do not start charging less than the value you are providing.
Make sure you communicate the increase in price to your clients in the right way. Increasing your revenue is a must, but announcing it effectively is even more important. Be transparent, and break down the reasons for your price increase. You can send emails at the time of booking, put it on your booking portal and also post it on your social media.
Deciding your yoga class costs with this much to keep in mind, might seem overwhelming. But keep in mind, your business won’t fail if you make one mistake. This is an iterative process.
If your sessions are overcrowded, raise your prices. Increase prices with increase in demand. If the turnout is less, wait and improve your marketing. Let your prospects know why your classes are important and share your message.
You might think that this increases the yoga class cost of marketing, especially if you’re still using pamphlets for advertising. Well, what if we said there is a way to automate these processes? That there is a way where you can not only communicate your yoga class prices easily, but also automate your marketing efforts?
We recommend using an online yoga studio scheduling software to help your business, with more than just managing a price list. Set your booking rules, whether it be terms and conditions, or regarding strong fragrances, have scheduling flexibility and more with Appointy’s yoga studio booking software!
Additionally, Appointy will also help with personalizing client experience, taking online classes, and even getting detailed real-time reports. Try it free for 14 days if you don’t believe us!
We at Appointy, help business owners grow and run their businesses with our online scheduling software. This blog was a part of our ‘Manage your Business’ category, where we provide expert tips, resources, or simply talk about the challenges that small and medium businesses face every day.
If you have any thoughts on this blog, or would like to chat about your business struggles and achievements, let us know in the comments below.
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