Price rises for small businesses are a sensitive subject. I run a micro gym myself, where we get to know our members very closely, and it can definitely be scary to raise prices because we believe there will be a lot of reactions.
Over the past year, through my role as a mentor in Two Brain Business, I have helped 10 different gym owners in Norway, Denmark, the UK and Sweden to set relevant prices for their services. These gym owners now finally have gyms that are profitable and they can pick up decent salaries, start taking their families on holidays and they can also start hiring coaches.
If I were a member of a gym that I appreciated, I would want the owners and coaches there to have decent salaries.
The business owner forgets this and adjusting prices feels like a scary decision.
Too many micro-gym owners set their prices too low and never get out of that trap. The gym simply makes them poor.
This is why we need to raise the prices. The compounding effect of a price increase is massive over time. The opportunity cost of NOT raising, on the other hand, is something you don’t even want to think about.
Since becoming an entrepreneur myself, and later a mentor, I NEVER ask other entrepreneurs for discounts. If they insist on offering a discount, fine, but otherwise I encourage anyone running a business to stand for the value of their services and target those customers who appreciate the value.
It is NOT bad to make a profit on your business, that is the whole point of making a profit if the business is to thrive. “Profit” is, among other things, what pays the entrepreneur’s salary and also to secure the jobs of the employees and this way also to increase the service and support for the customers. If the company is not doing profit people will lose their jobs and finally the members will lose their gym because the business goes bankrupt.
Entrepreneurs contribute to the development of society by employing people, they are an engine of the economy. Entrepreneurs take risks that others are not prepared to take.
I’m particularly fond of micro-gyms because they deliver an incredibly credible product. If people work out regularly at their gym, they simply become ridiculously healthy and strong. How is that not very important work and value that these micro-gyms provide?
If you don’t know how to increase your prices or if you feel scared about it you will probably need a mentor.
(edit Rickard Björnekärr)
This is a funny episode from where my mentees in Norway, Magnus Støback Bjørsvik and Ingrid Wilsgård Benjaminsen talk about the reactions they got when they raised their prices. It’s almost a bit hard to believe some of the reactions but it’s a true story