You could say that I have a small obsession with pricing schemes and using them in a way that affects people’s behavior (see Lose It or Lose It). I like exploring situations in which pricing schemes can have a big impact, and one such situation that caught my eye recently was CrossFit registration. I thoroughly enjoy being a CrossFitter and have noticed a small hiccup in the way their system works. People do not always sign up for their classes ahead of time, and class size tends to be between ten and thirty people. With only one coach, these larger classes can be tough, and the optimal class size is around fifteen to twenty people per coach. It’s hard to predict class size because people tend to skip signing up ahead of time, and I think a new pricing scheme could change that.
Before I propose my new pricing scheme, let me explain the current price structure. First, there are drop-in fees for non members. These are $20 per class. After that, there is a 10-class punch-card for $150. That comes out to $15 per class. Then there is a 2x a week for $115 per month program, which, if there are four weeks in a month, comes out to $14.38 per class. After that, there is 3x a week for $125 per month, which comes out to $10.42 per class. At the very top is unlimited classes for $155 per month, which if you do the goal attendance pattern of three on, one off, comes out to $6.74 per class. So, any one class can cost from $6.74 to $20, depending on the level of engagement.
OK, back to getting people to sign up for classes ahead of time. You need to provide an incentive for thinking ahead, but how do you do that when people are pretty much allowed to come to any class they want? You could turn people away if they don’t sign up ahead of time, but that could be construed as punishment and might make people angry. You could remind people about the class by pinging them with a rundown of the anticipated Workout of the Day, then letting them register by replying to the notice. Or you could reward people for signing up early. All these solutions are interesting, but I think they could be made more effective.
What if you charged the first person to RSVP only $1 for that class? You would then charge $5 for the fifth, $10 for the tenth, etc. The charges would reach the highest current price ($20) at the 20th person, which would also create a class with the ideal number of students. With twenty people in a class, the gym would make $210 per class with twenty people. On average, that is $10.50 per person, which is right around the middle of all of the various prices, as they currently exist. Members could fund accounts, and then money would be taken out of those accounts when they sign up for the class.
That is the simplest version. A little more complex version would include membership levels with a set MAXIMUM price per class. For instance, I could sign up as a member and pay $10/month simply for the ability to never pay more than $12 a class, even if I am the 20th person to sign up.
A kicker would be that once people sign up, they are charged for the class and can’t cancel. This way, someone can’t go through and buy all the spots at $1 and then never show up.
Long story short, there are a lot of ways to use a pricing scheme to affect the behavior of your customers. I’m not sure a CrossFit gym would necessarily want to rearrange their pricing scheme right this very moment, but this formula could be an appealing long-term plan. Since CrossFit is all about changing the way you think about fitness, maybe its time to change the way you think about pricing too.