3 Ways to increase your profit without increasing your prices
Let’s talk about profit first. It’s the reason you got into business, or it should have at least been a consideration. When you started out, I bet you wanted to help people but you also wanted to make more than just an ok salary from the business. Otherwise, what would have been the point? Running a profitable business comes down to a simple numbers game. Take the revenue earned from the business and deduct the operating expenses (plus tax) to give you the annual profit. It’s just like telling somebody about their calorie balance, eh? Factoring profit at the end of the year has always made little sense to me after reading PROFIT FIRST BOOK, but we’re still going to plug ahead and help you increase yours. We’re going to run on the assumption that you're already making a little profit because if not, stay tuned for 3 ways to make more revenue next month.
So with that out of the way, let’s dive in!
Would you rather get paid the same amount, 12 or 13 times each year? You provide a great service month on month but yet, in some months your members pay you less. There are four months in any given year which have 5 weeks and this is where you’re losing a decent profit.
If you were to bill every 28 days, you would make one full extra payment each year that you’re already working for but not seeing the profit from. If you’re already making 8% profit, changing the way you bill can literally double your profit.
Time is money. More than that, time is valuable. If your session/classes run for 1+ hours and you add value for an appropriate price, then great. But if you’re running 1 hour sessions that often start late, finish early or have unnecessarily long rest periods, a 45 minute session might be for your business.
Changing the length of your sessions will provide more value to you and your members including:
→Easing congestion around the busier times which mean less frustration around bookings and waiting lists
→Reducing hours worked and wages to be paid
→Opportunity to increase the membership capacity
Lots of people want to get in before work or drop the kids to school so need to be gone by 8:15am. By running sessions at 6:00, 6:45 and 7:30, members have three options instead of two and can still make it out in time. If you only want to run 5 sessions in the morning and 5 in the evening, you save 2.5 hours daily from switching. If you pay a staff member €20 per hour and factor in the changes, you now reduce your weekly wages bill by €250. Or you can decide to add more sessions, increasing the capacity and potential earning without having to pay any more wages. The bottom line is by reducing operating expenses or increasing capacity here, you have an opportunity to increase your profit further.
Use a credit system
Setting up your weekly timetable and memberships can be viewed simply as a capacity game. Look at the number of people you can take in each session and the number of classes you offer, there are only so many available slots (LegitFit has this visible top right of your dashboard). With unlimited session memberships, people associate less value with each session and therefore will late cancel or not show up on occasion because there is no consequence. More than this, the general population by enlarge don’t need to be in the gym every day of the week to get the result they actually want.
Ultimately, there are a lot of wasted slots taken by users who don’t value it or use it more than they need. By using a credit system and assigning X amount of credits per person, you know exactly how many slots are needed for your membership base on a weekly basis. For example, if your membership allows 3 credits per week or 12 per 28 days, you know that you will need approximately 300 slots each week for 100 members. Assuming 85% attendance every week, you still have flexibility within your booking system and you’ve saved a lot of wasted coaching hours.
In fact, if you currently offer unlimited and switch to credits, you could potentially double or triple your capacity depending on the membership options offered. How much would you save if you could remove a number of hours from your timetable and still have plenty of space for everyone? If you could double your capacity without adding anything else, what would that do to your bottom line?
These are three simple ways to increase your bottom line but by no means does that make them easy to implement. It takes considered decision-making and communication with your membership base. But do consider what any of these ideas can do for the profit gained from your business.
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