Episode 353: The 4 Pricing Mistakes Costing Your Business Thousands

Could one pricing decision you made years ago still be costing your business thousands today?

In this episode of the Female emPOWERed Podcast, Christa Gurka breaks down the four pricing mistakes that quietly erode profitability in Pilates studios, physical therapy practices, and boutique fitness businesses. From founding member rates that never expire to avoiding annual price increases, these small decisions can compound into tens—or even hundreds—of thousands of dollars in lost revenue over time.

If you've been hesitant to raise your prices or are planning a studio launch, this episode will help you create a pricing strategy that supports long-term growth and profitability.

In This Episode, You'll Learn:

• Why founding member pricing should always have an expiration date
• How to structure grand opening offers without creating long-term pricing problems
• Why frequent discounts train clients to wait for sales
• The most expensive pricing mistake studio owners make—and how to avoid it
• A simple annual pricing strategy that protects your profit margins
• How pricing decisions compound into significant revenue gains or losses
• How to objectively determine what your services should actually cost

Key Takeaways

✔️ Founding member rates should reward early supporters—not become permanent discounts.

✔️ Grand opening promotions should include clear expiration dates and client caps.

✔️ Discount intentionally, not habitually.

✔️ Small annual price increases are easier for clients than large increases every few years.

✔️ Your pricing should be based on your financial goals—not your competitors' prices.

Resources

🌐 Learn more about Fit Biz Accelerator:
https://christagurka.com/accelerator

📸 Follow Christa on Instagram:
@christagurka

🎙️ Subscribe to the Female emPOWERed Podcast every Tuesday for practical business strategies for Pilates studios, PT practices, and boutique fitness business owners.

SEO Keywords

Pilates studio pricing, pricing strategy, boutique fitness business, physical therapy business, membership pricing, founding member pricing, grand opening offers, rate increases, pricing mistakes, business profitability, Christa Gurka, Female emPOWERed Podcast.

Transcript

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Hey there, everyone. Welcome back to another episode of the Female Empowered Podcast. I am your host, Christa Gurka, as always. And today's episode is about pricing mistakes that can haunt you forever. So we're gonna talk about very specific pricing decisions that most of you make, most studio owners, most physical therapy owners, most boutique fitness owners, service-based businesses, at the beginning of their business and have an impact for years and years and years to come. So we're gonna walk through four specific pricing decisions that usually get made once, usually early on in your business, usually under the pressure of opening, and then sit there for years. And what they're doing is they're quietly draining your business. Founding member rates, grand opening offers, discount habits, and rate increases, or shall we say, the lack of them, okay? These are decisions that compound year over year. A ten dollar gap right now between what you should be charging and what you are charging, multiplied by every client every month for years, is not just a ten dollar result. It could be five, six, even seven figures. So let's dig in. The first one, founding member rates, and I wanna talk about this because there are studios opening every day on every corner in America right now. So for-- this is specifically for those of you that are thinking about opening a studio or opening a studio right now, and for those of you that have done this and need to figure out a way to backtrack, okay? Founding member pricing is not actually the problem. Founding member pricing without an expiration date is actually the problems, okay? So usually what happens is most owners create this, like, under pressure. They wanna get butts in seats. They wanna have people start to sign up and s- do soft openings. They're doing a new location. They're d- adding a new service. And what happens is you think about the front end, but you don't think about down the road, right? So what usually happens is you never just built, like, an exit ramp. And so we see this in so many businesses that I work with that have founding members that are taking up space. And this is specifically for, like, Pilates studios or physical therapy practices that are like, "This client has been coming to me for ten years, and they're only paying ninety dollars, and I'm now-- my rates are up to one seventy-five," or a Pilates, you know, that they're paying f- twelve dollars for a class. They only have six Reformers. Like, there is a limited capacity there, okay? And so those are the businesses that really, really, really need to look at this and really need to be smart about this, okay? 'Cause what happens is that founding member now becomes a permanent VIP tier that grows year after year, and you have no ability to replace them because they're taking up a performer, or they're taking up an hour of your time on the schedule that you cannot use to then sell somebody at a $200 price point, okay? So what I want you to do as an action step is take a look at all of your founding clients right now. Okay? Pull a list of every client that is on a founding member rate or every client that is not paying your current rates. Okay? So if you're a PT practice, maybe they weren't founding member rates, but they were somebody that has been with you for 10 years, and they're paying well below what your current rate is. Okay? So see how many people they are, and see how off they are from your current pricing. So let me give you an exact example. Let's say you sold a founding member rate. Let's go with a Pilates studio right now. Okay? And you sold a membership that was, I don't know, let's just say five classes a month for $99 as the founding member rate. Over five years, that's about $6,000. Okay? So over five years, they pay you $6,000, right? They've been with you for five years. They've been on this $99. They're taking a Reformer every week, three times a week, four times a week. Now, your current pricing for that five session package or membership is, let's say, $179 a month. All right? So $179 a month, right, times five years is is probably 11,000, 10,000, somewhere in there. So basically what's happening is it's an $80 a month gap. Okay? So now if you take $80, right, times 12 over five years, that's about $5,000 lost. And now imagine that you have- 10 people on that, that's $50,000. Imagine you have 20 people on that, that's $100,000. Okay? So do you see how these things compound month over month, year after year, and what you're doing is you're limiting the amount of new people that can come in. So what is the solve for that, right? The solve for that is that your founding member rate should have an expiration date. It could be three months, it could be six months, it could be 12 months, and it should be written in the contract. Okay? This is gonna kinda piggyback a little bit on what we're gonna talk about next, which is grand opening offers. Okay? So oftentimes grand opening offers are a little different than founding members because oftentimes they do have, like, you're selling a package, for example, not, like, a lifelong membership. However, usually, once again, they don't have enough of a hard cap. Okay? So grand opening offers, you're usually launching them to try to get butts in seats, right? Before you even launch. Get, get some cash flow. These are all great ideas. Founding member pricing is a great idea. Grand opening offers are great ideas. But they have to be very strategic, okay? The mistake when running an offer like this is running it with no cap or running it with no hard end date. Okay? So what you want to think about when you're doing a grand opening offer, so let's say, let's say you have a-- you're gonna run a studio and you're gonna sell a package for 10 classes for $350, and your grand opening offer would be, like, buy 10, or buy 12 for the price of 10, or buy 15 for the price of 10. Okay? I always like adding classes rather than discounting the dollar amount 'cause you just get more cash in the bank. But what, what I want to encourage you to think about is to limit the amount of people that can buy that. One, what does it do? It creates urgency. Okay? So maybe you can say the founding rate, the, the grand opening rate is available to the first 30 clients that book this within this month, and it's locked in for six months. So that way you never have to have that awkward conversation later, right? So this is one of the things we did at Pilates in the Grove when I opened my second location was we said the first 30 members that purchase get this price point for their class packages locked in at 12 months, right? So then we said at the 12-month date, rate increases to current market value. So every client knew that at the end of 12 months, or if they left before that, right, they, their pricing automatically goes up to what your standard pricing is. So then you don't have to have those awkward conversations about, "Oh, listen, and we have to increase your pricing now," right? You just build it into the contract. And you can do that exact same thing with founding members. So you can say this founding member membership, okay, I believe that a founding member should be a member, should be a membership, right? So it's recurring revenue, which is different a little bit than a grand opening offer. And you should have a built-in, in the clause, expiration date for when it increases to your standard, your current pricing. Okay? So that way you really don't have to have those awkward conversations 'cause most of the reason people g- get uncomfortable with this, they don't wanna have that conversation, right? They don't wanna go to their client and be like, "We have to increase your pricing now." 'Cause oftentimes, and if you wait two or three years, it's going from ninety-nine dollars to a hund- it's, like, doubling. But if you tell them, "Listen, after six months it goes up," you're probab- it's probably only going up maybe, I don't know, ten, fifteen dollars a month. Okay? So we talked about founding member rates. We talked about grand opening offers. And now we're gonna talk about things that usually happen in perpetuity, which is your discount habit. And are you training your clients to wait for a sale? So every time you run a discount, especially if it's one that is recurring every year, all the time, a Black Friday special, a flash sale, a just this once comp, you're o- one, usually giving away a little bit of margin, but you're also teaching your audience that prices are negotiable and they get rewarded for patience. Okay? So- What I want you to think about is how can you, if you want to add discounts, and if you want to run flash sales, and you want to run some specials, when you're talking about services now, I'm not talking about like an online library or something to that effect. I'm talking about your, services, like your time for money model. Okay? How can you do it intentionally so that you're not training people to wait for the s- discount? Okay, so let's say, let's just take Black Friday. A- again, if you guys have listened to me for a while, I'm not a big proponent of Black Friday or Cyber Monday specials in our industry. However, if you feel like that's what you wanna do, that's great. We'll have some more episodes coming out on how to make those, like, a- as intentional as possible. But, so let's say it's Black Friday, and let's say someone's done with their package in October, so if they know that the special is coming in November, they might wait for you to, to buy it, okay? They might even ask you. We had people do this all the time. "Can I just get a discount?" So, like, let's say example, they have 10 classes, right? And if they buy another 10 now, they'll miss the special. So they're like, "Can I get two or three classes at the 10 class package rate just to wait to the discount?" And the problem is, it's not like you have product or inventory that you're trying to get rid of. These are services that you're still paying your people and your staff the same amount for. So what you're doing is you're just eating into your margin, right? So before you run your next promotion, ask yourself, "Am I solving an actual demand problem?" Or am I just uncomfortable asking for full price? This is another example of, like, where do you wanna sit in the market? Do you want to sit in the market that's, like, discounted? If that's the case, that's great. Just know that, and know that you have to shoot for volume. If you wanna sit in the market at a higher tier or more exclusive, then just know a lot of those premium places don't have discount. Or maybe you do the discounts when you need more demand, right? So for example, we always did a summer special in July, which there's lots of episodes I've done on this, because our demand was... Our, our availability, our openings were the most. We always had the lowest amount of, package purchases or sales in July, and we always had the lowest attendance in July. This was, like, we looked at data over, you know, five, 10 years. So what we did was every July, we ran a s- a s- it was slightly of a discount. What we really did was instead of selling-- We never sold an eight-class package. So what we did was we sold the eight-class package, but at the same price as the eight-class membership, okay? We had a expiration date, and you could only buy a certain amount, and we only did it for the month of July. So you could buy them only in the month of July, and they had to be used by, I think it was the end of September. So that it was a very short, limited time. It allowed people a little bit of a discount, but not a great amount of a discount, and they had to use them in 60 days, okay? So very intentional. Also, when the demand in our studio warranted that. Okay? So oftentimes it feels generous to run a sale, but sometimes the numbers are gonna tell you a different story. All right? You don't necessarily have to run a sale when you're full and busting at the seams. Like that, to me, is not the best time to run a sale. Okay? So here's the last one, and here's the one that most of us get stuck on once we're open and once we're down the road a while, and it's rate increases, which is really the pricing mistake that haunts you the longest, for sure. Okay? Not raising your rates is the single most expensive pricing mistake on this list that we're talking about today, because it compounds every single year you skip it, and your expenses go up every single year. So the majority of our rent goes up 3 to 5% every year. If you're giving out raises, sometimes that's 3 to 5% every year. equipment fees sometimes go up 3 to 5% every year. There's, there's like other things every year that go up, right? Plus your cost of living, all of that. So if you're not raising your prices to Keep in line with that, right? Your expenses are going up, up, up, up, up, and if you're watching me on YouTube, like, you can see my hands raising, but your, your pricing is staying the same. So you're starting out the year in a negative, in a deficit, okay? And some owners go three, four, five years without a ra- a rate increase 'cause they're afraid of losing clients, right? Meanwhile, like I said, your rent, your payroll, your insurance, other input costs are going up every single one of those years, okay? So general rule of thumb, if you just wanna make it super, super easy and streamlined, plan an annual increase every year at 3%. 3% every year. Like, your rent goes up, that goes up 3%, okay? what you could also do is that way... So let me just go back for a second. so if you're doing 3% every year, that way at year five you're not having to do 15%, okay? There's other things that we did with our clients this year when they're like, "Oh, you know, I did two price increases last year. I don't wanna do a price increase this year." I'm like, "Okay, what if you did, instead of, in lieu of raising prices, you, you just, What's the word I'm looking for? Passed on the credit card fees to your clients. So that's another way you can raise prices, right? Usually credit card fees are 3%. That's basically a 3% increase, okay? So you can write this into your membership contracts as well. Membership contracts will go up 3% after, you know, on January 1st of every year or on April 1st of every year, whatever you wanna do. You can sometimes do, one year you can do group class, pricing increases, and the next year you can do privates. One year you can do evaluation increase prices, and the next year you can do follow-ups. The other thing you can do is it's really, really, really important that you make sure that the price increase Achieves your goal. So for example, if you're gonna raise prices $5, but $5 doesn't meet the goal that you need... How can I say this in a way on a podcast that makes sense? So let's say, let's say you charge $100 for something, okay? And your expenses are $100, right? So if you- by the time you pay your instructor, by the time you pay your rent, by the time you pay your utilities, by the time... Like, you have no money left for you, or no profit. So then if you're like, "Okay, I don't wanna live like this anymore," which you shouldn't. So now you're like, "Okay, I wanna make 20% of everything that I bring in." So now you have to say you need to bring in, if it costs you $100, you need to bring $120, right? And then you're like, "I wanna make another 20% of profit." So let's say that's another $20. So if you bring, your expenses are $100, you need to bring $140, right? So if you only raise your prices by $5, that's not gonna get you to your goal, and raising prices $5 and $15 is the same headache, the same ripping the Band-Aid off. It feels the same. So make sure that you're ru- you're setting your pricing based on the goals that you want to achieve, and this is exactly what we teach in our accelerator program. I just had our launch, our kickoff call yesterday. No. Well, yesterday at the time of this recording. it'll be, I don't know, when this airs. But, and we did this actual exercise, right? So people could see, like, "Oh, I need to be charging significantly more to meet my expenses," or, "I am great. I'm actually having a huge profit margin. I don't have to raise prices this year." Okay? So it's really important that you objectively look at your expenses, your goals, how much you wanna pay yourself, how much you wanna have profit, and then set your pricing according to that. So we're talking about the rate increases, so you can have that written out. Like, it goes up 3% every year. Every year you should be reevaluating your costs, reevaluating your goals. Did you make $50,000 this year and next year you wanna make $100,000? Well, yeah, you need to add $50,000. Where are you gonna get that $50,000 from? Okay? This is the way that we strategically and objectively help business owners decide on what their pricing should be. Okay? My expenses at Pilates in the Grove were very different than someone's expenses in Sioux Falls, South Dakota, right? Hence, the pricing should be different. All right? Starbucks in San Francisco costs different than Starbucks in St. Louis, Missouri. Starbucks in Miami Beach costs different than Starbucks in Coconut Grove, right? So they're setting their prices based on their individual expenses. Okay? The other thing you can do is define a window for some of your grandfathered-in clients, right? So you can say, "We are, we are adjusting pricing." I always like to say... I don't like to say raising rates. I, I like to say we're adjusting pricing. We are, updates to price- We're updating pricing. your rate is protected through insert date. The new rate will begin as of this date. Okay? So just writing those things into your contracts and your clauses is a great thing for you to be able to do. Okay? So let's look a little bit of little bit of math. Okay, so let's say that you don't increase prices for Five years, okay? And someone is paying you... I'm gonna be- need to pull out my calculator for this, okay? Let's say, let's, let's take a PT clinic right now, okay? Or if you're doing privates, and let's say you charge $150 to this person, right? And they come in once a week, so they're coming in four times a month, times 12 months, okay, they're spending $7,200 a year, roughly, okay? Now, they've had this price for, let's say, three years, okay? So for three years now, it's like $21,000, right? Now, if you were s- if your rate increases, if you did a 3%... Just 3% every year, it goes from 150 to 179, okay? So that is a $29 difference, times four times a month, times 12 months a year, times three years, okay? That's $4,000 over three years, right? And now let's say that you've lost, okay? So now let's say that you have, like, five clients on that. That's 20 grand, okay? That's 20 grand that you could have in your pocket. So, and this is just on one client, right? Or, or 20 grand is on, like, you know, f- five clients. But, again, it just shows you that it's really important to look at your pricing and make sure that it's staying within your profit goal, your... What you wanna do with the business. If you wanna save money to bonus your team, you need to project that. You need to forecast for it. You need to budget for that. If you need to... If you're gonna be moving or expanding, you need to budget for that, right? And doing the 3 to 5% increase every year versus doing 15 or 20% every four years, it just... It also makes the conversation easier, okay? So, in summary, let's review what we talked about. Founding members. So for those of you, i- if you've been in business for a while and you have founding member still on your, on your, roster, like Pilates studios, PT practices, look at that and how can you get those people off of them. If you're just opening a studio, I implore you to just be very intentional about your founding member rates and your grand opening offers, okay? They should have expiration dates. They should have a cap on it, and you should write in the contract when they go up to regular pricing, all right? Think about your discounts. Be super, super intentional with them. Make sure you're not doing them frequently, okay? Because again, once again, you're training people to wait for the deal. All right? You're training people to wait for Black Friday or things of that. And again, while they work for product-based businesses, they don't have your best interest at heart as a service-based business. All right? And then last but not least, really be intentional with your rate increases. You serve people, and you deserve to earn money, because the only way you can grow and impact more people and help more people in your community is by having better cash flow, okay? It's not a greedy situation. You can do more and help more clients and impact more people when you have more cash in the bank so that you, one, your nervous system is regulated so you're not freaking out every time someone cancels or you have a snow day or there's a hurricane day... Oh, God, knock on wood. that you have to close maybe, okay? So th- these are necessity things. These are necessary to operate a financially solvent business of which we are impacting people's lives, and how amazing is it that we just get to, that we get to do that? All right? It's amazing that we get to help people move better, live better, feel better, pick up their grandkids, walk their, you know, kids down the aisle for their wedding or dance at their wedding or do whatever. We get to help people live a better, healthier life. This is such a wonderful profession, and it also requires money to grow. So there's nothing wrong with that. So I hope this episode helped you think of the four pricing decisions you make in your business that could be having real, real long-term, effects and impacts on your business, and that's it. That's all I got for you. So I hope this helped. I hope this was valuable information. As always, I'd love for you to chat with me. You know, DM me over on Instagram. I'm @christagurka. It is actually me that reads my DMs, and I respond to all of them. And so until next time, my friends, bye for now.