Ollie  

But actually getting back in person, having that feeling of community, having that feeling of accountability with the instructor, they value that service. So you know, as long as you and I think positioning is important in this, and it's something we talk about as well, as long as you're clear with why and when you are increasing your prices and how, the community in the round in terms of the client base has really accepted that.

Will:  

Okay, hello, and welcome to group fitness real talk the podcast about how to make the most of being an instructor in the modern fitness world that are on the podcast, we're going to be talking about something that I get asked about a lot, which is pricing. And my guest is an expert on the subject, Mr. Ollie Bailey from Gymcatch. Ollie, how are you? 

Ollie  

Hi Will. Really well. Thanks for having me.

Will:  

My pleasure. So before we get into talking about pricing, and inflation, and all the stuff that I know, is really, really playing on instructor's minds right now, can you give me a little bit of an introduction to yourself, and then also to your business, Gymcatch?

Ollie  

Yeah, thanks. Well, so I founded gymcatch, in 2017, was when we launched the booking and customer management platform, we're here to be sort of the great value alternative to a load of names that you guys will have heard about in terms of booking and customer management software solutions. I founded that in 2017, in terms of launching Gymcatch. But prior to that I did for my sins or not 11 years of Barclays Bank, but I was in the corporate team, looking after technology clients. So one of the things we're going to talk about a bit today, inflation was quite close to my heart there. And I picked up an MBA there at the University of Chicago. So I guess that would be the quick background in terms of my professional career.

Will:  

The credentials on why we should be trusting you when it comes to talking about inflationary impact and, and how it affects people in the instructing business.

Ollie  

Yeah, exactly. Right. I'll try and keep it informative and light despite the topic.

Will:  

And just in case people aren't aware, do you want to sort of just describe a little bit about what Gymcatch does? Who are gymcatch's clients and how you work with instructors?

Ollie  

Fantastic, thanks. Well, yeah, so our reason for being basically is to make running a fitness business for anyone that runs a fitness business, whether that's a group instructor, who then grows into having their own studio or personal trainer, super slick, super simple, and to take all the admin away from you. So you can whatever your business model, you can sell your classes, your sessions, your packages, your memberships, throw it through the gymcatch system, and manage your customers, in terms of their interaction with you through that as well. And I guess, our one of our main differentiators for that is we really want that to be accessible to all. So our price starts at $10, euros, or pounds a month, depending on where you are. And the maximum that you pay at the moment is 22, in any of those currencies. So very much live in the UK, the US and Australia and Ireland. And that's what we do. And we're passionate about helping our customers. And I'm very proud about that.

Will:  

Very good. You guys have been around for about the same amount of time as SH1FT fitness. And I know that when we've talked before, we've talked about wanting to achieve the same things, which is providing instructors with a solution for what they need to be doing that is at a cost that is sensitive to the realities of what you can earn as a group, fitness instructor, and the various polls on time and finances. So when we discussed what you're going to talk about today, we well, it was probably about a month ago when inflation was maybe even less of a concern than it is now. Maybe we start by you giving an explanation of what we mean when we talk about inflation, just generally in layman's terms in a way that a group fitness instructor will be able to apply it to their business. So I'll let you take it away.

Ollie  

Thanks, Will, so most fundamental inflation is the increase of prices in things over time. So how quickly prices are going up how quickly things how much the price of something increases is called the rate of inflation. And that's generally tracked on a year to year basis. So when you see it in the press at the moment, someone's saying in March inflation was running at 5.5%. That means that since March last year, if you look at the same basket of things that you went out and bought in the supermarket or elsewhere, your gas and electric, the prices of an average basis across that basket have gone up 5.5% in that 12 months as against where we were a year ago so so that's what it is at its most basic. What how it's calculated is generally done by national bodies in the UK. It's the office for nationals statistics, and they have a set basket of things they go out and check each month. That's called the consumer price index. But normally, what drives inflation is something a little bit more technical in terms of how much money is in existence in the market, you are times by the rate at which one pound in the UK, for example, is being spent what's called the velocity of money. And I don't want to necessarily go too deep. But that's how you traditionally calculate what what's driving what's causing the rate of inflation. And what I guess is a bit different about what we find ourselves in at the moment is, there were definitely a couple of factors that are a bit sort of outside of the norm, that have been really driving prices up in terms of the UK and obviously, the tragic events in the Ukraine more recently.

Will:  

Right. So now correct me if I'm wrong, but I'm going to try and put it into a into like a short a short paragraph. Essentially, we have a situation where supply chains were a bit constricted, which meant that goods were harder to procure, and prices needed to go out, the labor market was a little bit less full. And businesses were struggling to get staff meaning that wages went up a little bit. And then fuel crisis fueled by Ukraine war equals a whole lot of unique and different pressures on pricing, which is resulting in a lot of prices going up for end consumers. Is that is that sort of broad enough terms?

Ollie  

I think so Will, you've pretty much got it. I think, at the back end of last year, like you said, the supply chain issues, lots of businesses were having a really caused by sort of big log jams and ports and shipping issues. And because of that, I think a lot of people, understandably, incredibly, were kind of saying, look, this little spike that we're seeing inflation here might be over in three to six months. It's no it's passing, it's transient. So I was trying to sort of explain it near the top, like the underlying fundamentals of what normally drive inflation, aren't there, this is an unusual thing. And then obviously, what's happened subsequently, in terms of the war in Ukraine and all the Russian news is that gas and electric have suddenly spiked as a result of that we are it big elements of how you calculate what inflation is. So, you know, the year on year inflation in the UK, as an example was 5% 5.5% year on year. But if you look to Gas and Electric, Gas was 28%. Electric was 19%. So again, it sort of speaks to the fact that there are kind of just a couple of things at the moment that are really hitting inflation, in a roundabout way. And we are seeing that, I think in everything that's being priced in terms of cost going up,

Will:  

Right, because it was there was a hope there sort of when the supply chain issues were solved, that things would drop back to a you know, maybe higher than they had been previously but a more normal rate. And as the supply chain seemingly got fixed, war happens in Ukraine, which is, which has not been helpful.

Ollie  

I think that's exactly it. Like, again, in economics, he talks about supply and demand, like there was lots of demand for shipping. So prices went up. But then the market reacted to that, but more shipping on to fix the problem. Yeah, and prices were coming down. And you expected to see that sort of get back to a more normalized level, as you rightly say, then everything kind of February March has really kicked on with the gas and electric energy crisis driving. And unfortunately, because of the amount of production that the Ukraine puts on foodstuffs and other raw materials, I think some other elements that will drive inflation in terms of the supply chain costs have yet probably to be fully seen, it's it's going to morph into more of the supply chain again, rather than just Gas and Electric in the coming months. So don't think unfortunately, it's it's going to pass quickly, I think we're going to be here here to stay for a while. The bank, governor of the Bank of England was saying, you know, yesterday or the day before, I think it was, you know, at least a year of sort of unusually high inflation in terms of what you can expect to see.

Will:  

So for the average person, and I don't think there's anything that there's nothing that impacts the fitness market, in particular about what we're seeing, but obviously, as the cost of petrol or oil goes up, that increases the costs for everybody. So the individual that needs to drive somewhere, plus the whole years that need to bring goods and services that we want, meaning that those goods and services services will have an adjustment upwards to reflect the increased cost. And that brings us to a position where if you're a group fitness instructor and you're looking to set your pricing and know that you are charging the right amount to your clients and customers, it can become pretty difficult Well, to figure that out from two perspectives, one is just generally one of the biggest questions that we get to pick from listeners to this podcast is, how do I price my packages? How do I price my classes. And that's something that I'd like to talk to you about as well, because I know that you have a wealth of information and might have some guidance for our listeners on that. But the other thing is, if we are going into a period of inflationary pressure for medium to long ish time, depending on what time horizon you're looking at, how do you forward plan in a way that doesn't result in you, setting your prices too low for what the costs are going to be and allows you to kind of keep pace with the changes? So why don't we tackle them in that order? So from a pricing perspective, can you give me a little bit of a little bit of your understanding of how instructors go about setting prices from the gymcatch experience? Because you guys obviously host many instructors from all around the world. And so you've got a view on how the pricing occurs at the instructor level, what guidance would you have to give instructors? Let's let's ignore the inflation question for the moment and just saying in general, like how to instructors generally go around setting their prices. 

Ollie  

I think, actually, the process that you should, and lots of people do do for setting their prices is the right one, regardless of the inflationary environment you have here, it's just worth revisiting that given everything that's there, because, as you intimated, if you're an instructor, you may or may not be directly impacted in terms of your fitness business in terms of your costs going up, I guess, Hall rentals or studio rentals, their heating and things are going up, they might increase those notably, but it's a you as the bottom line in terms of everything you buy, as an individual is going up, you need to possibly make more money to sort of stay at the same quality of life that you were. Because it's often you know, an independent business, and you're sort of self employed. So how you price your services to adjust that is obviously, a question on everyone's lips, and really important. And I think you start with your customers the best advice that we can give on that. I mean, we have hundreds of thousands of bookings each month,

Will:  

It's worth also noting that, I just I realized that I probably should have been clear for the listeners, obviously, some people teach in gyms and you're getting paid a class fee, and you're not always in control of what their class fee will be. So what we're talking about in this conversation is where you are teaching in the community, you're running your own digital classes, all the stuff that you can do to the gymcatch platform, and that many instructors are doing generally, where you have the ability to price your own classes, whether that be individual classes or class packages, what should you be thinking about, so do anyone who's currently sitting, listening going, Oh, but I teach at a gym, keep listening, because there's going to be some guidance for you. And teaching in the community is always a good option for all instructors. So now that that's now I'll get back to you Ollie, sorry to interrupt.

Ollie  

And I guess if you're teaching in a gym, and someone else is setting the pricing, if they're doing it based on giving you a percentage cut or thinking of it that way, maybe you could take something to them if they've not looked at it anyway. But um, I think we start with looking at your customer base, so dependent on the type of classes that you're delivering. And for us, geographically is a key element of this, you know, where you find yourself, you will have different customers with different, willing willingness to pay. So, you know, if you happen to find yourself teaching in a high end studio in West London, there's a reasonable chance based on the data that your customer base are quite affluent, they've got quite a lot of margin in their own life quality, and they would be unlikely to substitute away from going to the partaking in their fitness class. And they could swallow a price rise quite quite readily. Perhaps in economics, you'd say their price inelastic, whereas maybe if you're in a slightly less economic thriving region that's been really badly hit for various reasons over the last couple of years, people might want to be exercising and you know, they love your sessions and everything around that but with the cost of inflation going up everything going up and their price their own personal wages not going up. They're more likely to sort of substitute away from a pay as you go fitness class because they don't see their their fitness classes sort of as much of a necessary cost each month. So I guess there's a wider point there about Is there something you can do to sort of rephrase that with them and rebalanced that in their head is, you know, it's there's the mortgage, there's my food costs, then it's my fitness classes rather than it being sort of further down the pecking order but if you start with your customer base and get a feel for how price sensitive they are, that can to an extent frame your consideration about your ability to make price increases or not And then it sort of then falls into the question of, okay, well, if I think I can make price increases, and maybe talking to some of your loyal customers around actually asking that question, we get a great anecdotal feedback from people saying, You know what, actually, I've been teaching this class for a long period of time, got some really low oil, great customers. Everyone knows inflation's happening. I don't exist in a bubble, things are tough. I've talked to him about putting the price up by a pound or $5. And actually, they said, Yeah, you probably should, and there was actually support from it within the community. So I think, in line with that, understanding your customers I, I'd really advocate from the sort of 40 plus interactions, I have a week talking to our customers ask the question, and you might be surprised about one how open they are to provide you honest feedback around and to what what they tell you around that. And then, so sort of trying to be a bit more directive, because I realized at the moment where I'm sort of giving general advice, what we actually see in terms of the price per class and the type of class that you're giving, whether that's a you know, a hit class, or a ride class, or Pilates class even is hugely variable based on on the geography. But what I can give you some insight is over the sort of the trends that we've seen in terms of pricing increases per session, over the last six months, and across the hundreds of 1000s of classes on gymcatch that we've seen covering all of our geographies, we've seen an average of 8% price increase in terms of either a pay as you go price, or a pro rata cost per class that they're selling package or membership membership offerings in that space. So, you know, 8%, over six months is more than 5.5 over over 12. Interestingly, group x in terms of how we bundle up our sessions in that has been 12%. Increase last September. Yeah. So I think there's a couple of factors into that. 

Ollie  

Sorry, can I just ask this question? Because I'm curious at this point. And when, are you break in group fitness into live classes, or digital classes, or is it all bundled within the same sort of definition?

Ollie  

So for that particular data set, we were looking at live classes.

Will:  

So live Group Fitness prices on gymcatch rose 12% since last September.

Ollie  

That's it. And that data was to the end of February, and we did a little background refresh last week. Yeah. And it's really the same similar, similar story. So yeah, 12%, which surprised us to be honest with you, because anecdotally, when we talk to our customers, and nervous about putting prices up, they, they worry about their customers, they genuinely got into fitness, because they love delivering the sessions rather than than they love running a business. It's never easy asking people for money. But I think there has been a real reality that everyone has seen their own costs gone up, whatever form of life they're in. And the other piece around what plays to group instructors in in advantage in being able to make those adjustments is a big percentage of our customer base operate on sort of pay as you go, or books of credits that they might sell. So sort of shorter term pricing structures that gives a level of sort of flexibility, such that if you do have some of the shots, you can make a change and communicate that it's coming for next month, a few weeks before,

Will:  

Yeah, this is something that's been, this has been playing on my mind quite a lot. Because with SH1FT, we're about to introduce annual packages, which is something that our instructors have wanted for a long time. And at the recent inflation has made me think oh, annual packages are all fine and good. But um, if inflation does run off, that could be quite a tricky thing for a business to operate on. So if you're like me, but if you're right, if you're if you're doing more short term, short term solutions, like pay as you go or monthly memberships, then you do have a little bit more flexibility when it comes to your ability to change that price. I'm really interested in that stat. So I didn't know the stats prior to the podcast. And so I'm interested in all of these as well. So group fitness classes have already been preemptively increased. Now, inflation has obviously been something that's been playing on people's minds for a number of months now. But I'm quite surprised that group fitness instructors have been so ahead of the curve. It's not something that I necessarily will give our industry the most credit for in many ways, although maybe the pandemic changed that us with adoption of digital, thinking more about yourself as a going concern and a business. What do you think has driven that price increase since September last year? Because it's obviously not, it's obviously not sort of directly related to the most recent issues with Ukraine and the price of gas price of oil. So this has obviously been something that's been playing on instructor's minds for a while. What do you think it is?

Ollie  

Yeah. So I think is fascinating. And we put a lot of time and effort and I was asked this question about customers, too. I think a few things have fed into it. I think people got a little bit conditioned over the pandemic, who kept going, who were doing online sessions that they came back last July, with quite soft pricing in order to encourage people back.

Will:  

Yes. So. Okay, so maybe that when the pandemic first ended, there was a little bit of of people realizing that they went in too low.

Ollie  

Yeah, I think that was the case. And I think when we saw a big bounce kind of September, October in, in participation, and going back to live, people had, generally speaking quite good September's October's got quite excited. And then Omicron here, and kind of November, December was really disappointing. And again, sort of re launching in January, as many people did capitalizing on the the annual trend as far as they could, as well. Yeah, it was a bit of discounting. So I think there was a part of this as a reversion to where they actually need to set their pricing as against to survive and have a viable business moving forward. But we reckon that's only probably half the story in terms of that 12%, when we talk to people and look at pre pandemic pricing, and make some assumptions around that, I think the other part of it is such a big percentage of our client base do operate independently, and higher halls. And, you know, they also, quite frankly, you're doing this as a job. So if the costs

Will:  

So if fixed costs increase, then they have to amortize that across the board.

Ollie  

Yeah, and in order for it to be viable for them as an income. Yeah, all of that personal costs are going up and really their businesses their personal income. Yeah, exactly. Look at it and go look at you know, it's not like I was made, making millions doing this very much, you know, wants to be a sustainable business. But it's also something I deeply enjoy. In order to this to be viable, I do need to make some pricing adjustments. And for the most part, the people that have done that, as I said, they haven't seen customer migration anywhere near the level that they...

Will:  

This is, this is a really, really important takeaway from this discussion, which is like if you've if you've been listening to this already, but just to make it super explicit. The group fitness market in gymcatch, which is a pretty large sample size, has seen 12% increase in prices without too much negative impact on demand. Meaning that if you're currently worrying about putting your prices up, it's already happening within the industry. So and that may or may not be useful. It's not quite like supermarkets where people are doing like for like, for example, if I'm teaching a community class, and someone else is teaching a community class there, it could be a different genre, it could be in a different location, there's things that mean that it's not quite as easy to swap out, as you know, one supermarket for another. But at the same time, it is useful, very, very useful context and information to know that the industry has made price increases if you're currently worried about doing so.

Ollie  

Yeah. And I think the other thing that it's really focused people's minds on is the kind of efficiency of their business. So yeah, well, you know, in terms of your options, with high inflation, you know, what do you do if everything's got more expensive, you can cut your costs, if you can difficult when you don't have too many inputs on that, or you're not necessarily in control them or raise prices. But just in terms of the efficiency of your business. A lot of people who didn't before perhaps are amending their cancellation policy to say, look, you know, in a world where people might be off for COVID, suddenly within a week or have to self isolate, might need certainty of income in order to, you know, run this class people do value the class, I used to give a cash credit back a refund, to anyone that canceled more than 24 hours before. And now they're not going to do that, or I'll give them a credit that they can use in lieu of what they've booked before and automate that rather than actually going you know, what, we're all very friendly. We know each other. Of course, I'll give you a credit, you know, the cash refund, no problem, right? I think again, it's easy to say but when we talk to our customers about it, and I, my personal experience rings true with this when I go out about at the moment, your customers do not operate in a bubble, you know, they have all seen the world become difficult for very many people and for services that they provide and, and people that they know and like I think that's the big thing that we undervalue in terms of the delivery of fitness classes is they are buying from you He was an individual. And then that's why people did go back to in person fitness. And you know, the stuff online is great. And that will be forever there for the five to 15% that only want to do the digital option. But actually getting back in person having that feeling of community, having that feeling of accountability with the instructor, they value that service. So you know, as long as you and I think positioning is important in this, and it's something we talk about as well, as long as you're clear with why and when you are increasing your prices and how the community in the round in terms of the client base is really accepted that, again, we run a little bit of data in terms of looking at, at average, active users per business across categories, set over this period of time. And it's not perfect, because obviously December, everyone stops anyway. But if you compared sets September, October to January, February, lots and lots of people have come back, who hadn't got back in September, October, businesses were far busier than they were after the restart sort of July, and then September, October last year. So it hadn't seemingly impacted their business. And when we were we had the data and compared it to businesses pre pandemic, they were certainly as busy if not more busy in terms of the active client base on gymcatch. So, there's nothing from our data or our conversations we're having with our customers, that's throwing up red lights around that trend.

Will:  

Interesting. So I want to hold on one of the things you said previously, which was around policies, because this is it is so directly related to pricing in a way that a lot of people probably don't. Maybe people gloss over the importance. But with people able to or needing to isolate and not being able to come in cancellation policies become incredibly important for the sort of cash positivity of a business. What do you generally see, with the instructors that are using gymcatch? For their group fitness classes? What are the types of cancellation policies that they operate? And is there one that you would recommend over another I know you kind of mentioned this already, but just

Ollie  

It's really interesting. So there are probably 3 or 4% In total, that just sort of go look, if you paid for it, whatever the cost of that, and some are the sort of quite expensive Pilates type compensations, or the five, six pound community fitness class, just say, look, if you cancel, if you booked and you cancel, that's it. I'm sorry, I've got to run a business. You can't be touring and shaking. So there are people that do that. And they do it successfully. And they have hierarchy.

Will:  

So what percentage of what percentage of people do the non refund entirely?

Ollie  

Top ever? I think we've seen about 5%. Yeah.

Will:  

It's interesting, isn't it? Because it's not it's not in like, I get why instructors would be uncomfortable doing it. But it's not like it's an unheard of thing in general, like if you buy a movie ticket, they often don't give you any ability to refund or anything like that when it's sold capacity. So there is no, I guess it allows instructors who are at the top end, to have a little bit more certainty. But I guess you have to be really confident that that's not going to deter people from booking in the first place. Right? Because that cancellation policy becomes a reason not to book not to book that class. 

And that's my point really, I mean, yeah, fine. If you're in an environment where you've frankly, got not enough space and people...

Will:  

Right, you've got a small space, you're very popular and those spots and those those spots will be filled otherwise, like you're you're working at capacity.

Ollie  

Exactly right. And and maybe also you've got members who you've got to sort of provide some access for as well. So you kind of know, you're always going to be at a level. But what's interesting, also, when we started off on Jim cut, and we added our auto credit feature, we had an assumption that we would need to automate the kind of the cash refund through our system immediately. We genuinely tracked this, and we've been asked for it once in the last 12 months from over 2000 business customers. We haven't you do that in gymcatch through your stripe dashboard. So what we see is literally, I don't know of any on our platform. That's not to say there aren't people that are doing it and running the policy that's not stated. But what we don't see is people that just go cancel anytime and cash credit or cash refund is that that is just kind of not what the industry is doing. And I think, to your point, I think it's absolutely fair enough. You know that? Yeah, you booked a session, you paid for the service. Now whether what we do see the most of is people that say okay, look, if you give me a bit of notice so that there's a reasonable chance that someone else can fill that space. Or if I'm at a really low level, I decided it's just not viable to put the class on anymore, which sadly has been the case in some some weeks due to isolation and COVID and everything around that. Then 24 to 48 hours notice before are definitely the most commonly pegged there.

Will:  

Is there a particular split over that? Like, if you were to put percentages on it, which which do 48 and which do 24?

Ollie  

Yeah, so I have to be honest, I've not looked at that data. I've looked at it in the past, though, Will. So yeah, I would say 24 hours is probably twice as common, if not more than 48. And you know, there are people that do three hours before as well. And I guess the type time of the day that you're doing is that. But the other point of that is, if you did three hours before and you've got a really busy class, and you've got an automated waitlist like you do on June. That's kind of possibly still okay, because you can be reasonably confident.

Will:  

Right. That's exactly true. Like, if you're someone that consistently has a waitlist, even if you don't have it for some classes, then having a short cancellation window is not a bad thing. But if you but if you're not full, having this short cancellation window, it's probably not going to be of huge use.

Ollie  

Right. Because really, actually, in that instance, what you've done is enabled someone to buy the space twice. So yeah, and depending on what terms you put on the auto credit that song, get back for canceling in line with your policy, you might decide, well, I'll only give them a week to use that credit. Or maybe it's two weeks. So, you know, hopefully they will you want people to come to your sessions, and I don't advocate the in fact, I'm kind of really against it that sort of the Big Jim, well, it doesn't matter if only 30% of our customer, we only expect that percent of our pay members to turn up to the actual the gym, you know, yeah. That's, that's self defeating over the long run. But it does, you know, immediate harm, if you give a one class credit that's viable in two weeks. And that customer does it for any reason, at least you've still had the money in and they've used it. And you've had the option of selling that space again, to someone else. Yeah, I made the money...

Will:  

I know that ClassPass who, who I used to work for, they have a 12 hour cancellation policy. So the way it works is that if you cancel within, if you cancel outside of 12 hours, the credits are returned to your account. And it's all fine and good. And if you cancel within the 12 hours, they've recently changed, actually, it's either, if you cancel within the 12 hours, you get charged a cancellation fee, but you get credits back, but a no show is a higher penalty. And so they've kind of structured on the basis that they want to disincentivize people from changing last minute, but they want to extra disincentivize people from just not turning up. So a no show, a no show has a penalty added to it that a cancellation within the window wouldn't.

Ollie  

Yeah, and I think in a world where you're selling to instructors, that you're effectively selling underutilized space, and that's why people sign up to class past and what they want to use it for. It's sort of probably understandable that they're doubly focused on making sure that their people that's subscribing to class paths or using the system are kind of punished for not turning up because they got a contract with the instructor is really all about filling spaces that otherwise wouldn't be filled. Otherwise, why are you paying class pass a percentage of what you could otherwise take? So I take the point, I think it's being run on a slightly different rationale.

Will:  

Yeah, for sure. For sure. I was just meaning kind of with a context of what people that bought classes are used to us to expect that I think everybody reasonably expects a decent cancellation window that that doesn't allow you to just three hours I would say is very short before I actually jump in parents that I go to has a one hour policy, but again, they're operating on that gym conception of it doesn't really bother them if the class if people go to the class or not, because it's just part of an all in one membership, as opposed to being paid out on a cost per head basis. So gyms have a much different rationale for wanting people to book classes, then someone who's actually you know, taking money from each and every class like a local community Instructor or a...

Ollie  

And I guess that studio in downtown Paris has a high foot fall and lots of people nearby who might be on a waitlist and suddenly get the paying and actually, a big part of their drop in strategy is to try and convert them to pay members. So yes, kind of an extra benefit to getting more people coming into the drop in

Will:  

Yeah and I think a lot of their, like they have a waitlist and a lot of their classes are oversubscribed. There are small kind of boutique gym and they have small classes. So there's always there's always demand because I think that oversold the I feel from attending that they have small class capacities and potentially oversold the gym itself. And so the demand is definitely there and people will just ask if there's a space going.

Ollie  

Yeah, and but I mean, that's kind of morphs into a question about the sort of the business model structuring, as well, which I think has been really interesting to see and talk to people around. Because we obviously we offer memberships, courses, which is kind of like a block, it is very popular with Pilates, you know, if you're selling Monday, 10 o'clock for 12 weeks, by buying the course, you're booked into all of those specific sessions, then you have like books of credits, we call bundles. So you know, by 10, class credits for your shift, and then you've got pay as you go. And I think what what's interesting as you think about pricing here is the trade offs between each of those in terms of cash in the door, upfront, long term commitment, and then the ability to also be flexible with your pricing structure, short run if costs go up, or you think you need to change things. So what we're seeing from the instructors point of view, is sort of a reversion to pay as you go with books of credits to sort of reward commitment and, and cash upfront, sort of being over sort of a two three month period to use the credits. Were is sort of coming out of lockdown last year, a lot of people refocused on memberships trying to get them to the monthly fee, the monthly charge. But if people have signed up for 6,12 months memberships, suddenly that the rate that they're paying for that without a formal ability to adjust the price, potentially, yeah, is not quite so attractive on a per class cost as against what else you'd be doing.

Will:  

And what do you have any data around the percentages of instructors that utilize class packages versus drop ins, sort of what the share of those two different booking types is across the platform or across group and its classes?

Ollie  

So it's, it's really high, I can tell you that I can't tell you the exact figure. But I would say it's rare that one of our instructors doesn't offer a class pack as well as dropping, drop in cost. And, and you know, that often they're not promoting a huge saving for buying the bundle, it might be...

Will:  

Ah, this was that this is a you're walking straight into the next question I was gonna ask, which is, I know that like giving advice on like, what price should I set in US dollars or Great British pounds is a difficult one to do? Because obviously, it's based on with where's your location? What is the propensity of your customer base to be able to absorb a price increase? But one question I do have is, when it comes to drop in versus package, let's use Base 10. So like a 10 class drop in, for example, what's the type of discount that instructors across the board are giving? Because I think this is a question that people often have.

Ollie  

So it's, it's between almost universally 10 and 20%. Okay, and it will depend a little bit on, again, the type of business and their client base. So it's kind of it's an I guess, the amounts involved as well, you know, if you're selling a 15 pound Pilates session, and you've got the money set in your bank, saving 15 pounds by buying 10 credits that you're going to use in three weeks is kind of enough to incentivize you to do that. If you're doing a five quid drop in 10, sessions is 50. Maybe actually, I need to save a tenner to get it to 40 to, to warn me shelling out the 40 quid now because I'm

Will:  

Right. And there's a whole psychology behind what numbers you use, right? Because whatever your base price is, is going to, is going to have some impact on what your, your higher price will be. Because there's an element of I have a willingness to pay X amount for x. And you know, the whole thing about, you know, dropping it down to $99 versus $100, 2 digits versus 3, all these kinds of considerations.

Ollie  

There's, yeah, absolutely. Right. And but the other thing about offering packages, and if you don't do this, even as just an experiment, I would really recommend just trialing it and seeing how it, how it operates. Because what you do you learn from that, obviously, is a little bit more about your customer bases willingness to pay and their ability to find money to pay for services. So, you know, if you put packages on and no one's prepared to pay 40 pounds for a package that they might be able to use for a month or three months. It's either because you've not made the saving deep enough or because they don't have 40 pounds.

Will:  

Yeah. Either way you've you've learned something right. 

Ollie  

Exactly right. And if if they suddenly sort of flying off the shelves and everyone's bought a package, well actually is your is your pricing of those packages and your pay's a little...

Will:  

...a little bit low. Yeah, totally. Which this is brings us something you haven't really talked about, which is like analysis of your own demand. And so figuring out whether your pricing is is on on market or acceptable for your so your chosen demographic, because if if you are constantly sold out, and this may be maybe obvious to many people may not be if you're constantly sold out, then you do have the ability to potentially look at raising your prices in a way that isn't going to impact your demand.

Ollie  

Yeah, exactly. Right. I mean, that is the classic market form in terms of, you know, how, what we would expect to happen and see, in that situation. And prior to looking at this data, more recently, I would have veered towards saying that our customers don't actually do that. But it's one for the market in terms of saying, you know, people, I think do adjust their prices, but it's always worth reminding and thinking that through and, and being it's a very difficult mindset to get yourself into when you spend so much of your time or thinking about how I might grow my business and get more customers. Yeah, but the other crucial thing to think about is okay, if I increase my prices, and I've done some research here about my average customer and spoken to a few trust about it, that gives me some data that I think confident that that's fine. And I'm going to implement it in a month or so's time. So I can see some forward bookings and purchases and double check that my assumptions aren't way off some some time into the future as well. But I think one of the other things to be get get yourself comfortable with is this. Okay, if I increase my prices by 10-15%? What what does that mean, in terms of if I did lose a few customers, am I net better off still? Yeah, it is okay to lose customers based on price, you know, that that is a a, you know, a consequence of business and services, you know, you will not be able to forever serve every one necessarily correct.

Will:  

And, and there is also something to be said for the fact that you can also give, up your prices and see whether your market can sustain that. And if you have to lose a few customers, then you can make that decision of where those customers customers are needed to lose for the, for the future of my business? Or do I want to service those customers in a special way? And is there some kind of, you know, loyalty discount could be in the form of packages could be in the form of annual payments could be in the form of? I don't know if it if there, if there tended to be students who can no longer afford it? Can you have some sort of student discount? There are ways there are ways to come up with sort of good faith policies that allow you to potentially get the people that can pay more to pay more, and then figure out how you're going to deal with those that can't pay anymore? Yeah, absolutely. And if you don't put that up, you never you never find that out. Right, exactly. 

Ollie  

Right. And one thing that we've been talking to quite a few people about is, as we've gone back to life, the other thing is you sort of position price increases is, is there actually more that you can package up within, within your services without actually really making material are lifted in your day to day operating costs. So for the last two and a half years, lots of our instructor has been making great content that's kind of sad and recorded. And they've been selling that or not, and because people have got back to live that's now kind of sitting there. But could you as part as for example, a new specific offering that you're going to put throw in 10 On Demand videos that you can view within a month? Or yes, maybe I'm still running one live stream a week in the morning, but can we just found it was really popular. And some people like the flexibility, if you sign up for this, you get access to that as part of...

Will:  

Which is something that a lot of a lot of gyms and studios that I work with have done which is they have used digital as a as a benefit for signing up to a committed membership for you know, however, however long they committed membership might be, or using it as a kind of premium service that allows them to charge a little bit more than the average user. So creating more value within that package that justifies why the price is a little bit higher.

Ollie  

Yeah, absolutely. And, and it's been interesting to us about 15% of our total customer base have got a hybrid model going.

Will:  

So when you say hybrid, you mean livestream and live? Only 15%, is that all?

Ollie  

Only 15%. 

Will:  

It's interesting, I would have thought that there might have been higher. 

Ollie  

Yeah, I mean, if you added people who've got some on-demand content on there, I think it was 25% that you get to.

Will:  

Only 25%. So 75% of the instructors on your platform don't have any digital provision. 

Ollie  

That's correct. 

Will:  

That is insane. Are they not listening to this podcast? You need to share every past episode of mine with them.

Ollie  

Yeah, but I think part of it is I mean, that's what I when I say currently, they might have it up, but that's based on recent transactions. So it's interesting to us because we, throughout the pandemic, lots of people kind of quite trying to think through how people's habits will or won't change. And we always kind of had a bit of an in house view that people as soon as they could get back into the in person piece, that the digital stuff is right for 10 to 15% of the market. Yeah, I think we're sort of seeing that borne out in terms of the usage stats. But the point of me raising it was, was more to say that for certain end participant, customers, and businesses, they are absolutely still engaging with it just not was their core element to it. So if you have got all that content there, and the ability to sell or package it in, I think reminding customers of it and promoting it. But as what is proven quite popular as keeping one or two livestreams over a week or two week period to, to let people drop in, that's been interesting that 15% is really, you know, it's not that they're all running all of them on livestream, it's that they're doing a blend, but they're giving that that sort of that one or two classes, they're doing a week as a kind of a an extra drop in or an optional catch up, which has been quite interesting to see one thing on pricing when it's difficult to think through scenario, that it's right. But for some people, it might be you know, it is a valid strap pricing strategy to keep your pricing the same, or, or even reduce it, you've just got to be really clear on why you're doing that and understand your market and your your customer base. I think, you know, I suppose if you were in a incredibly competitive area with people that we're all offering the same type of services, as you I think I'd start off by saying, well, you need to differentiate yourself better in terms of that.

Will:  

Yeah, all the stuff we've talked about many times before, find your niche and market to your niche, let people know what they're coming to you for all that sort of stuff.

Ollie  

Yeah, exactly. Right. But I mean, what's interesting for us with sort of, with fitness businesses, you know, we deliberately price our services at a great value, offering an alternative kind of attempt to, you know, 50, even percentage of what they shall not be named sort of what we think are sort of similar services for 85% of people's use cases. And we do that, because we know that there's so many instructors and people that that opens up to reach who otherwise couldn't afford those, those, that technology and those services. So we've created a bigger market by having a lower price. And that kind of makes up for, for why we're doing it. But the key point around all of it is and have a strategy and and and have it clear in your head don't just sleepwalk into it, I think would be the punch line.

Will:  

Right? And and use the data that's available to you to make smart decisions rather than putting your finger in the air.

Ollie  

Exactly right. Ask your customers, try some things out, and be quick to react and you can be quick to react if you've got a business model that enables that in terms of your pricing structure and strategy. You know, I'm not saying don't have a membership. But if you're giving people an ability to do drop ins at a price that makes economic sense for you and have a package as well, you can have the best of both worlds in that. And I think learn more about your customer base quickly.

Will:  

Yeah. So we started off talking about inflation. And then we moved more into pricing. One of the biggest things that I've certainly taken away from this is that the pricing in the market has moved and your platform and the prices being charged for Group Fitness classes are evidence of that. As we look to wrap up, is there any like major advice you have for instructors, when they're going about thinking about the thinking about the pressures that inflation is going to going to have on them this year? Say like we're looking at to the end of 2022, it's crazy to think that we're due to already. Where's the year gone, I feel the last two years of my life just got deleted. What, are there any major suggestions that you have as someone that understands the economy, the economics and the instructor pressures for how instructors should be viewing how to set their pricing moving forward this year? Do you think hold out for a little bit longer? Or should they...

Ollie  

So I would definitely, I'd say two things. So one thing I've already said but I think it's key and we always talk about it with all of our customers is start with your customer base. If you don't have a clear understanding of who your kind of customer target and profile is, and their willingness to pay and that kind of their economics. Go away and figure that out.

Will:  

And how would you do how would you suggest someone do So we're to say we're talking to someone that sort of been teaching their community classes, but they, they haven't come from a running a business background. Is that? Would you suggest doing a survey? Is it speaking to them? Is it using sort of the anecdotal side of talking and asking? Is it sending out a survey monkey? Is it a feedback form?

Ollie  

Yeah, I think a Survey Monkey is a survey and even giving away you know, free class credit for, you know, one lucky winner. However, even if you only get 10% of your customers, or 5% of them reply, you've learned tons from that. So, you know, there's a free version of Survey Monkey, if you can get 10 questions should be more than enough for what you kind of...

Will:  

And I guess so just to make it really clear for instructors who have maybe done this before, you can do surveys that are anonymous or non-anonymous, if you're doing an anonymous survey, you're potentially going to get more honest results, although not always. But I think what I'm hearing from Ollie is that in order for this data to be useful, you probably need to get some demographic information. And so thinking about doing an anonymous survey where your respondents actually say what their household income is, or what their disposable income is, so that you have more than an idea of just would you pay two pounds more for a class, but you can look at, okay, what are the what's the income of my average class member. And if you do an anonymous survey, then people might be more inclined to do this, you know, it's the kind of thing that you would, you would have seen in any type of survey that you might have filled out, like a census or anything like that, there's just checkboxes, you know, under, under 25, between 25 and 30, etc. But that will help you to get deeper into the data and actually have an idea of whether the more wealthy people in your class are more inclined to pay more, or whether everyone's inclined to pay more, because they value it.

Ollie  

Yeah. And trying to keep those questions as open as you can. So that you can let them respond and give you the data and the insight that they are happy to give you rather than just saying, you know, to set asking the question, would you be happy if I increased by prices by 20%? Well,

Will:  

No one. Hahah.

Ollie  

They're not going to say yes to that. But yeah, if you ask them, you know, more in line with, have you seen general pricing increases across other services that use in your day to day life? If so, roughly by what percent? Get a feel for whether they're aware that general prices have gone up? And where they are, asking a question on the lines of, do you think you get good value from my service?

Will:  

I was gonna say that or what else could I be doing to deliver value so that then you can be twofold, it helps you to generate some ideas about what you could be doing. But it also ties in the fact that it's this question is not around, all prices are going up, look out, it's more, you know, what, what more can I do to create value for you in the context of a an environment where prices are going up?

Ollie  

Exactly right. And as we were saying, some of what you might be able to do, might add little extra operational costs to you. But you'll be able to position all of this great, new new class types or new class time, or extra on-demand content that you're making available as part of your new service offering, which is slightly higher. But you know, it could be much higher give, you know, inflation has been running at X, and I've only done Y I think that's viable. And people as we were saying, I don't think your customers will, will have a knee jerk to that based on our, our data. The other thing that you mentioned, Will, we had some lovely feedback, genuinely, I don't know whether she wrote a public review that you can actually check me on this, but one of our customers last week saying who just started up on gymcatch saying one of the most lovely things that she'd found about it was that rather than checking people in or checking whether only one a paid or having to think about the few that wanted to do cash on the door, yeah, it freed up the time before class, see who is there who booked on and paid, all ready to go. So they had 10 minutes before the start of the class to actually talk to him about how things are, you know, how are you finding things at the moment? Is it tough? Have you had felt much impact from everything in the world? And that sort of it's more of a general test of the temperature and the sort of the feedback but I think you'll quite often find that they'll give you a an honest appraisal of what's going on and how they're feeling. And you know, for those that you may be known a bit well on a bit longer, it's okay to be honest and say, you know, talk to them and say, No, just one thing I've been thinking about struggling in my head a little bit is how I adjust to everything that's been going on in the world because energy has gone up or, you know, what do you think? I mean, that's not the right question for every customer. But there might be, there might well be some that I mean, I've lost count on the number of times I've talked to a customer, who's trained someone, or who has a customer within their community class, who is actually helping them with their business in some way or something else, because they become friends and, and that person has some great experience that they've been able to bring and help them and to their table, it's, it's often not just a transactional relationship that our customers have with their clients.

Will:  

And I think this applies for all instructors, right? Like it we're not, we're not selling, we're not selling widgets, to your point before where we're creating connection. And that means that if you are doing a really good job, then there is the scope to increase your prices, provided that what you're doing is a value. And it all starts from with like, what is the value that you're bringing? And knowing that is really, really important.

Ollie  

Yeah, absolutely right, and who you're bringing it to? Yeah,

Will:  

And it also goes without saying, I've thought this couple of times during our conversation, one of the things that if you're not currently, and this is obviously a plug for gymcatch, because you guys do it at a very, very reasonable rates. And we've had a lot of shift instructors who have recently moved across from other booking platforms on to gymcatch. And they are uniformly very happy with the improved financials they have from a system that doesn't, that doesn't sort of take a big chunk of the bookings from them per month. But having an automated booking system is pretty important when it comes to making sure that you can track your revenue that you can do things like class credits and refunds. If you're still someone that's manually tracking everything with cash, it becomes just a lot more difficult to be flexible. And we're certainly coming to a point where I would imagine that most people have some form of, of non cash payment options. But if you're still an instructor, and you're still using the cash economy, not to say that instructors can't always take cash bookings when they need to, but but definitely look into systems that can help you to manage your finances a little bit better. And Gymcatch is a great example of those.

Ollie  

Thank you, Will. And I, obviously digital evangelist, I wouldn't say this. But I think you know, people had to take online payments due to the pandemic, whether it was online or when they came back in person because they didn't want to be handling cash. I think now, there's also it comes back to that cancellation policy in terms of if you want to maximize revenue and income, you know, how many bookings and you want to convert that intends to book and commit and pay you at the moment that that hit, because you know, whether that's them sat on the sofa, or in bed at night, or on the train or commuting, we see a big spikes in terms of bookings. Now, again, as people are getting back into sort of the world between 8 and 9:30 in the morning, and then again late at night, and sat in front of the couch, you know, how many people do you miss out on by just taking cash on the door because it gets close to the time and they're like, oh, well, I could do that. Or I could actually go home and put something in the oven or go for a beer or whatever it is, you just want to take that maximize every every penny at the moment. And whether that's an additional booking, or one or two cancellations that you've been paid for that you would have otherwise missed out on or not in a month. It's a small percentage of your total number of bookings that you'd already have paid for the service on a monthly fee. So let alone your time in terms of administrating the back and forth and so slightly coming from a coming from a buyer standpoint, but I think yeah, we believe it, we genuinely believe it.

Will:  

Okay, well, Ollie, thank you very much for taking the time to explain to our listeners sort of what inflation is and how it is something that instructors should be thinking about. I guess the big takeaways for me are that inflation is is happening in the economy. So being aware of it is important, although I don't think anybody listening to this is not going to be aware of from the articles on the news through to the price of petrol or gas at the pump. But one of the key things to think about is that instructors have for a number of months been resetting their prices at a slightly higher level. So if you've been worried about this, then maybe this is the push you need to do it in a smart way by making sure you understand what your customers want by thinking about what are the value you could provide. But don't be afraid to do it because others have and they haven't seen any massive detrimental impacts to their business. And if you do it smartly, then you'll be able to weather some of the increased costs to you while also keeping up a successful business. Any final comments, Ollie?

Ollie  

Well, that was a brilliant summary. Exactly right. No, I don't think so other than, you know, the fundamentals in terms of our business customers is you knnow, focus on your customers. And I think the key point on pricing is really, to have a strategy and make sure it's it's thought through and whatever you do, to commit to commit to it. And to say, thank you for having me, I really enjoyed it.

Will:  

My pleasure. And we will put links to Gymcatch. And to your so your business, so you can check it out. And if you have any questions, Ollie, where do they reach out to?

Ollie  

So happy to contact me at ollie@gymcatch.com in terms of the email, or if it's more system focused, if you hop on the website, you'll find live chat that you can reach the team on Monday through Friday, live hours or leave us a message.

Will:  

Awesome. And we will, as always, put some links in the show notes. So from gymcatch, Ollie Bailey, thank you very much.

Ollie  

Thank you, Will. Thanks, everyone.

Will:  

Thank you for listening. If you're enjoying the show, don't forget to subscribe for all the latest episodes wherever you get your podcasts. And while you're there, please drop us a review. You can also get in touch with me at will@sh1ftfitness.com. I'm Will Brereton and you've been listening to Group Fitness Real Talk.