Ask any health club owner and they’ll tell you that a large percentage of their revenue is from fixed monthly membership fees instead of drop-in fees.
Why is it that many yoga studios derive a significant portion of their revenue from drop-in class fees instead of fixed monthly membership fees?
Admittedly, yoga studio memberships are a little more complicated than health club membership primarily due to the fact that yoga studios are constrained with fixed class sizes and class frequency. However, in my view, this is not a sufficient reason not to incorporate and promote yoga studio memberships.
What is a yoga studio membership?
A yoga studio membership is charging students a fixed monthly amount permitting the student to attend as often as they like, depending on availability (I address how to deal with this constraint below).
I call it the “unlimited yoga” offering.
Pros of offering and promoting yoga studio memberships
1. More revenue
It’s sad but true that many health clubs earn revenue every month from members that never go to the gym or visit so infrequently that the per visit revenue exceeds the drop-in fee.
I’m not saying your objective should be signing up memberships and hoping nobody attends; however, memberships can result in more revenue per student.
In fact, students with memberships may attend more often than if on the drop-in fee model, yet you will likely enjoy more revenue per student per month with memberships than solely offering drop-in fee options.
2. Steady cash flow
The yoga studio business can be difficult when revenue fluctuates monthly (all businesses struggle when revenue fluctuates). Yoga memberships help stabilize (and likely increase) revenues month-to-month. With steadier revenues, you can budget more accurately and plan more accurately for the long-term.
3. Students like unlimited yoga memberships
Why are restaurant buffets so popular? Because they remove limitations. There’s a perception of freedom to eat what they want and as much as they want.
An unlimited yoga model provides the same perceived benefit. Students like the idea of paying a fixed fee with the option to attend as many classes as they like in any given month. It provides the perception of freedom and flexibility (pardon the pun).
4. Good for your students
As a yoga teacher, you want your students to progress with their practice. Memberships provide an opportunity for students to attend more often which will result in a deeper practice.
5. Fosters loyalty
Students who have no long-term financial ties to any particular studio may visit different studios over the course of a month. However, students who pay a fixed monthly membership will much more likely only attend your studio. This results in more loyalty and deepening relationships between your studio and your students.
6. Increases the value of your studio
If you sell your studio, having a large membership committed to long-term contracts will increase the value of your studio because of the higher certainty of future cash flow for the buyer.
Cons of yoga studio memberships
1. Capacity limitations
If you sell too many memberships to the point where classes fill up too quickly; members won’t be happy. Members expect to by and large, be able to attend most classes when they want.
That said, yoga students do understand that classes do fill up. How can you resolve the capacity limitation?
a. Cap the number of memberships you sell.
Frankly, I’d prefer expanding the number of classes and/or class capacity before capping the number of memberships. However, adding more space and/or classes adds to overhead costs, which you may not be prepared to do at this time. Moreover, you may not have additional space available in your present premises.
b. Add classes to your schedule.
This is a simple solution if you don’t have gaps in your schedule. That said, there are peak times when people like to attend class. Adding a class at 4 am probably isn’t going to resolve this problem.
c. Add space to your studio.
This is an ideal solution, but it’s not always possible. You may have no more space available. You could open up a new location, but this adds significantly to your overhead. You have to do a cost/benefit analysis.
d. Offer advanced class registrations/reservations to paid members.
This is probably one of the best solutions to the capacity limitation issue. Offer, as a perk to membership, the opportunity to reserve a space in any class they like well into the future.
The problem with a class reservation system are no-shows. You solve the no-show problem by no-show cancellation fees. For example, you could stipulate that cancellations must be made 24, 48 or 72 hours in advance of the class. If not, that student is charged a cancellation fee such as one-half, up to the full price of a drop-in fee.
2. Additional administration
Managing members, especially if you offer a class reservation system, adds to your administration.
Let’s look at the numbers
Suppose you charge $100 per month for unlimited yoga. If you get 100 members, that’s $10,000 in fixed monthly revenue. $10,000 could be sufficient for you to make a living. Add drop-in fees, retail sales, private classes, and gift certificate sales and you have a solid yoga business.
How much should you charge for unlimited yoga monthly memberships?
A common fee is $99 per month. You could start with this amount. You could get more scientific about it by looking at the average number of times your students attend your studio each month and the average drop-in fee paid.
For example, if the average number of times a student attends each month is 5 times and the average drop-in fee is $13, that is an average monthly revenue per student of $65. Clearly memberships at $99 in this scenario would be a good business decision.
If, however, the current monthly average revenue per student (without memberships) is $130, offering $99 monthly memberships isn’t necessarily going to improve your revenue. You might want to charge $149 per month.
That said, do a full pricing analysis. In addition to looking at the average, look at the median monthly revenue per student. Perhaps 15% of your students spend $250 per month while 85% spend on $30 per month. In this scenario, memberships at $99 per month will likely increase your monthly revenue if the bulk of new members are from the group spending $30 per month.
In a nutshell, do some revenue projections based on your current revenue sources. You’ll need to make some assumptions such as how many students will become members and whether only the frequently attending students will become members or students from all attendance frequencies will become members.
Please do not rely on the numbers above. They are illustrative only. Your yoga business is unique and you must make decisions based on your business data only.
Consider surveying your students
Ask your students if they’re interested in a membership option. Include in the survey:
- How much they’d pay for a monthly membership?
- Would they commit to a long-term contract?
Keep the survey short and simple. The results can help you a great deal with your membership pricing.
Why would students pay more per month for a membership?
Because the perception of “unlimited yoga” is a value-add to your students. They’ll like the fact they can attend as often as they like.
Should you require students sign a 1 year contract?
If you can, yes. Getting a commitment is an excellent way to build a stable yoga studio business. However, offer an option for students to get out of the contract by paying an exit fee.
What not to do if you offer yoga memberships
1. Do not reduce the number of classes
If you sign up a bunch of memberships and then reduce your yoga schedule, your members will not be pleased. Yes, you will retain the right to revise the schedule at times; however, radically reducing the number of classes offered will anger your members.
2. Fail to honor class reservations
If you implement a reservation system, honor it. It’s more administrative work on your end, but members will not be pleased if they show up for a class they registered for and cannot attend.
3. Diminish yoga instruction quality
Do not sign up numerous of members and then bring in inexperienced teachers. Your members are committing to the quality instruction they’re accustomed to. That said, you do have the right to change instructors for any given class; this happens all the time. Just ensure instruction is top-notch if you’re charging premium membership fees.
4. Be careful about dropping membership prices in the future
If you start with $99 per month, sign up members at that price and then drop it to $65 per month, your $99 members may not be happy.
Start low (it’s a good incentive), and if you change your membership pricing, increase it in the future.
5. Fail to be organized
Honoring class registrations, billing, and all the administration that goes with memberships requires some administrative efforts. Don’t bungle it. It helps if you have yoga studio software for managing your members efficiently and accurately.
6. Don’t treat non-members as second-class students
Remember that all non-members are still your students. Although offering incentives for members is a good idea, don’t create an environment where members are considered first-class people in your studio. Exclusivity should be avoided.
7. If you end the membership option, honor existing memberships.
Tips for keeping your members happy
In addition to avoiding the “what not to do” above, consider the following to keep your members happy:
1. Dream up perks for members such as a unlimited class registration.
2. Offer “member-only” workshops, seminars, special classes, retreats, etc.
3. Focus on quality in all that you do.
4. Offer more classes and space as soon as you can. This will increase the value to your members.
How to sell memberships
1. Promote memberships as much as you can. Make it clear in your studio, online, and in all your promotional materials that you offer unlimited yoga memberships.
2. Offer a free mat or other accessory upon signing up for a 12 month contract.
3. Offer incentives for members to refer other members. For example, you could offer a free month to members who refer a student who becomes a member.
4. Start low and increase accordingly. A low introductory offer out of the gates (when you initially roll out membership pricing) hopefully will be a great incentive to get many students to become members right away.
5. Going forward, offer first-time students your introductory low membership price that is good for 30 to 60 days. After that, the price increases. A time-limited offer to new students hopefully will serve as an incentive to get students to join as a member.
The membership model, if done right, is a terrific way to continue building a viable yoga studio business. It won’t save a sinking ship and it won’t guarantee success; however, it’s a tried and true revenue model used in the health club industry that can certainly work in the yoga industry.
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