In this episode, John and Chris will answer a question from one of their good friends and students. The question is based on whether or not they would advise a yogi setting up a new yoga studio to offer discounted prices to attract students or just start off with their full prices from the get-go.
The answer to this is sort of multilayered, because from their own personal experience of owning yoga studios, they applied different pricing tactics when they set up each of their current four studios. When they were starting out, they didn’t have much in terms of information on how to run a yoga studio successfully, so they would just throw a launch party, which was more like a launch campaign, where they would give bonuses to people who signed up for their various packages.
As far as the prices were concerned, they would go low, but they eventually shifted towards charging full prices when they set up a new location because they discovered that clients who pay, pay more attention. One of the biggest challenges that yoga entrepreneurs face when they open up new yoga studios is that there’s always a huge upfront cost to setting it up, and so they have to get students coming in the door almost immediately they open, which makes offering free packages or charging lower prices a disadvantage. Stay tuned as John and Chris share all their wisdom on this subject, so you can be better prepared when you set up your new yoga studio..
Key Points Discussed:
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This episode was released December 26, 2019
Disclaimer: The Transcript Is Auto-Generated And May Contain Spelling And Grammar Errors
00:00 We would create some sort of defined end program as the entry point, as our lead generation, or as our front end offer, or promotion, or introductory offer is what most yoga studios call it, meaning, we wouldn’t just say, “Here’s a free class, come in and try it”, because like, free is compelling, but it doesn’t stick people to what you’re doing.
00:25 What’s up everyone? You are listening to Yoga Entrepreneur Secrets. I am Chris Yax, and I’m John Yax. We are part of a small group of yoga entrepreneurs who are committed to making a living, doing what we love, without feeling guilty about making money, or ashamed of being successful, because we know the real value of yoga and how the world needs it now more than ever. This podcast is here to teach the strategies and tactics so we can thrive financially as yoga entrepreneurs. We are the Yax brothers and welcome to Yoga Entrepreneur Secrets.
00:56 Alright. So, in our continuing process of answering questions that were posed to us in the ratings and the reviews in Apple. And by the way, if you haven’t, and you’re listening to this, please go rate, review, and let us know what you think. It means a lot to us. And, if you have, thank you so much, and keep listening. So, this time, what we’re talking about John is…?
01:17 Looking back in the past. We had a question from a good friend and student of ours, Michelle Brian. Hi Michelle. So she asked, “Did you actually start high as meaning like, full value, like as far as your prices go, on day one when the doors opened up”, and she said, “If not, and you could go back and do it all over again, would you have?” And then she goes on to say, “Do you think you’d be where you are today if you had, if so if you started at top prices, how would you address the very real issues of those who simply couldn’t walk through the doors, and commit to you because of budget issues?” Big question. So the breakdown basically is kind of, “What do you charge when you open up a studio for the first time? Do you go full prices, or do you do a big discount on your prices, and kind of move from there?” And so, what would we have done in the past? Chris, you and I talked about this a little bit.
02:06 Well, I think it’s important to say… so we’ve opened four yoga studios. We started with the first one in 2005. We opened up the second one in 2007. We then did renovations, so we kind of opened up a third, but it was the second room inside of the first yoga studio in 2009. Then we opened in a whole separate market in Richmond, in Virginia in 2012, and then we did a second one up in Richmond, but just on the Southside in 2015. And, what we did from the beginning of 2005 to what we did in 2015, it changed. So, it’s a kind of a… it’s a multilayered answer.
02:41 Yeah. And so, really, the gist of it. So when we first opened up the very first studio we opened up, and we had very little experience, knowledge, and understanding of the best ways of doing it, I look at it now, and there are so many people that are able to do it, and are successful opening up studios of all kinds. But yoga studios, and there’s a track record, and people know what to do, and what specifically to do to be successful with it, but we didn’t know at the time. This was 15 years ago.
03:05 What we did is we threw a party and which is kinda cool cause like there are things like you throw a campaign like there’s a launch campaign is what it’s called and the marketing world. And so we kind of did that, which was like a little kudos to us I think without knowing what the hell are we doing. We were still, we threw a party, had a bunch of people come to it and then we gave out bonuses for signing up for any packages on that night, which was pretty cool. But as far as our prices went, we just went with low prices right off the bat. Yeah, so we didn’t discount, but we are full value at the time I believe was $83 we started $83 for that is like, so at the time our package structure was, we did an unlimited, which was a 12-month contract and then we did unlimited at a six-month contract and we did an unlimited, a three-month contract and that’s was the differentiation for the price points.
03:52 And then we did the 10 2050 cards and all that stuff and then single visits. So we didn’t discount, but what we did was we just added bonuses for that party, anyone who attended, but other than that to get people to the doors, what we did was a free class. Anyone who came in, I don’t care where you were, where you’re from, if you’ve ever practiced, not like you get a free yoga class with us. That has changed. I don’t necessarily, and certain instances a free class can be beneficial to get people in your doors as far as that lead generation to get these new people into the doors and like have them experience what you do. I don’t believe in that anymore. I believe that people that pay more attention. And so, uh, would we go back and change it? Yes. First, we were charged more for the services that we’re providing and not just because we believe wholeheartedly in what we do and we know the value of it.
04:39 But we’d set up a studio that was top notch. I mean like towels, free towels format towels and shower towels. At the time we had like spa amenities. I mean you’d walk in and like tile showers and three showers and each women’s bathroom, men’s bathroom, like anything you could think of. We handled like we invested a crazy amount of money in the heating system. So like there was a big capital expenditure so we could charge more, but we didn’t. And so that’s one thing would change. We would definitely charge more. And that’s one of the challenges.
05:12 Open up a, an open up studios, there’s an upfront cost to it, so you have to get people in the doors as soon as possible as you’re already running at a loss. Right? So that and business is called the J curve and you are working your work, you’re, you’re starting off at a loss. You’ve got to get people in the doors. So with that, if we would’ve done it similar to what we did before, I would have said, here’s the price and the first 50 to 75 to a hundred people get it for this discounted rate to get people in the door and get your memberships up. And then people knowing what the actual value is and getting it at a discount makes them feel amazing. Right? They feel good because they’re getting a discount and you’re getting a base of students in the door. Now, with that said, knowing what we know now, we would do it completely differently. And how is that Chris?
05:56 Yeah. So now we would do is we would create some sort of defined end program as the entry point, as our lead generation or as our front end offer or promotion. Our introductory offer is what most yoga studios call it. Meaning we wouldn’t just say here’s a free class, come in and try it because free is compelling but it doesn’t stick people to what you’re doing. So this defined end program would be a challenge or a transformation or a program or some type of like it starts to, right now what we’re like in the midst of launching is a, what we call a six-week fountain of youth challenge. And so what that does is it says it frames very clearly in someone’s mind six weeks as the program fountain of youth is the transformation. And it is a challenge in that there are certain requirements that are going to be needed to be met to fulfill the challenge, which everyone likes to go beyond and meet the challenge and like go beyond what they think they can do.
06:53 And for the us to get them the results that they’re looking for. And what Chris just said is the gold in that we get the results. So traditionally, and what we’ve started off with was just open up the studio and giving people a yoga experience or we’re not really promising any results. We’re saying just come practice yoga cause it’s awesome, right? We will change your life. Let’s use a very vague result. And we feel the difference because we practice consistently. But someone brand new doesn’t understand that. So they come in and have an experience, but they don’t realize what the result is going to be if they continue to practice. It doesn’t, they won’t stick with it. So one of the biggest differences is setting up a front end offer that guarantees the results. And with that gives, compels them to practice the point that they get those results that you know they’re going to get when they’re consistent with it.
07:36 Right? So that gives you the ability to be able to charge more and give people results that are going to change their life. Because we know, we all know that if we practice yoga enough, everything changes about your life. Yeah. I was gonna say something. I forgot what I was gonna say. I knew it was important. So important to me. So good. I was going to blow your mind. So Chris is going to come up. He’s going to think of it. It’s going to pop back into his steel trap in just a moment. But what the other thing I want to mention about this is if, so that front end offer also is more expensive. Oh, forget it. I remember, shut up John. I’m going to talk now.
08:09 Here’s the other thing that it does. This is what’s so important is indoctrinates people into the experience that you want them to have, meaning, nurturing process. I knew that I actually stole it from your brain. I inception you into thinking for me the thing that I had forgotten so that I could take it and say it as if it were my own. Oh, that’s high-level stuff right there. But keep on. That’s why I meditate. Keep on that point because it was this point he’s about to make is that I was gonna make that he’s making is so important because they wait until you’re in your process, right? So then you get to give them, I’ll use content but that’s not really the right word. You get to give them like information that they need to understand the value of what you do and you can do for them.
08:56 Basically you get to like infuse your belief systems and the why you love yoga, why you started the practice. All the people that have come through your doors that have transformed their lives in these specific ways and you can tell them those stories and you and you can uh, handle all the objections and all the things that you know are going to, that came up for you. Like what is the Sanskrit, what is coming like how much, what do I eat before class and what do I not eat and why do I feel this emotion? Like this emotion in classes. I’m just doing these physical poses like, and then you get to address all those points. Why? Because then if they understand you’re why, if their belief matches your belief and you can handle all of the things that could potentially keep them from coming back, you have a higher chance of changing their life first and foremost.
09:49 Cause that’s why we do what we do. But in that process, when they have a higher chance, you have a higher chance to change their life or they’re actually changing their lives through your process, they will stick with you. They will now have a benchmark upon which they are looking at every other yoga studio. And if they go to another one, and like most places do, they just say, Hey, come on in. Take a class. Did you like the class? Would you like to sign up? And you’re like, no, no, no. I bring you in in a very specific process because I understand the things that are going to come up for you and I want to address them. And by the way, I’m going to charge more for them because I’m increasing the value because I’ve created this beautiful, wonderful transformational experience and it’s worth more than just going into a yoga studio for a free class or a 30 for 30 $30 for 30 days experience where there is no control over their experience. You are literally hoping and praying that what they experience in that room is going to be something that I resonate with and come back and want to stay with
10:43 or that they do enough classes to get that experience that Chris is talking about. Right. So the next piece that we want to mention to this is that, so if you’re charging higher prices, how do you deal with people that are potentially a budget issues and can’t afford your services? One of two ways you can approach this. You can either, it comes back down to we didn’t episode recently about who’s your who, right? Know who you want to serve. You can open up a studio and have a donation-based studio or have the lowest prices around, right? We talked about this in previous episodes about yoga suits to become commodities and everyone’s racing to the bottom by cutting prices and cutting prices. So you can either be Walmart or you can be Gucci, right? You can be, you can either, you can be the lowest prices, which there’s a market for it, right?
11:28 You can provide a service for people that can barely afford it, or that it’s donation-based where you have enough people coming in that you’re able to pay your bills, right? So there’s that way. And there are people yoga for the people. There’s a studio in New York and S and he actually opened up one up in LA, but there is density guys, right? So if he’s doing a donation made studio, but there he’s doing it in places that are densely populated where it, it can actually work. So there is that option, right? You can play on that, but that means you have to have a lot of people coming in. The other way you can play is at the higher end, right?
12:00 And what that means is if people can’t afford your service, then you’re who’s different, right? You’re working with people that can’t afford your service or, and so this kind of brings up another question which I’m going to let Chris field is
12:11 like, if it’s valuable enough for somebody, they will afford it, right? And you see this because you like how does a homeless person also have a cell phone, right? How does a homeless person able to drink every night, right? Because they value a cell phone or they value that drink so much so that they will find a way to pay for it, right? They’ll find the money to pay for those things that are meaningful to them. So that’s the other way around it. Chris can chime in on this.
12:38 Yeah, it’s an interesting question because where it comes from is this desire to serve everybody you know, like, and you believe that what you do is going to change lives and it will, and the rub is in, but I can’t change everyone’s life. So I have to be clear about whose lives do I want to change and are they willing to pay for the transformation. And there’s a lot embedded in that. Like, am I able to articulate the value and the result that we’re going to get upfront so that they can perceive the value because once they make the purchase in their minds, whatever problem you’re solving has already been solved and then it’s just time for you to deliver on it. But so the issue is like for me it’s like the bleeding heart. I want to serve everyone but I can’t serve everybody.
13:21 Right? And if I try to serve everyone, I end up serving no one because I’m lost in this. Like we have hard expenses every single month that we have got to be met and all of a sudden this is another, this is what’s really interesting is if I the low barrier to entry offers, cause that’s kind of what we’re talking about is when was the free class or the $30 for 800 days or whatever the, whatever people do. What ends up happening is that you need a high volume of people. You need to reach a ton of people. You’ve got to have elite like hundred or 150 people coming through your doors every single month just because you know at that lower barrier to entry offer that lower price point like not everyone’s going to stick because everyone’s kicking your tires and seeing if it’s something that they want to do.
14:03 Once you increase the price, yes, are going to be some people that can’t afford it, but the people that can, if you’re offering in, you’re creating that experience that we’ve talked about that we would do differently had we known then what we know now what’s going to happen is I don’t need as many people. I don’t. I can literally cut that number in half and get 50 people to the doors knowing that they’re not spending $30 they’re spending $200 or $400 with me and guess what? More of those people, you’re going to have a higher percentage of the people that stick around because they’ve paid more because, and what that does is it requires them to have a bigger stake and more energy and more effort involved. They’ll do more to get the result because they have more on the line that they put financially, which means you have a higher probability that they’re going to stick around.
14:48 And so what it does is yes, I can’t serve everybody, but the people that do serve are going to stick around and I’ll be able to serve them at a higher level because I’m not going to be worried about how am I going to pay rent next month. And so it’s a conceptually, it’s easy to wrap your brain around. The challenge is in the like the practical application of it because at some point you got to ask, man, it’s $300 and if you have, like for me, I had this like poverty consciousness, this scarcity mindset where I didn’t feel the value of that for a really long time. I’m like, ah, I don’t know if I could, I don’t think I could afford it. You’re not filling your own wallet and you’re not the person that you’re selling to. Right. So it’s really important that like understanding it, but then in the practical application of it is, that’s where the rub is really. So, but, and my real point is you don’t need us. It makes it an easier time operating the business because I don’t need as many people coming to the doors. The people that do come to the doors, I can serve them at a higher level, which means I can give them the more results and they’ll stay around longer and I’ll have more memberships and all of a sudden everyone will win.
15:48 Yeah. And so the next part of the question that Michelle asks is like in general September, are these times where the holidays are over in January or summer’s kind of over? Kids are back in school in September. So she was, when do we change your prices during that time? And the answer to that honestly is no, you don’t change your prices during those times when it gets busier, but you create offers, right? There’s a whole process of creating really good offers that will, that’s for different episodes, but it’s not like there’s an st Chris and I were playing around with the same, as I say, you don’t offer specials. You make your offers special, right? You create specific offers during those times that people are like, yes, I’m getting back into it. I’m getting back into my practice. I’m ready to do this again. I want to jump into this, whatever. This specialist, so they’re like, basically they’ve been around with you, they practice with you and them kind of fallen off and they’re getting back into that time of year. Make really great offers during that time, those times a year where you know people are gonna come back and start practicing again. Get them back in and enroll them with you again.
16:46 Well answer. John will answer. I liked that. One last one is do you benchmark off other yoga studios in your state, nationwide or worldwide to set your prices? Not nationwide. Not worldwide, you would look at it really, I mean locally or regionally cause that’s if you look at where people are going to be benchmarking what your prices are in relationship to others. They don’t care what price in New York is. They care what the price of the yoga studio down the street is or in the next town is. But again it goes back to when I benchmark prices like what we’ve done is we look at the benchmark of what people, cause it’s important you want to like we’re not, you’ll hear us say like you mean to charge more and increase your prices and like create better offers so you can charge more and like make more money and all that stuff.
17:30 But like there’s a point at which your students, the market you’re going to like, you have to listen to that and doing meaning. Listening to it is what are other yoga studios offering. So we benchmark it but we don’t the typical practices, someone will benchmark it by saying, Oh they’re offering $99 for an unlimited. I’ll offer $90 for unlimited. We do the opposite. When I see a benchmark of like, okay, this is what generally the industry in this area offers, like it’s about a hundred dollars for an unlimited. I’m going to go up, I’m going to premium it a little bit more. I’m going to increase the price of ours because perceptually what that means is what we do is better than them. If you just simply look at it on price value, like I’m very confident that what we do is the best, and I know if someone looks at it being a higher price, their perception is that what we do has a higher value and is better than what other people are doing. And I’ll just add to that really quick is if you can get results for people, you can create a better offer than just,
18:28 Hey, come into my studio and practice at an all the normal classes that I’m offering. If you can create an experience transformation in the very beginning that people can go through and get amazing results from, you have the ability to charge more, plain and simple, right? You can get that. If you can create this front end offer that is a full transformation experience, you can charge more than anybody, anyone else in like double the prices of anyone else in your region because you’re creating a specific result and changing people’s lives. So that’s just the addition to it. Yes, charge a little bit more. But if your offers completely different in the beginning or you’re creating a different experience, which is we talked about in a previous episode of this is where the shift is going to be going and yoga studios is they’re going to start to train people in the personal development side of yoga changed people’s lives. That way they’ll be able to charge more for it because it’s going to create magnificent results in people’s lives.
19:21 All right, awesome. Well we hope we answered those questions adequately and if you’re listening to this and you have more questions, please go to Apple podcast and rate review and as you review it, just leave a question and we continually check those and we’ll let a couple of them combined and then we’ll just do a couple of episodes just answering all the questions. So if you’re interested, if anything we’ve said you’re like, Ooh, but I have a question about that. Go rate. Go review. We love five stars. Four stars are okay, but five are better. I know, but be honest. If you don’t like it, tell us you don’t like it. We’re cool with that. But then leave a question and we’ll answer it. Live raw and uncut. Oh, almost uncut. And so you want to take us out, Chris? Yes. So always thank you for listening. Thank you for being part of our tribe and as always do the work. Honor the struggle and make the world better. Please delay piece.
20:08 Yes, thanks so much for listening to Yoga Entrepreneur Secrets. Do you have a question that you’d like us to answer raw and uncut on the podcast? If you want your questions answered, all you need to do is head over to Apple Podcasts, and do three simple things. One; rate and review telling us what you think of the podcast. Two; in that review, ask anything you want related to yoga, and three; if you want to shout out, leave your Instagram handle or name and that’s it. Then listen in to hear your question answered Live, raw and uncut. Join us next time on Yoga Entrepreneur Secrets Podcast. Thanks.
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