Bringing Dynamic Pricing to the Fitness Industry
Dynamic pricing is no revolutionary notion.
Introduced as a concept in the airline and transportation industries in the 1980’s, it’s a pricing model we’re familiar with in certain markets. Now we’re seeing it’s application expand to other industries — from Broadway to concerts and sports — as a proven driver of revenues.
When the data and technology are available to improve the effectiveness of pricing, it just makes sense to leverage that information to drive purchases and improve the customer experience.
As this practice becomes more widespread, and real-time pricing becomes the inevitable next step, it’s important to note that the term “dynamic” is actually quite broad. Any prices that change are technically dynamic — even if the only difference is as simple as peak versus off-peak.
In order for this pricing model to be most effective, it is imperative to hone in on what the drivers of the dynamic pricing in question are, and the behaviors it is designed to capitalize on.
The Dibs approach to Dynamic Pricing is systematic, deliberate, and most importantly, customer-centric.
While our algorithms are tailored to maximize class revenues, the primary goal of the pricing is to drive long-term value from the individual customer, not just get as much money as possible for one particular spot. We do not drop the price at the last minute just to fill it.
With Dibs’ Dynamic Pricing Platform, prices are at their lowest when they are first available on the schedule. The initial price is based on several considerations, including instructor, studio location, time of day, and historical revenue generated. The cost of class only increases as class time approaches. That way, customers are rewarded for committing early.
This emphasis on rewarding loyalty to a specific studio is inherent in each feature of our platform. Customers who choose to pre-load their account at a particular studio receive an extra boost. Additionally, those who demonstrate other positive behaviors (like consistency, or increasing momentum) are rewarded with small “flash” credits ($1-$3, with a short expiration).
Good for our studio partners, good for the customer.
This approach works because the experience is tailored to the needs of the customer, and that makes the transaction feel good.
We are offering flexibility that the customer did not previously have, when the only options were to make a large upfront financial commitment in the form of a package, repeatedly purchase expensive drop-ins, or join ClassPass (but attend your favorite studios less frequently).
Your customer’s interactions with your brand begins with the purchase.
Ensuring that the experience is positive — from the transaction through the class — will spur customer loyalty and keep ’em coming back.