Reader Question:
“Help me with my pricing. I have an app that is used by gyms to manage and bill customers. We sell this SaaS to gyms to help them run their businesses. I am a bit stuck on how to price things, can you help?”
Pricing is one of the toughest challenges for any SaaS business. The right pricing model can set you up for sustainable growth, while the wrong one can leave potential customers confused, undervalue your product, or even alienate users altogether.
When pricing a SaaS product like a CRM for gyms, you need to consider the unique needs of your customers (gym owners), their ability to pay, the value your app provides, and how you’ll sustain your business long-term. Let’s walk through some key considerations and strategies to help you find the right pricing model for your app.
Understand Your Value Proposition
The first step in setting your pricing is understanding the specific value your app provides to gyms. It sounds like your app helps gyms manage customers, which is a crucial part of their business operations. Think about the following:
What pain points does your product solve for gym owners? (e.g., simplifying customer management, automating communications, or reducing administrative tasks)
How much time and money does your product save them?
Does it help them grow their customer base or retain existing members?
The more directly your app impacts a gym’s ability to generate revenue or reduce costs, the more likely they are to see value in it. Your pricing should reflect the value you’re delivering—whether it’s streamlining operations, improving customer retention, or enabling growth.
Consider Your Customer Base
Gyms come in all shapes and sizes—from small, independent studios to large, multi-location franchises. Your pricing should take this variation into account. If you target both small gyms and large chains, a one-size-fits-all pricing model may not work.
Consider a tiered pricing structure that caters to different segments of the market:
Small gyms and studios: These customers often have tight budgets and fewer members to manage. They’ll need a price point that reflects their lower capacity and resources.
Medium-sized gyms: These businesses might have more members and greater revenue, meaning they can afford a mid-tier plan with more features or integrations.
Large chains or franchises: Larger gyms or franchises may require advanced features, integrations, and higher usage limits. They’re typically willing to pay more for a solution that scales with their needs.
Decide on a Pricing Model
Once you understand the value you provide and who your customers are, the next step is to choose a pricing model. Here are a few common SaaS pricing models to consider:
Per User Pricing
This is one of the most popular models for SaaS products, where you charge based on the number of users (gym employees or trainers) who will use the software. This model is scalable for the gym, as they only pay for what they need.
Pros: Simple to understand and easy to scale as the gym grows.
Cons: May limit adoption if gyms are hesitant to pay for additional users.
Per Member Pricing
Since gyms manage members, you could consider pricing based on the number of customers they manage through your CRM. For example, charge per 100 or 500 members managed. This way, your pricing scales with the gym’s business size.
Pros: Directly ties your pricing to the size of the gym’s business, making it more attractive to small gyms while also allowing larger gyms to pay more for greater usage.
Cons: Larger gyms may balk at higher costs if they have large memberships but low usage of the software.
Flat Rate Pricing
A flat monthly fee for access to all features, regardless of gym size, can work well if you want to avoid complex pricing structures. This could appeal to gyms looking for simplicity in budgeting.
Pros: Straightforward and predictable for customers.
Cons: May not scale well for larger gyms that need more features or higher usage limits.
Tiered Pricing
This is a great option for SaaS apps with varying customer needs. You can offer different tiers based on usage limits, features, or customer segments (e.g., Basic, Pro, and Enterprise plans). Small gyms can opt for a low-cost basic plan, while larger gyms with more members or advanced needs can choose a higher-tier plan.
Pros: Flexible and allows you to serve different customer segments.
Cons: Requires careful planning to ensure each tier delivers enough value for the price.
Freemium or Free Trial
You could consider offering a freemium version or free trial to lower the barrier to entry for gyms. A freemium model provides a limited version of the product for free, with options to upgrade to paid tiers for more features or higher limits. A free trial allows users to test the product with full access for a limited time.
Pros: Reduces friction for new users and can drive organic growth through word-of-mouth.
Cons: You need to be careful that the free version provides enough value to attract users but not so much that they never upgrade.
Benchmark Against Competitors
Look at other SaaS products in the gym and fitness space to understand where your pricing fits in the market. What are other CRM or gym management apps charging? Are there similar products that gyms are already using, and how do they price their services?
While you don’t need to copy your competitors, knowing the pricing landscape will help you position your product competitively. If your product offers more value or features than competitors, you may be able to justify a higher price. If you’re focused on the small-gym segment, consider underpricing larger competitors to capture that market.
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