NY Health Club

Personal training is a significant money maker for many health clubs. However, individuals are drastically different when using the service, their view of pricing, and what times they can avail services at what price. Currently, the New York Health Club (NYHC) has a rather undisciplined tactical approach to personal training. Tom, a senior manager, felt that a more balanced and quantitative approach would be desirous. The rate a client paid was based on negotiations with the trainer and had little to do with services offered. Tom was also hoping that a more disciplined approach might even out the usage of the needed facilities.

Data analysis shows the following:

Peak times for training are 6-830am; 11-1230pm; and 5-8pm

Lowest times are 5-6am and 3-5pm

Because rates are negotiated by individual trainers, there is no consistency in either rate, projection, or ROI

Part 1 -- Flat Personal Training Rate -- One way to mitigate down times and provide an average price for training services is to do a flat personal training rate. When we analyze the data from the survey, we find that there are two meaningful average:

1) the average of all respondents in what they would pay per hour averaged over the entire day = $58.58

2) the average price when all respondents are averaged based on time of session = $58.58 (identical)

3) Thus, the average price per hour that would satisfy most of the clients would be $60/hour.

This represents the expanded results of the survey based on members:

Pricing at $60 per hour would be favorable for 45 members, or 40%. Pricing at $50 per hour would be favorable for 65 members, or 58%; This does not mean, of course, that those surveyed would not pay $50, just that their price/value relationship is lower.

Part 2 -- Two Price Levels; daytime $50/hour, 5pm-9pm TBD. The second way to price the services would be to segment high and low demand. $50 per hour for all hours except 5pm-9pm. Management must find a way to price the other hours to maximize profit and allow for peak usage times of facilities. Based on analysis, recommended hourly prices would then be $50 per hour regular, $80-85 peak.

Linear Demand Model

Regression Equation

Results:

Total Numbers:

Slope (b):

y-Intercept (a):

Regression Equation (y):

Appendix a -- Averages Correlated and ranked for regression

Sorted