Psychological price war between yoga studios and customers

Managers must understand that prices have many aspects, not just a question of 'how much should the price be set' but also a question of 'how should the charge be charged.'" Said John Gourville, a professor at Harvard Business School.

In an interview with the online weekly "Harvard Business School Working Knowledge", Golli said that when customers are asked to pay may be more important than how much they are asked to pay. Companies should charge at the beginning and charge at the end, or let customers pay in installments. Although the total price is the same, different methods will change consumers 'perception of price and affect product sales.

Taking a yoga studio as an example, the two most important tasks to maintain revenue are to attract more new members, and the other is to ask old members to renew their dues. In terms of attracting new members, membership dues are usually more attractive when presented in installments. Paying an membership fee of $10,000 may deter consumers, but if the company converts the same amount into "the membership fee is only 900 yuan each", consumers will be more tempted. Companies can make good use of this technique and package the same price into a relatively painless small payment.

In terms of attracting old members, when members feel that their first year's money is worth spending, their chances of coming back will increase. Therefore, gyms should focus on encouraging members to come to work out more often.

Customers still remember the behavior of paying after they first purchased the product, and they use the product the most frequently in order to pay for the ticket price. If the gym requires members to pay all annual fees at the beginning of the year, members will tend to go to the gym often at the beginning of the year, and then the frequency of using it will gradually decrease due to the long-term payment behavior. When it is necessary to decide whether to renew the membership fee at the end of the year, some people will choose not to join because they do not use it frequently and feel that it is not cost-effective.

In order to avoid this situation, the gym can change to ask members to pay monthly membership dues. After paying each month, members are more likely to force themselves to go to the gym. Therefore, the frequency of use throughout the year can be sustained and average. When the membership dues need to be renewed at the end of the year, Customers who continue to go to the gym are more likely to renew their membership dues.

In this way, the number of members coming to the door can also be dispersed so that it will not be too crowded at the beginning of the year, because equipment, venues and staff are overwhelmed, which reduces customer satisfaction. At the end of the year, it will be too deserted and wastes operating resources. In order to avoid this situation, in addition to changing to monthly dues, the gym can also ask members to pay membership dues at different times in batches, or send payment notices during the off-season to achieve an average number of customers throughout the year.

In addition, research has shown that when consumers pay installments, they are more sensitive to the monthly fee paid and less sensitive to the length of the payment month. Paying 10,000 yuan each month for a total of 30 months, and paying 15,000 yuan each month for a total of 20 months. In fact, there is no difference in the total amount, but consumers are more resistant to the second situation because the amount they have to pay out each month is higher.

Golly said that if the company did not consider how, when and where to charge when setting prices, then the company only asked half of the questions. (Internship Editor: Lin Xiaodong)