Pricing an psychology

[LionsDen]

So an interesting thing I’ve learned in the last month or so, is that middle of the road pricing tends to be bad for business.

When people spend money they want to feel good about spending that money. This for many people means feeling like they got a good deal, or feeling like they got something high quality or exclusive.

So if you look around and the highest charging schools are $200/month and the lowest are $50/month, trying to split the difference at $125 may actually discourage potential students/customers because theyll see the lower end as a better bargain and the higher end as better quality or more exclusive.

[bushido_man96]

That's an interesting take. I think it depends on the area, too, especially the population. But I do see how pricing could be viewed to potential consumers.

[sensei8]

Survey the competition, the other MA schools, in both your immediate areas as well as the neighboring areas for a starting idea. Whatever the median yearly household income for your area is, I'd certainly wouldn't ignore that vital factor.

Forever and a day, my dojo was located in Van Nuys, CA. So, before I even hung up my shingle, I did some serious research. The average median family income in 1978 was roughly $21,020 with a population under 100,000 with a median age of 28. While I deeply respected the moderate diversity that is the San Fernando Valley, I cared nothing about the demographics that made up Van Nuys because I'm there to teach students the MA, and I don't care what the ethnicity of my student(s) are.

I do care about foot/car traffic; location, location!!

I want to know what schools and how many, as well as what type of businesses surrounded my dojo. There were 4,917 families headed by single parents or 21.3%, considered high for both the city and the county.

Educating myself about Van Nuys from the business aspect, after all, I was raised and schooled in Van Nuys, but knowing The Valley as a kid is not the same as knowing The Valley as a business owner/operator.

After some time, I opted to charge both a flat fee and a variable pricing. For example, I learned that in Van Nuys between 1973 - 1975, Van Nuys average median family income was $22,350; $1,332 higher than 1978. Therefore, to avoid moving my price structure up and down like some crazy yoyo due to how the average median family income acted, I charged $25 per month.

As time rolled forward, my price structure settled around the neighborhood of $50 per month, with the highest of $100 per month.

Van Nuys population nowadays are somewhere near 136,443 residents in the 8.99-square-mile Van Nuys neighborhood—or 11,542 people per square mile. The median age rests comfortable between 28 and 35. More schools and businesses, however, the average median family income tops any of my research because if I charge Beverly Hills prices in The Valley, or more importantly where my dojo rests, I'm sure that the demand of my services would demise quicker than a burp.

All in all, no matter what a MA school price structure might be, if one can't teach, then price structures are mute.

Research is paramount before one can hang up their shingle.

Imho.

[LionsDen]

Survey the competition, the other MA schools, in both your immediate areas as well as the neighboring areas for a starting idea. Whatever the median yearly household income for your area is, I'd certainly wouldn't ignore that vital factor.

Forever and a day, my dojo was located in Van Nuys, CA. So, before I even hung up my shingle, I did some serious research. The average median family income in 1978 was roughly $21,020 with a population under 100,000 with a median age of 28. While I deeply respected the moderate diversity that is the San Fernando Valley, I cared nothing about the demographics that made up Van Nuys because I'm there to teach students the MA, and I don't care what the ethnicity of my student(s) are.

I do care about foot/car traffic; location, location!!

I want to know what schools and how many, as well as what type of businesses surrounded my dojo. There were 4,917 families headed by single parents or 21.3%, considered high for both the city and the county.

Educating myself about Van Nuys from the business aspect, after all, I was raised and schooled in Van Nuys, but knowing The Valley as a kid is not the same as knowing The Valley as a business owner/operator.

After some time, I opted to charge both a flat fee and a variable pricing. For example, I learned that in Van Nuys between 1973 - 1975, Van Nuys average median family income was $22,350; $1,332 higher than 1978. Therefore, to avoid moving my price structure up and down like some crazy yoyo due to how the average median family income acted, I charged $25 per month.

As time rolled forward, my price structure settled around the neighborhood of $50 per month, with the highest of $100 per month.

Van Nuys population nowadays are somewhere near 136,443 residents in the 8.99-square-mile Van Nuys neighborhood—or 11,542 people per square mile. The median age rests comfortable between 28 and 35. More schools and businesses, however, the average median family income tops any of my research because if I charge Beverly Hills prices in The Valley, or more importantly where my dojo rests, I'm sure that the demand of my services would demise quicker than a burp.

All in all, no matter what a MA school price structure might be, if one can't teach, then price structures are mute.

Research is paramount before one can hang up their shingle.

Imho.

yep, what classifies as a bargain, or luxury pricing will vary based on location. $100/month is pretty steep for my area median income being around $28k, but the Hollywood hills might see $100/month as too cheap to convey a sense of quality.

[crash]

im not disagreeing with what you state as far as pricing is concerned, (especially in other types of business or sales,) but pricing isnt the end all of a sale in any business. "curb appeal" is often the closer of a sale regardless of price. when a potential student walks into your dojo what do they see?, how are they greeted? are they invited to watch a class or take a free class? what is the condition of your dojo?, what type of floor, equipment, etc... compared to the competition?.... while pricing should be competitive to the area and competition, the level of instruction and professionalism should be the first concern, and will dictate what you will be able to charge. this will also build your reputation as time passes and you become more established.

[bushido_man96]

The first DT certification I got was taught by Royce Gracie. He said he offered to teach law enforcement where he lived for free...seemed like a good investment for him and his family. He rarely had anyone show to do it. But hold weekend seminar and charge $300 or so for it, and people show up in droves.

[LionsDen]

The first DT certification I got was taught by Royce Gracie. He said he offered to teach law enforcement where he lived for free...seemed like a good investment for him and his family. He rarely had anyone show to do it. But hold weekend seminar and charge $300 or so for it, and people show up in droves.

yep, pretty much. people are pretty bad when it comes to assessing value lol.