"We Don't Have Discounts": How to Keep Your Profit on Black Friday

Don't do it at any other day. Slashing rates is a horrible idea to brain founder Chris Cooper is here to tell you why. He's also gonna tell you exactly how to say no to discounts. I'm Mike Workin . This is Run A Profitable Gym . Please hit subscribe wherever you're watching or listing . I'm gonna tell you a secret, our 2024 Guide to Black Friday for gym owners.

It's coming out tomorrow, so you can DM Chris on Facebook November 19th or later and get it. Or you can go to jim owners united.com to connect with him there, follow the instructions on his post, and you can get that guide that will walk you through exactly how you retain your profit on Black Friday. Coop , welcome. How are you? We're Black Friday's approaching? Are you nervous?

So the , the deal was Mike like, yo, I'll , I'll give you a free membership. You bring me whiteboard markers 'cause bright whiteboard markers are expensive.

But in fitness we somehow think, oh, if they keep training with us, they might buy a membership. And it's just like, you're giving away two weeks. I've seen four weeks. Like I hate those ones a lot. So they're out there too. Gym owners, if you're listening, we're gonna tell you how to get around these things and how to build some value so you don't have to offer discounts.

And so you're getting outta the bargain basement and you can become that best steakhouse in town. So Chris, first question. Why do we see so many sales and discounts at this time of year? Like why should, and why should gym owners stay away from this stuff when every other industry is discounting stuff for Black Friday?

So even if you're running a group class, you know where you've got like 12 or 13 people in a group, the number of people that you can get is finite. So if you look at our state of the industry data, what you'll see is the average gym is now charging about 170 bucks a month for an unlimited package if you're a CrossFit gym. But their a RM like what they're actually collecting is closer to one 20.

And that's because they've got so many discounts that they're not making nearly what they think they're making. And so they get in this vicious cycle of, I need to get more clients to get more money in the door, but the more clients I have, the more expenses I have.

And so eventually, like, you know, the cost just keeps up with the new revenue they're bringing in and you just keep going further and further down the hole . You're serving more people, you , the landlord's making more, the government's making more, but you're not making more, you're just working way harder for the same money.

And that's the bottom line with discounts is like you just keep working harder and harder and harder and never, never getting ahead. So the , the reason that people run these discounts is they think that it's a marketing ploy, but one of two things happen .

Number one, either you receive less money from the people who wanted to sign up anyway, so you wind up teaching your good clients bad habits, like they just wait for the sale or you wind up attracting the people who are not gonna stick around anyway. So you give them this short term deal thinking this is what's gonna attract them .

And then they take the deal, but then they also take the next deal from the gym down the road. And so you're in this like never ending price war. So discounts don't work for marketing. They can actually harm you though too for marketing. So for example, you know, in the first instance I said you teach the best clients bad habits.

You know, there was a massive successful from the successful from the outside gym , uh, over in Hawaii. I won't name the gym. They had three locations at the time. And what they were doing was this Black Friday paid in full discount. So if you on Black Friday paid for a year in full, you would get two months for free, right? So you'd pay for 10 and get two more.

Well, what happened was that after the first year, you know, it looked like they , it was a huge success. They got a lot of revenue in the door in November, but by the time September rolled around they ran outta money because like they just didn't have a profit margin where they could be giving this much away. So September, oh crap, what are we gonna do?

So they went out to the, the members again and said like, okay, paid in full discount, same deal, you know, pay for 10 months, get two free. And that bridged the gap almost. And then next year, you know, guess what happened in July they ran outta money again and eventually what they realized was like they had taught all of their best, most valuable customers to pay less and less and wait for these special deals.

And, you know, eventually that killed 'em . They went bankrupt.

You might discount something, maybe you're trying to get rid of some t-shirts from 2023 or something like that, that are taking up space and , and get rid of those discount those maybe never discount your services because you only have so much time and if you market yourself properly, you can fill that time with a high value client who pays full price and you don't have to give away the money that should go on your

bank account. So that's, that's the lesson. Product service, two different things. Do not get sucked in by product discounts. You are a service provider, you're providing a high value service. Chris, do gym owners actually need to cut rates to get clients? Like why are some of 'em so tempted to give away their profit? Well,

In fact, you know, a couple of them have made some really amazing Black Friday posts recently and I made one last year too.

Like people forget that if I make money at my gym, a lot of that is going right back out to benefit their community. Also, you know, I'll employ six people and most of their paychecks are gonna go to taxes too. We also sponsor kids to play sports, et cetera. Like you can see this on the screen, it's a great post and if you're listening, feel free to copy that.

I'm not trying to make people feel dumb for buying Black Friday sales on televisions, right? Like that's not it at all. What I'm trying to do is set the context that there's a difference between paying for a professional service and buying a discount on like, you know, pots and pans. Go ahead and , and save 30% on pots and pans.

If you wanna line up online for that, that's fine, but do not expect a discount on a professional service. Like, you know, if your wife needed surgery on her teeth, like you would not go out looking for a coupon.

You're like, I've already got three per month or whatever your , the number that was that you set with your mentor that you're targeting. And so it's just this steady, steady, steady thing. And if you want, you can do other things like say, bring a friend and we'll, just like you best clients, bring your best friends. We'll probably get four or five outta theirs and we'll get them at a hundred percent full price.

We're not gonna discount this stuff. So that's an interesting one. That post that Chris shared is in our guide for gym owners for Black Friday. You can get that again by DMing Chris on Facebook November 19th or later to get that one if you wanna copy it. It had a great response. I've seen people copy Chris's post and post a version of it on their pages. They got a great response. It works.

You should use it, tailor it, put it out and charge full price. So Chris , let's talk about exactly how to say no to discounts because some people just , uh, they fumble and they blah , what do we do? So what's the, the line? What is your very first line about discounts when someone asks,

It is, you know, of course it is. They're right. Oh , okay, yeah , you're right. It's also for nurses. And then a teacher came in, wait a minute, you know, ,

The staff person can't even give them the answer because the price changes all the time. You know? So for example , um, my general manager does our no sweat intros now, and a couple came in last week and they said, is there a discount if we both do on-ramp together? And he said, no, because you're both gonna get one-on-one attention from me. You're just gonna be coming in at the same time for your convenience.

And they said, okay, he didn't have to ask me. And so the principle of a hundred percent is easier than 98% is true because you don't have to make a decision. The precedent has been set, it's the same rule over and over and over again. You actually build trust among consumers. And I'll , you know, we're gonna come to this in a minute. Like, what do you say when somebody actually asks?

But you know , when somebody comes in and says, Hey, hey, can I get a discount? And you say, how's 20% sound? Their next thought is gonna be, can I get more? Is he giving 25% to somebody else? Is he negotiating ?

So we had, a long time ago we used to have open gym access and we had a class starting at 6:00 PM and you know, this guy named David, who was a fantastic client, great dude. He came in during open gym access and he set himself up to do a half marathon row , right? You know, go for it. The problem was that he set himself up to do this half marathon row like 20 minutes before class started.

So he's rowing and he is rowing and he is rolling . And of course the rowers are kind of out of the way. He's not making a lot of noise. It would've been very easy for me to just let him finish. And instead, five minutes before class started, I said, David, like in five minutes class starts and you're done. And he said, well, I still got like 5K to go.

And I said, you better either like break the world record or, you know, in five minutes, get as far as you can by all means. But in five minutes class starts and we're done. Well, he got off the rower and he made a big show and he, he left and he never came back. But we've never had a problem with people working out like on their own during class. Again, there's never been another awkward conversation for a decade.

And it's because my, my staff understands that like the precedent is more important than each specific instance because we're gonna be here for a long time. So, you know, when somebody comes in and they're like, Hey, I can get a discount that gym's doing a Black Friday. That guy will give 20% off for firefighters. Um, we're prepared and we know what to say

And so if somebody say , if I just say , uh, we don't have discounts, and they say why, then what I would say is our service is already as inexpensive as we can make it for this level of service. So now what you're doing is you're shifting the conversation from price to level of service. Now that doesn't mean that everybody's gonna be like, oh Chris, you're so wise and and witty.

What it means is that the people who prioritize the value of your service will say, I get it. The people who prioritize price will say, see ya . And they're gonna go find the cheaper spot. But they're gonna do that anyway. And you know, if you're playing these discount games, you are never gonna be the cheapest forever. You will never win that race to the bottom and you don't want to.

Cheap has connotation beyond price as inexpensive for this level of service frames things a little bit differently. Like, okay, what am what is that person not delivering that allows 'em to be 20% less? Okay, we don't play those games is a little bit confrontational, but when somebody is aggressive and says, why don't you do this other CrossFit gyms do it.

And we do get that, you know, twice a month we can say we don't play those games. And the good good people will say like, what are you talking about? What do you mean why, you know, they'll ask follow up questions.

So you , here's the line that you have said before, we treat all of our service professionals equally well because we know your service is critical for your safety. Talk about that one and how it applies to say any of these great service providers in the community.

He's like, I did not sign up to risk my life pulling people outta burning buildings to get 15% off at your f-ing gym. And I've heard that over and over, mostly from military people like, do not belittle my service.

We will say to them like, look, we know that your life depends on your fitness and we will do everything that we can to protect you , uh, by giving you like top of the line coaching the best service that we can possibly give you the best programming access to all the equipment that you'll ever need to make your job as safe as possible. And also thank you for your service.

And I saw one of our military , uh, one of our mentors who had served , uh, in the military had said one time he had posted on this and he just said like, you know, I think it was in one of our private groups, he just said, guys, I I am a passionate, passionate service person. I'm still in the reserves. I I'm still all in the club. I'm telling you from the inside.

And as a 20 year professional in that, in that field, you do not have to give me or anyone like me a discount. We don't expect it. We don't need it. Thank you. You know, and I , I thought that was a really powerful thing from a service person .

And this is how we remember Master Corporal Scott Vernelli, who was killed in March, 2009 by an improvised explosive device. And we use our gym to memorialize him and sometimes we make a donation. Now the , the problem is that a lot of gyms can't afford to make a donation, but they are making a donation with all the discounts that they're giving anyway.

And that is actually what's stopping them from becoming profitable, from making enough money to be able to contribute when they can. They're giving discounts and basically like donating 20% of their membership to the wrong people, the people who don't need it. What we're doing is not giving discounts, making more money, and giving that money to the people who actually do need it.

And that to me is like a really important principle of entrepreneurship is you make lots of money and you give money away to people who actually need it instead of giving these random 15 to 20% discounts to people who don't need it because you don't know how to market.

And it's just like, dude, like this is, it spirals real fast and it, like Chris said, all these discounts add up, they take money of your family's pocket and they actually kneecap your ability to do charitable work and to donate to people who are in great need. I'm not saying that some of those groups are in great need, but you get what I'm saying.

There are, you know, Chris donates bikes to local kids who really could use them to like escape things and enjoy their lives and become fitter. That's a great project. If Chris kneecapped his business and didn't have the money to do that, that's, that goes away. So that's the principle there. Chris, let's go to the , uh, the next one here. Let's talk about instead of offering discounts, what should gym owners do?

How do they build value?

You, you can't tip the waiter at what they should be tipped and you become , uh, the next person going out there looking for discounts. And what happens is, if you're the one that's always out there looking for discounts as an entrepreneur because you need the discounts, you just perpetuate this downward spiral. You know?

And um, I'm so passionate about this that we've actually stopped accepting discounts when, you know, we go to the bike shop and the the bike shop is like, ah , Chris, I'll give you 20% off that helmet. Don't want it. And the reason is that I care more about that bike shop being here in 10 years than I do about the 20 bucks that I'm gonna save on the new racing helmet.

So I'm not asking other people to go that far. I'm just saying like, as entrepreneurs you are probably undercharging as it is. Do not perpetuate the cycle by giving more discounts, driving yourself into bankruptcy and you know, forcing everybody to just keep getting cheaper and cheaper 'cause you can't afford it.

Instead lead the charge back to a positive caring economy that can support other people by charging what you're worth and not discounting it.

You lay out the exact plan. And this is like professional level stuff here. This is not every gym does this. You lay out that plan, you tell them the price and away you go. And when someone does that, then three months later you meet with them , you show them their progress and you make adjustments to the plan if needed. In some cases you want them to move faster .

So we're gonna add some pt. What this is, is a professional level prescriptive model service. And you're using that to get people to understand this is not a choose your own adventure where you might randomly get results. I have measured your results. I'm going to tell you when you're doing well, I'm gonna adjust the plan. If you're not, we are invest , we're meeting regularly. All of this sounds like a valuable service.

It doesn't sound like use the la pull downs for 20% off. Right?

And so, I mean, those gyms are going to run Black Friday discounts because the name of their game is get people on a recurring monthly membership that they can't cancel, not coaching . 'cause they're never gonna come in. Yeah. A coaching business is dramatically different.

And that's why to be a professional, you have to deliver value, you have to be confident in that value, and you have to not do the things that undermine that value. Like negotiating discounts with people, you know, it really just doesn't make sense.

If you offer a 15% discount, your profit margin is now seven. And that's like a sneeze away from being zero. And if you offer 20%, you're pretty much, you're in trouble. And so like that's an average. So again, let , there are gyms out there who's profit margin is maybe 12%.

And I'd get two or three of them in my 6:00 AM class. And I was realizing that I was paying the coach 25, these people were kicking in 15, I was literally paying for their memberships and I did this for a decade. They helped me start the gym. I felt really, you know, like I needed to honor that, but it wasn't a wise business decision, right? So you've seen these discounts all over the place.

Take the money out of your pocket and pay their membership from your pocket with, from your income. It's really the same thing, you know, taxes aside as giving them a free membership, but you will feel it. The problem that most people have when they're giving away free memberships or like scholarships or discounts, is they, they don't feel the immediate pain of doing it. They don't feel it till they're way down the road.

They're looking at their 5:00 AM class going, wait a minute, these grandfather rates are paying like $9 total for this hour. I

And also you really do feel like you're contributing something instead of just one more head. The myth of these big group gyms, especially, and this is really prevalent in CrossFit, is it's another dollar. You know, one more person is another buck 25 that I'm making. You forget about the costs associated with adding headcount, right? And you forget about that.

This add one more person to make another buck only works in a commoditized service, which means like big group classes where you're just churning people, churning people, churning people all day. And the problem with commoditization is that, you know, nobody can tell the difference between your big group class and that big group class next door.

And so whoever has the lowest price is gonna , you know, win the race to the bottom. And what happens when you, when you have like cut rate pricing is that the consumer appears to benefit, right? So Walmart comes into your town, they're charging a dollar less for a a she of paper 50 cents less for a toothbrush. The consumer is like, I'm winning until all the local retailers, the local drug stores are gone.

And then Walmart's prices start to creep up and the consumer is like, what happened? Well, that's the same thing that happens in a, in a gym business in your town, if a consumer is taught like just pick the lowest price, you know, everybody's the same, then they, they go to the lowest price gym. The real professionals go outta business.

They all go get jobs , selling houses, and eventually that low price gym is the only one left. But they're not making money either. So they either go to business and screw everybody or their prices have to come up like nobody wins when service professionals discount their rates.

Like, it just, it feels weird to me because I'm giving a hundred percent to all three of those people, you know? And, and that's kinda the way you gotta look at it. Chris, this guide, we put this thing out every year and we help gym owners not discount things on Black Friday. Where can gym owners get it tomorrow, November 19th,

But like what we try to do is give that to you and then say, Hey, how are things going with you g to see how else we can help. You know, so you're starting a conversation with me and, you know, maybe that'll lead to a conversation with our team, but if not, like, just take this guide and use it. Go your gym,