Feb

21

Half OffI joined a health club today, and hasten to add this is just for the pool and steam room. But the pricing was curious:

– Off Peak (to 5pm only): £24 per month
– Peak (to 10pm): reduced to £25 per month
– Group peak (access to the entire chain of clubs to 10pm): halved to £24.50 per month

No prizes for guessing which one I went for — it seems like they were having a lot of trouble unloading the more expensive membership packages and slashed them in a a somewhat arbitrary way. But now I'm wondering if there may be some predictive power for other luxury areas in their fee structure. For example in their peak/off-peak ratio and whether this is becoming larger or smaller.

This kind of thing might be applied to other areas too, for example the housing market. I've often wondered about the London vs the Rest gap, after having watched this  narrow during booms. As everyone tries to jump on the bandwagon (or through fear of never being able to buy something) he drives up the prices of the lower quality property whilst affordability constraits keep the lid on the better stuff. For sensible pricing to be reestablished a differential would need to be restored.

Riz Din adds:

A bit more on incentives and the curious nature of gym pricing:

A few months back, I took out a health insurance policy that encourages me to go to the gym and to partake in other healthy practices. Insurance can be quite a blunt instrument because it can encourage one to behave more destructively than they would otherwise, so it's interesting to see innovations that make an effort to realign people's incentives.

With this insurance product, I collect points for these various healthy activities and at the end of the year, if I have enough points, my insurance premium will be reduced by more than 70%. The quirk is that I don't care one bit about the health insurance policy. It's nice to have it, just in case, but I really wanted to join a gym and the policy comes with massively reduced rate gym membership to encourage me to stay healthy. Indeed, the gym records my visits over every quarter and provided I work out at an average of twice a week, then I get both the insurance and the gym membership for significantly less than the gym membership alone!

The catch is that if I fail to go to the gym twice a week, it can get expensive, and I guess some people will fall into this trap. However, I saw this as an attractive incentive to stay fit, and so far it seems to be working. Nothing incentivises like hard cash.

Scott Brooks explains:

ScottI'm not sure there is any predictive power to discounted gym memberships. I work out at 24 Fitness (of "The Biggest Loser" fame) in St. Louis and at Wilson's Total Fitness in Columbia, MO. Both of these gyms constantly run membership specials.
 
When I worked as a personal trainer in the mid 1980s (which meant that I got hired and sold people memberships and had to pretend like I knew what I was doing), we rarely ran specials, but I had tons of leeway in terms of what kind of memberships I sold. I could vary prices and length of time of membership almost however I saw fit. Basically, the goal was to sell, sell, sell.
 
This time of year, gyms are really hungry for new members. They've gone thru their big selling season, the New Year's resolution phase, and most of those people have already petered out and are gone, even though their memberships fees are still paid or are owed. As an aside, there is nothing more irksome than the first 4- 8 weeks of the new year when the gym is full of these people (who are going to fail anyway) crowding the machines and weight stations). So this time of year, gyms are selling heavy.
 
There may be predictive power in other areas of the economy, but I don't think there is in the fitness arena.


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