Best Practices: Setting Your Prices
How much should you be charging for your activities? Your guide to putting a price on what you do.
Working out what to charge is not easy. Undercharge and you’ll miss out on valuable revenue, overcharge and you may lose potential customers.
A simple way to think about how much you charge is to consider the difference between what you charge and how much you pay for all the associated running costs for your activity. You’ll need to charge the customer enough to cover your costs, and then whatever they pay over this amount will determine how profitable your activity will be. However, pricing is more complex than this.
To determine the price you charge, you will also need to take into account the perceived value of the activity you run. The price of your activity tells a story to families about what they can expect.
Different customers will perceive the value of your activities differently. Understanding how much your customers expect to pay for your activity and what pinch points will start to turn off someone are crucial to ensuring that you don’t over- or under- charge for your activity.
You need to be able to clearly communicate the value of your activities - especially if you’re charging more than local alternatives, as parents need to understand why they should pay more to attend your classes. It’s also worth bearing in mind that charging a lot less than the expected price may be a turn-off too, as it can cause parents to question the quality of what you’re offering.
Customers are used to comparing prices, so we always recommend that you consider how much parents pay for similar activities. To get you started we have compiled the average price for different activities across the UK, providing a snapshot of what parents are willing to pay for different activity types. We’ve looked here at single session pricing as it’s representative of trend across all price types - look here for data on full term prices.
What are the average prices for different kinds of activity?
Activities are more expensive (per single session) for kids’ sports, martial arts, parent and baby fitness and learning, which covers cooking, coding and similar activities. These kinds of activities typically have a higher cost for materials or equipment per child. While it’s good to take into account the relative prices of different categories, you should remember to take into account your costs - if you provide expensive materials, this should be reflected in your price.
However, the kind of activity you run is not the only thing you should look at when deciding what to charge.
Average Single Session Price by Activity Category
How much should you charge for children of different ages?
The price of activities trends upward with the age of the children participating, with activities for the under 4s at almost half the price of those for children over 5. This probably reflects how the activities become more complex, requiring (as above!) more expensive equipment and materials, and more specialised teaching.
Average Single Session Price by Age Group
Does where you live make a difference?
Short answer: yes! We found that activity prices are more in bigger cities, less in smaller cities and less than that in non-urban areas. We also found that cities with a high cost of living more generally, like London, Brighton and Edinburgh have correspondingly higher prices for children’s activities, while cities where the cost of living is lower, like Sheffield and Leeds, have lower cost kids’ activities.
You should always take into account the market rate, and what your competitors are charging, when thinking about the prices of your activities.
Average Single Session Price by City
Simplifying pricing options
We’ve all experienced fatigue booking an activity or event at some point. Different prices for different tiers, times, extras can seems appealing at first, then quickly become a chore when you just can’t figure out what to book.
Too much choice can be overwhelming, and some people would rather buy nothing than choose the wrong option. If you introduce too many pricing options, customers may abandon the purchase if they can’t easily figure out the best option for them, or are forced to try and calculate the value they’ll get from the amount they pay.
We’d recommend keeping pricing options simple, especially for the family audience, to increase the chance of booking. A recent study by Hoop showed that parents typically abandoned purchases when the booking process takes longer than two minutes, so there’s plenty of incentive to make sure your check out is as simple and stress-free as possible.
Which pricing model (or models) should you use?
There’s a wide choice of pricing models available for your activities, so you should consider which options are best suited to you business. For example, if you choose to go with single session pricing, it’s unlikely you’ll also want to run paid trials - parents already have the option to try out your activities by booking one session. On the other hand, if you only offer parents the option to buy a term, you may want to consider offering a free or paid trial, to incentivise new families to try out your classes.
Here’s a full breakdown of pricing models that class providers should consider.