Pricing in Business Plan

[passi0n]

Just so you guys know, I am not creating my business plan that I will be starting a business within the next year. I'm taking Entrepreneurship 12 and we're required to make a business plan.
Anyways. I'm wanting to open my own gym eventually, so I'm looking into this right now. I have to do a section of pricing and finding an approximate price range for my service.

What would fall under these categories?

Internal Factors -
1.Operating Costs
2.Production Costs
3.Transportation

External Factors -
1. Competitors pricing
2. Inflation
3. Act of God
4. war

Perceived Value-
1. Perceived value
2. Benefits

Can anybody help? I'm wanting to get this assignment off tomorrow.

[LisaS]

In general, you'd be more likely to get help if you demonstrated that you had done some of the work rather than just asking those here to do the assignment.

For example - show what you have listed so far for all of these using the research that you have already done and demonstrating your mastery of basic business concepts. You should be at least 80% complete on your own for something like this before asking professionals who run their business to take time out of running that business to help you with a school assignment. Once you do that, perhaps ask if there is anything that you might have missed.

[passi0n]

Okay... I had done the operating costs/production costs... I just don't know what goes under which. This is what I've got so far.

Operating Costs:
-membershiip software
-insurance
-lease rent
-various bills
-security system
-equipment

Production Costs:
-insurance
-rent
-various bills
-equipment
-renovation

Transportation
-gas

I'll see if I get any help past that?

I also have competitors pricing as well but their website isn't loading right now. I'm going to call the YMCA. I would call Great West Fitness but they make you come in for an appointment ..stupid

[passi0n]

EDITED

Okay, I did a bit more research trying to help myself out. Now, let's see if I can get anybody to spare 5 minutes to let me know if I'm missing anything or if I put things in the wrong subtopic!

Operating Costs:
1. Janitorial
2. Insurance
3. Staff (sales, front desk clerk, management)
4. Building Lease
5. Equipment Lease
6. Marketing
7. Accounting
8. Legal
9. Various bills (electric, phone, gas, water, sewage)
10. Client/Fitness Software

Production Costs
1. Building Lease
2. Equipment Lease
3. Ongoing monthly training/sales seminars
4. Construction
5. Insurance

Transportation
1. Gas
2. Parking at the gym

Now I have a list of things that I'm not sure goes where
1. Labtop Computer
2. Security system
3. Website

[PowerManDL]

I'm wondering how a gym, which isn't a manufacturing facility, has production costs of any sort.

[passi0n]

Originally Posted by PowerManDL

I'm wondering how a gym, which isn't a manufacturing facility, has production costs of any sort.

I would ask you to explain but I'm sure I'll be ridiculed for not knowing why.
I'll go past that.

[LisaS]

What is the definition of a production cost for a business?
Would a operating a gym as you understand it have any of those sorts of costs?
Why or why not?

[passi0n]

Um...All I thought of was construction to fix the building up..
Equipment... I thought that would be production and operating..
In my textbook, it does say the costs to produce your product/service... I don't know I just figured construction and equipment would work.

[PowerManDL]

In a gym, costs to produce a service = operating costs

[passi0n]

Oh okay. So there are no production costs?.. Okay.. I have never really looked into business before this, so this course and these terms are new for me!

[PowerManDL]

I love how well public education works.

[Jean-Paul]

Hm,
I would list it like this:

Start-up expenses

• construction (build-out, architect, materials, inspections, management -- in some commercial properties, the managers will take a % of the build-out cost as a management fee... If you address this on the front end you can easily get them to waive this)
• lease deposit (make sure you don't allow them to tack on an annual escalator. Some firms will claim that you must agree to 3.8% claiming that it must climb with inflation. They base this on the 30 year rate, but in the last 10 years it was only 1.8%. If you can't get out of it completely -- as I always have -- you should be able to get them to adjust it down to 1.8%. If you can't, take your business elsewhere).
• equipment
• marketing/advertising
• staff
• taxes/permits
• insurance
• 3-6 months operating expenses
• Misc (about 50% of the previous for unanticipated expenses)

Operating expenses

• Equipment Lease
• payroll
• taxes (payroll/sales etc... will vary according to your type of corporation)
• maintenance
• rent/note payment
• utilities
• Insurance
• Phone
• Internet
• Inventory (if you have a smoothie bar, proshop, etc)
• Supplies (cleaning/office)
• Marketing (should budget $3K - $8K per month depending on the size of your club)
• Capitol improvement (if you can put away at least 25% of your profit into this you will not regret it)
• Dues (Chamber of Commerce, various leads groups, professional certs)
• Subscriptions

That's all I can think of off the top of my head.

[passi0n]

thanx jp!
So i did get most of the stuff figured out!
I have to work on this approx price range now, and then do a one year promotional plan and I'm done this assignment! Thank you for all your guys help!

[Jean-Paul]

Do a google search on Thomas Plummer. He has one of the best books I have ever read on opening a high-end health club, and he takes you through the entire process, along with sample pro-formas and building estimates.

[passi0n]

Awesome. I will definitely look into that book.