A disruptive New York-based startup is bringing dynamic pricing to the fitness industry in an attempt to make it more transparent.
The strategy, which has been used successfully across travel and e-commerce platforms for years, uses algorithms to deliver real-time pricing based on consumer demand and has the potential to reshape the entire industry.
“I’d been working in the fitness industry for four years and I kept hearing consumers complaining about the options that were available,” Dibs co-founder Alicia Thomas told Welltodo.
“Consumers were saying it was really difficult to discover new classes and the studios were saying how difficult it was for them to fill their classes or to know what they should be charging.”
Dibs tackles these concerns head on. The team behind the dynamic new booking platform, which is currently being used by 10 fitness brands including AKT in Motion, have ambitious plans for implementation in 100 locations by March.
Success will mean users have access to some of the best and fairly-priced workout classes in New York. And for the studios, Thomas says that the platform gives them the power to price their classes more efficiently and flexibly in order to maximise revenue potential of unfilled spaces.
“As a data driven company, our process begins by analysing data from each studio. We look at each individual class, instructor and season in order to consider everything. Then each class receives a demand curve which we forecast pricing against,” Thomas explains.
“Over time the algorithms work to refine that demand curve so that it’s much more accurate and then eventually we expect to see that every class is full.”
The strategy, which could really shake up the industry, gives business owners more control over pricing. As the market stands today, Thomas argues that there are really only two options; either high end or extremely discounted. Dibs addresses this gap.
“What we say is, there’s a lot in between. You don’t have to be forced into charging full price or discounting your classes so heavily. We’re really targeting that blank space in the market.”
With a proven track record with studios and consumers already, Dibs has released a second more streamlined version of its platform, with 20% growth in uptake week on week. In addition, the platform has achieved a 65% repeat booking rate and of that repeat booking, 70% of people have booked three times or more.
But Thomas is quick to point out that for consumers, the attraction isn’t solely for discounted class prices.
“A significant amount of people that use the platform book classes at the same price as the studio charges, so ultimately it shows that it’s really about the perceived value. When it feels fair it feels good to the consumer,” she says.
By making the system more transparent, consumers feel like they are being rewarded for going to ‘off-peak’ classes, which helps drive sales and grow the industry – a model that benefits all parties.
“What we’re really focused on is growing the industry at large: with the introduction of dynamic pricing, Dibs has the potential to grow the group fitness industry 25-30%. Making it easier for people to attend more classes instead of attending less,” says Thomas.
The company secured $1 million in seed funding in January, following a round led by Gree Ventures, the investing arm of the mobile games company, and is focused now on employing a larger sales team to service the growing demand. And with plans to expand to Los Angeles and Washington D.C, the business is set to radically transform the U.S. fitness industry.
“Our focus right now is about reaching as many studios as possible, so the seed funding was really about growing faster, reaching more locations and providing more solutions for studios,” says Thomas.
“What we are doing is quite ambitious, but our goal is to change the fitness industry by working with business owners.”
Unlike other booking platforms that perform better when the studio performs worse, Thomas argues that Dibs and the studios they work with have aligned interests, making for a much more sustainable business model. And whilst Dibs is a pricing strategy and pricing solution business; if a studio doesn’t want to be a on their platform but still wants to use their data they can provide that service.
However, she does suggest that “consumers who use our platform go to the studios more often than even the studio’s own users.” That alone, she says proves that Dibs is encouraging more people to attend studios and is helping to grow the industry rather than shrink it.
Right now Thomas is focused on boutique studios using the pay per class model because consumers are used to making transactions that way, however Dibs certainly has plans to expand beyond that narrow vertical.
“We look at this model as potentially changing the whole health and wellness industry,” Thomas says.
In a world that’s increasingly being driven by tech, embracing data technology solutions makes sense. From massages and manicures to big box gyms, making transactions more transparent has the potential to increase revenue, boost customer satisfaction and give businesses more time to concentrate on providing the best services possible. And Dibs’ goal is to make that a reality.