Land of (missed) Opportunities – part 2: Would you look a gift horse in the face?

As I hightlighted in my last post Land of (missed) Opportunities – part 1: Engage & Educate recently, in the space of a week or so, three individual events sparked my interest. All relate to business opportunities that were already ‘warm’ and with the right approach would have led to income for the people I was interacting with. In this post, I will look at the second.

The Back Story

After completing a half and a full marathon, I have now set my sights on doing a triathlon. The challenge in itself is good, but there is an added benefit that I will significantly improve my swimming and I have engaged a coach to help me to that. The current gym I attend has a small swimming pool, where it is difficult to develop. Therefore, I decided to look for an alternative gym that had a larger pool; as it was it also had newer and more modern facilities, more facilities generally, larger car park and a much nicer view when you are on a treadmill. I knew that this would be more expensive than the current gym and was prepared for that, however, I did not want to pay the full price which was over double what I was already paying.

Having had the usual tour, the Sales person sat down with me and started the sales pitch. I was impressed with the gym, but laid out my case. I was prepared to split the difference or go slightly over 50% more than I was currently paying but not prepared to pay the full price. I got the response that all fees were set centrally and that there was no room for negotiation or flexibility. Therefore, no deal was done and I walked away.

Missed opportunity?

This gym is constantly advertising for new members. I approached them and was in a ‘buying’ position and would have ‘bought’ had the price met my requirements. To the gym it was almost guaranteed revenue, yet the local inability to be flexible on the price/package meant they lost out altogether. Aside from the setting up costs, I cannot believe that the monthly maintenance cost of my membership was more than a few pounds so there was a large margin to be had on my offer of 75% fee.

Opportunity cost, isn't it better to have cash in your hand

The Math

Gym asking price for a full membership: £1200pa
My offer price for full membership: £900pa

Differential cost, the cost difference between two options, of my offer to the Gym: £1200 – £900 = £300 – the gym would have made £300 less on my membership

Opportunity cost, the benefit sacrificed when one option is surrendered for another, to the gym: £900 – if they had taken my offer they would have obtained revenue of £900pa, as it was they made £0pa as I walked away. Of course there may have been additional revenue for them too, in the form of drinks, snacks and social events

This is a fairly simplistic analysis, as I do not know what the margins are or break even point is on a membership.

In many businesses, cash is king. What would you do, if a potential customer came and offered to put £900 in your hand with little or no effort on your part? Would you stick out for the £1200?

Written by Rob Cameron

Rob Cameron

Rob Cameron is a Business Coach, passionate about helping business owners to grow and develop their businesses to achieve the lifestyle they desire. Founder & owner of Ignition Coaching.

Leave a Reply

You must be logged in to post a comment.