 I think I'll start first with a little of my background, how I discovered floating. I was active duty Navy for 22 years and towards the end of my career I was in a workshop and we were discussing different stress reduction techniques and the word floating was on the screen. And I immediately Googled floating and float on of all places showed up and I remember calling and talking to Graham and going down and doing the internship and or the workshop down there for a couple days and really wouldn't floated and realize this is this is what I want to do after my career is over. So went out, bought into the urban float franchise at the time, mainly because I had run into the Pierce County Health Department, which was not quite as bad as the floor to Health Department in Jacksonville, but not far behind and realized I needed some help to get started. And then we opened in November of 2018 and I went through the holidays. Our pricing model at the time wasn't really optimized I would say. We have a first time float discounts, we had group bonds, we had unlimited float at crazy prices, it was just a bad model and I knew we had a problem when March of 2019 we filled 70% of our appointments and we were a six tank center and we booked a $15,000 loss. And I knew we have a big problem here. This is not going to work. There was no way we were going to fill 100% of our appointments every day to be profitable. And so I spent the year 2019 kind of in a panic trying to figure out how do I crack this nut and get to where we need to be so that we can have a successful profitable businesses which what we all want. And so in the pandemic hit I kind of went down the rabbit hole of pricing psychology. What determines or what helps determine if a client makes a purchase and what purchase they make, when they make it, what their thought process is, how do we present that to them. So part of this talk today, this first half I'm going to go through part of that and then in the workshop I'm going to go a little bit more in depth and I'm going to show you some numbers as we go along. I'm a big, in the Navy I was a nuclear engineer and a health physicist so I'm a big data and systems and I ran nuclear reactors and practiced responding to nuclear accidents so I'm very systems focused. So this was 2019 and so we opened up and like I said we had first time float discounts, we had Groupon, we had everything wrong that we tell you not to do when you open a float center. And so we ended 2019, we had 135 members, we had seen 2,600 new clients that year and we booked $295,000 in revenue. That was over $100,000 loss that year. So we did over 9,000 floats but we only converted 5% of those to members and that was a real conundrum for me like why people would come out they'd have great floats and we couldn't get them to make a commitment and I couldn't figure out why. And so I figured out I had what's called a logical fallacy. Maybe you've heard this term before a logical fallacy is an error in reasoning that occurs when an argument is based on faulty assumptions and my assumption was if we give people a great float they're going to be willing to pay more when they come back and that is not the case. People are not hardwired to pay more for a service the second time around. In 2019 out of 9,000 floats we had one person pay for a full price float, a non first time float or Groupon float. So we had a big problem we had to figure out. So I came across this guy named Nick Colinda you may have heard of him he's a psychology and marketing expert and he said most tactics of pricing psychology are based on numerical cognition which is comprised of fundamental principles of perception from a small B2B company to a large enterprise B2C company all customers abide by those same cognitive principles so pricing tactics should work in any market and I will tell you they do and I'll show you that as we get further along in the presentation here. So the first thing we talk about in this first half of this talk we're really going to talk about is perceived value. Perceived value is the worth or value that a customer assigns to a product or service based on their subjective perception of its benefits. So that value is different for each client. So when they come to your website and they're looking and they look at the benefits of floating and they look at your pricing they're doing a cost benefit analysis kind of think about we've all done this before you go on Amazon you go buy something you look at the reviews do I really want that product am I willing to pay that price for that product what I really need it for every client before they make an appointment goes through this analysis in their head. So your perceived value is based on the pricing that you show them and we can change that value by setting our prices at a certain level. So luxury goods carry the perception of value to another level called prestige. So again the way we price our single float sessions our single sessions can add that value of prestige you know think of a Rolex a Rolex is not based on its functionality but is an image a mark of success and refined taste. So pricing can have a significant impact on perceived value of a product or service in general customers associate a higher price with higher quality. So think when I was offering first time float discounts so our normal first time price was 89 we offered a first time discount of 45 in 2019. What we did is we locked in the value of our service at that lower price they didn't think our service was worth 89 it was worth 45 so when they came in and we tried to get them to become members our membership values were starting at 59. So again my logical fallacy thinking if they really have a great float and they really love it they're going to willing to pay that 59 to continue to do that. As you see 95% said no only 5% thought it was it was worth more to pay more to continue to use our service. So for certain products lower prices don't always equate to higher sales. Longer lasting purchases customers are often motivated by the quality and tend to associate higher prices with better quality. Coming out of the pandemic we raised our first time float price so in 2020 we closed for three months as many of us did from March to June and we spent that three months as owners evaluating our business how do we change our business how do we change our pricing what do we need to do to get to the next level to be profitable because all of us were not being profitable at that point. So we changed our first time float discount to 59 which aligned it with our first level membership. We made a few other price changes on some of the different memberships. We got rid of some memberships but we really started using kind of this pricing psychology and testing it out. Pricing services at a higher level reflects luxury attracts those buyers who make the correlation between price and quality and will therefore justify paying the higher price. So premium prices also involves setting prices permanently higher so one thing we stopped doing we also stopped discounting. We moved to an all full price model so if you wanted to discount you had to either become a member or you bought packages. Generally premium pricing strategies determine that a business never discounts like I said because we don't want to change that perceived value towards the end in January of 2021 we raised our first time float discount price again to 65 and we started seeing some positive changes with our membership. Our membership started growing in June of 2021 we completely eliminated that and at that point our business completely changed for the better. So the pros of changing your pricing and raising your perceived value increases your long-term profit margins through higher pricing you can establish a renown sought after brand things that are more expensive are associated with higher quality. So if a customer views your website for the first time say your first time float price or your float single session price is say 89 that is the price that they lock in their head so they make an appointment to come to your float center planning to pay that price. When you offer them a membership at a lower level it's not a discount it's they're getting a membership so it changes the perception doesn't change the value. One of the cons of that is you're going to alienate more price sensitive market to higher pricing. When we were offering first time float discounts one of the things we noticed was that our clients were more price sensitive because they were coming in they made the appointment and we locked in that price of that float at $45 because that was our first time float discount or $59 or $65 before we got rid of it. When we moved it and eliminated that and went to the $89 price point our client base changed. We found that we had less price sensitive clients coming in but they were more willing to spend additional money to stay with us and continue to float. So 2020 like I said I love the numbers we ended up there with 176 members 1275 new clients and we did $226,000 so and we were closed an entire quarter that year. So just by the small changes we made in our first time float discount it affected our membership base. 2021 in the second half like I said in June of 2021 we completely eliminated our first time float discount we stopped Groupon's and pretty much the only discounts we offered were through our membership pricing and package pricing. We also eliminated our first time three float package and just offered a straight three float package. So we ended the year at 331 members. We saw 1721 new clients and we did 425,000 in revenue in 2021. In 2022 we ended with 568 members. We saw 2100 new clients and we booked $676,000 in revenue. The only thing we changed was that first time price discount. We got rid of it. That changed the perceived value of our service and it made our memberships more valuable to clients. So in our facility first time floats 89 our first time one credit membership starts at $59 a month. So that gap that $30 gap we found was enough to get people to make a decision to become members and so that was a huge who's safe for us. So the purpose of your single session price is to set the perceived value of your service. This is an important price point. Clients will book an appointment after doing their personal perceived value and they booked that appointment planning to pay that price. They're not coming in because you're offering them a discount. They're planning to play, planning to pay that $89 price point. But then when you present them with the membership offer at 59 or one of your other memberships, that's a deal. Oh, I can pay 59 and I continue to float. It's a huge thing. Your pricing structure should make the membership the obvious choice. Nothing should interfere with your membership model. Your membership model should have the best benefits. We run multiple modalities. So we do float. We do infrared sauna. We do red light therapy, halo therapy, compression, beamer. You get all of it for one price. You get a credit. You can buy multiple credits depending what you do and you can use those credits however you want. So it's we're packaging everything under one price. You're not paying extra. And then if you want to do extra sessions, you've used all your credits. It's a 20% discount. We found this model to be, as you see, pretty solid and has worked pretty well. Resist the urge to discount your single sessions. We do not offer any single session discounts anymore. When clients ask, we say our discounts come in the form of becoming a member or buying packages. That's where we offer our discounts. Any questions? Yeah. The hard part with that, I think, would be to who do you give that to? Who qualifies for that? Yeah, see, that's a tough. To me, I try to keep things very simple for my staff. Like, we keep our rules very simple. We don't modify our rules. Like, here's how the membership works. Here are our packages work. All of our memberships are shareable. So it could be like a couple on them. All of our credits roll over. So as long as you're an active member, your credits roll over each month. If you cancel, we give you 90 days to use those credits before they expire. We offer a freeze option. So say you've accumulated a bunch of credits and haven't come in for a while, you can come in and freeze your account. That's $15 a month. You get to keep your credits. You can use them, and they don't expire. So we get them, and then usually they'll convert back to members when they're caught up. 60 minutes. So we do our floats. Yep. So we do all of our advertising through more floats with Bryce. We spend $1,500 a month on ads through Bryce. We also do some SEO and SEM through Seattle Times. We spend $500 a month there. We do movie theater advertising. So we spend $1,000 a month in our local movie theaters, which helps our Google numbers. We also just spend $250 a month on some local print magazines. So we spend between $4,000 and $5,000 a month. What I found is with my marketing, with a certain ad spend, my goal is I know my staff is going to convert between 10% and 20% of our new clients to members. So I need to bring in the numbers so that 10% to 20% is maybe 30 new members a month. Because every month you have churn, right? You have clients that come in and cancel their memberships. You have to replace them. You want to maintain or you want to increase your numbers over time. Yeah. Well, and I've really noticed a drop-off in the last couple months. And my advertising spend has not changed. I haven't increased it or anything. I think there's a couple of things going on. One, the economy right now I think is affecting people. I saw a news piece they talked about since 2021. The average family spending extra $700 on month on living expenses. So that's taking a lot of disposable income. So I really think we're a disposable income business, right? People are spending their extra money with us. So I think that is having an effect. I think this is the first full summer where post-COVID people are traveling. So yeah, my July and August, so since about May, we're down about 10,000 a month. We typically do between 38,000 and 40,000 a month in membership. And we were doing about 20,000 a month in just single sessions, packages coming in. And I've seen that drop about $10,000. So any more questions? So when they first join up, it's three months. And then it goes month to month after that. We used to be a two month. And what we found is that when we switched to three, one, no one complained about it. But then people were staying members longer. We found that two months, our average membership length was like four months. But when we moved it to three months, it went to like eight months. So that was a big change also. Any other questions, middle there? Yeah. Well, break-even is going to be very specific to your individual situation depending on your build-out costs, your initial marketing costs. I mean, I have a tremendous SBA loan that I'm still paying on. I mean, my build-out was $800,000 when I built out in 2018. So I can imagine now, if I tried to build out the same float center, I'm probably talking 1.5, the way construction costs have doubled. So I think that's a huge factor. So it really depends on how much money you're coming in with. I think you could be profitable fairly quickly if you don't make the mistakes I did. Once you, there's two important things, marketing and your price structure. I had the marketing to begin. We were bringing the clients in, but the price structure didn't move them into the memberships. So once we got that fixed, then it's just been take off from there. Yeah, I'm in Washington state, our minimum wage is $15.49. So that's fairly expensive just to start. So I'm competing, McDonald's is paying $18 an hour. So I'm competing with McDonald's and every other place for labor. So it's real hard to get labor, real hard to get them trained and good before they decide they wanna go do something else. So that's a difficult thing. So during holidays, and I'll talk about this in the workshop, what we've done is we've, a lot of our packages now are we're combining modalities. So like we run a sauna float appointment. So you come in, you do a 40 minute infrared sauna, you do a 60 minute float, and we normally run that at 125 and like during the holidays, we'll run it for like $99. So the only thing I discount is stuff like that. This year, we're talking about doing a gift card promotion like bonus cash, say you get an extra 10% or 15%. We had run that promotion with that kind of combo package for the last couple of years and we found it's slowly getting less traction. But we really try to avoid discounting floats, because we wanna be able to convert members to, or new clients to members, long term. And if that discount is too close to the membership, they won't, psychologically, they won't make that jump. They just can't, any other questions. We do a ton, like I get hit up every fall and stuff, schools and I donate tons of gift cards and I donate $89 gift cards. That's our single session price and then they auction them off. And then our goal, our team's goal was to convert those to memberships when they come in. You can pay 89 today, or you can apply it towards a $59 month membership. And it's gonna pay your first month, your first month and a half. And my team's really good at doing that. So yeah, I love to sell gift cards at a price point, not for things, not for a package, or sell, give it to them with money on it that can be used towards anything. Yes. Since we've gone to this model, prior to 2019, we were almost all packages. We would sell discount packages, first time three float packages. We would do 10 grand a month in packages. The problem is, every month you gotta find a whole set of clients to buy those packages. So, since we've changed this model, we sell very few packages. I sell maybe like a three float or five float package, maybe one a month or less. It's almost all memberships now. We don't pitch anything till after the float. You don't pay anything. We take a, so we have a late cancellation or no show policy, so we get a credit card on file. We find people no show less if they got some skin in the game. If they know they're gonna be charged, they'll show up. 90% of my no shows, or as when the staff didn't get a credit card, and there's no way to charge, they have no skin in the game. But if people know they're gonna be charged, and then we talk to them after their float. So, our goal is we do a very thorough orientation in the room. We try to get some intake to figure out what they're in for, what's their why, like Bryce said earlier, and then we gear their orientation around that why to help them be successful in their float. And typically, if they have a great float, it's a really easy pitch. It's almost like, can we talk to you about the options, or they'll come out and go, yep, I'm gonna do this one. So, yeah, so I'll talk about that in the workshop. So I don't wanna answer that now. No, no, absolutely not. So we do a store bonus program. So the way I run it is we have three levels. I call it threshold, target, and max. The values, the target is where we wanna hit, and that's our six-month running average for that item, memberships, packages, retail, gift cards. If they hit the target, like for if they hit our membership target, they get an extra dollar an hour for that entire month, an extra 75 cents for each one of the other ones, so it's cumulative. The key to that is they have to average at least $85 a day in sales. That ensures I don't have one member who's killing it and everyone's bonus-ing, right? At $85 a day, everybody's contributing towards that store goal. For the threshold, it's average minus 10%. If we hit that, and they're at 85, they'll get meals delivered while they're working, so I'll door-dash them food, they'll hit me up on Slag Cave, we want some tacos. I'll door-dash them some tacos while they're working. And then max, it doubles it. So that's the store bonus, that's everybody working towards one goal. Then they have personal goals, so for every one-float membership, they get $5, for every two, they get 10, for every three or four credit membership, they get $15. Then I have another one, once they hit $4,000 in sales and they finish their month above a 125-day average, they get a $250 bonus. And that can roll over as long as they're hitting. So I have some of my employees, I pay $700, $800 a month in bonuses. But they're hitting their numbers, and so that's contributing to the success of the business. I do, but not on one of my slides. We average, well, so prior to the summer, I would say we were averaging about 12 to 15 people that would come in and cancel per month. On top of that, if we have someone that goes into default, so say their credit card stops working and all that, we give them 60 days to get current, or we close their account and we wipe their credits out. So it's a little bit of incentive to give us your new payment information. I've noticed the last couple months where I would see maybe one every few days, I'm seeing two to three payments not go through a day. So that's adding up. I want to say in June we had 26 failed renewals, and we were able to close all but three so far. I haven't noticed a real issue there with churn. Like I said, our average is running between six and eight months. People are staying members. And we're pretty good. We use Zanoti, and Zanoti's got a really good email. You can set up campaigns that run continuously. So we're always reaching out to those folks via email and text. So we're always kind of in touch with them per se. Does that answer your question? Okay, Zanoti? Yeah, so Zanoti does our booking. It's our point of sale. It does text email. It does email marketing. It does text marketing. It does, but I don't track them in there. I have a separate spreadsheet that I pull reports. And so, yeah. Yeah, we were usually so busy. We're probably running 30 appointments a day. So we started out at six. We run about five. We run five float tanks now. Coming out of the pandemic. So we used to be open seven days a week, 12 hours a day before the pandemic. Now we're open. We open at 9.30. I've staggered my float. So I have three tanks that start off at 9.30. I have two that start at 10.15. My sauna starts at 9.30. And then my red light beamer compression room starts at 9.30. And that just goes throughout the day. And then my last float's at 7.00 p.m. So I've reduced my hours. I extended the duration. So we do 60 minute floats, but we do 45 minutes in between. So that helps the staff with orientations. They have more time. And that post-float conversation. One to two. Depending on workload. For a while we were running, we'd have an opener come in and come in at 8.30. Get the store started up. We'd have that second person come in and work like 10 to 6 p.m. And then we'd have the closer come in at like four and work four to close. So there was two people most of the day, but only three employees working for most of the day. Yeah, one of the things I like about Zanoti is you can set the audience who's getting emailed. So it's not just blasting everybody. So I can say it, send emails to the person who's floated once, but hasn't been in in 60 days. Hasn't been in in 120 days. Or I can say all clients. Or I can say all members. Or there's like all these different criteria that it will go in and just email that specific group. Yeah. So we're in the metro Tacoma area. So there's probably, I think Tacoma metro area is probably a million people or so. We're the only float center there. There were two others that didn't make it through the pandemic. We are in a, so we're in a retail, kind of a retail apartment complex. There's apartments above us. And then retail on the first floor, I have a whole foods kind of down at one end. And then there's like a library. And then there's a bunch of different. We have a spa, we have a Pilates studio, an orange theory fitness, and then there's a few restaurants. So it's kind of becoming a destination area. So there's people always kind of in the area. Any other questions? We are. Yeah, for now. You know, I thought we would have a lot more, but surprisingly not. I've had people that, I had a girl come down to float who had lived in the apartments for two years above us, didn't even know we were there. Because the, like the cardboard interest where they were driving in was on the backside of the building. And she never went to the front side of the building. Yeah, so it was like, I was like, what? How'd you know we're not here? No, no, I found, you know, I did some print stuff when we first opened and I just found the ROI was so low. It was just, cause you just can't reach enough people. You're very limited in your reach. So I reached out to them and asked them, do they give like a welcome folder like with stuff? And they're like, no, we don't do that. I'm like, cause I was going to like put a card in there and like come get, you know, 10% off, try this out, you know. No, so that made it difficult. Any other questions? All right, so we're going to take, I think we're going to take like a 10 minute break. We ran over about eight minutes there and then we'll come back and I'll do the second presentation. We're going to go through some more psychology and then we'll have the microphone down here. Definitely love the questions. Let's keep it going. You know, this is a model that I've moved to and as you can see, we've had some pretty good success with it. So I see a lot of stuff on the Float Collective where people are struggling and stuff. So.