Worth is more than just what something costs in a vacuum. Other factors such as demand, the season and even the weather affect the worth of whatever you are selling. This being the case, prices should constantly be in flux to reflect this reality. This type of pricing, usually in favor of the customer, is finally being used by Dibs in the fitness industry to give you the best and most original and accurate prices available.
With their eyes set on hitting more than just the fitness industry, Dibs Founder and CEO Alicia Thomas talks about their original pricing algorithm and how it is changing the game for fitness classes around the world.
Who were your investors and how much did you raise?
Dibs’ $1M seed round was led by Gree Ventures, the investing arm of the mobile games company, and joined by Comcast Ventures’ Catalyst Fund, Caerus, and Dreamit Ventures, along with individuals.
Tell us about your product or service.
Founded in June 2015 by Alicia Thomas and Jina Wye, Dibs is a dynamically-priced technology platform, empowering brands with the ability to maximize revenue without resorting to blunt discounting, while providing users the best available rate.
Dibs’ proprietary algorithm analyzes available inventory, historical purchase patterns, and booking velocity to price based on real-time demand. The data-driven approach helps brands understand which inventory is most and least in demand by their customers, and charge accordingly.
How is it different?
Unlike blunt discounting platforms, Dibs prices inventory in real-time. We give our partners the ability to take time-based, perishable inventory and sell it at a rate that reflects the true demand value – this price scales up or down based on sales history, purchase velocity, and available inventory. It’s the smartest and most efficient way to price any type of time-based inventory that is non-recoverable, which is the case for all service-oriented business. (see below re: fitness industry and dynamic pricing), while maximizing revenue potential for the business.
What market you are targeting and how big is it?
Our platform targets the $75B global fitness industry. Our launch is focused on group fitness, the fastest growing segment of the fitness and wellness industry. Dibs has the potential to expand into other markets that carry time-based inventory such as spas, salons, holistic therapies, entertainment, and much more.
What’s your business model?
We take a revenue share of each booking.
Why does fitness lend itself well to dynamic pricing?
The air travel, hotel, entertainment industries have already effectively employed dynamic pricing for years. In 2012, Major League Baseball began to employ dynamic pricing in ticket sales, resulting in topline revenue increases of over 30 percent.
Historically, the fitness industry had little need for this pricing strategy and technology because gyms used to generate the bulk of their revenue from memberships. But in recent years, consumer preferences shifted away from high-commitment memberships toward a la carte classes whether they are boxing, spinning, cross fit, yoga or Pilates. Furthermore, studios are not able to sell out their classes using one static price – with dynamic pricing, Dibs gives them the ability to price and sell classes based on real-time demand.
Tell us a bit about your experience with the DreamIt accelerator…
Like most accelerators, Dreamit is a great launching pad for companies that are just getting started and don’t know where to begin. We came into Dreamit with just an idea (we didn’t even have a name for our company!), so they were very involved in helping us sharpen our focus. They offer a full suite of startup training and resources; they helped us test our assumptions and ensure that we were heading in the right direction as a company. It also forced me to think bigger than I was accustomed to. The weekly meetings with the advisory board kept things moving quickly.
What was the funding process like?
It’s like going to war. Really really challenging. This is the first test of a founder. Can you survive the funding process?! It’s not the rejection that is the most difficult; it’s managing all of the follow up and the process. You’re constantly selling yourself and your vision for your young company. You have to get people to buy into you and to believe that you’re the person to build this business from scratch.
What are the biggest challenges that you faced while raising capital?
It takes a lot of time and it’s distracting. You just want to be running your business, but simultaneously, you have to carve out time to meet with tons of investors. Also, I had to develop a thick skin and turn “no” into an opportunity for feedback. “Nos” were difficult in the beginning.
What factors about your business led your investors to write the check?
Raising got easier once we started to witness some early results on our hypotheses. The earliest investors invested because they understood the space and saw the potential in what we were doing, but once we started to bring in hard data, (105% increase in average price paid from targeted customers), we saw more interest.
What are the milestones you plan to achieve in the next six months?
We plan to onboard 20-50 studios in the New York metro area and begin expansion plans to our secondary market, Los Angeles.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
You MUST be scrappy. Do what you can with what you have. Just get from point A to point B, don’t try to get to point Z. Talk to customers, find out if they would actually use your product. Recruit a team to work with you. If you can’t recruit a team, you won’t have a business. Don’t let lack of capital stop you. The money will come as long as you’re relentless. You have to be able to build something. Looking back, the first version of our platform was such a rookie product, but it allowed us to prove we could provide financial value to studios, and that users would actually book and have repeat engagement with our platform.
Where is your favorite bar in the city for an after work drink?
Prohibition on the Upper West Side. OK – so it’s close to home. Convenience is king! And they make a good Moscow Mule.