If you want to make money with remember this simple fact. Most people stop going within a few weeks of joining and this is why pumping a lot of marketing dollars into bringing in new contracts is so important. Most gyms see 50-60 percent of new members start in January to meet those new year’s resolutions so marketing around this time is critical. Typically when people are signing up for a gym membership they aren’t signing up to lift weights, run on a treadmill or swim. What most people are paying for is the ability to actually get in shape. In reality, most people know so little about exercise it doesn’t matter what tool is used as long as they get results.
What gyms call a membership is really just a multiyear contract or alternatively a big initiation fee. The gym often wants 1-3 years worth of monthly fees up front in order to qualify for a low monthly maintenance fee of $20/month or less.
They do this because they know the vast majority of their customers will quit within a few weeks and this is a way to get all the money up front or lock them into a contract and keep them paying. They make their money by basically selling the first few weeks for $300-$1500.
What I have seen from most gym financial statements that have a critical mass of members is that the general membership revenue is what pays the bills and gives a very slim for most gyms. In order to make any significant profit you will need to generate revenue outside of membership fees.
Volume is the key and for example, if you charge $20 per month and have 100 members then you would only be bringing in $2,000 in revenue and possibly making a little profit if your overhead is really low. Growing that to 200 members makes it a little brighter but still not at a livable wage as total revenues from memberships are less than $48,000.
Basing your business model off of just memberships is not going to make you rich, but once you have people in the door, the opportunity to “up sell” and make more money is through classes and product.
Classes are the big money maker. Remember people are looking for ways to lose weight and classes provide an ample opportunity for the exercise challenged. Popular classes now are yoga, pilates, aerobic classes, circuit training, military fitness, kickboxing, dance and crossfit. By having the classes you also are going to have trainers who the members look to for advice on meeting their goals. Having the trainers push expensive supplements, vitamins and so on will boost revenues as well.
Also juice bars, massages and tanning are great money makers when you have your critical mass of members who are interested in looking good and want to spend more money to achieve that goal.
In the end if you want to make money with a gym, this is a business not a hobby. A business plan will be the key if you want to create the best odds of success as you must think everything through. Creating a good and solid business plan can be painful at first, especially if you`ve never had your own business, but it works. You need to figure out exactly how many members you need to be successful, figure out a possible and likely growth rate to determine when you will hit that essential number and how to measure your success as you go!