How To Choose The Right Gym Business Model

the right gym business model

The health club industry is continuously growing, even during this period filled with challenges and constant change. It is reported that in 2019, the market size for this type of business exceeded 97 billion dollars. Looking at that number! It’s easy to see why anyone would like a piece of that low-fat, low-carb pie. Figuring out the right gym business model will be vital to kicking off the effort properly.

If you’re a person who is passionate about fitness, someone who has a good mind for business, a personal trainer looking to grow their setup, or any combination of the above, here are a few things you will need to know before opening your own gym.

Pick a Business Model

You should know right from the start that opening a gym is not as easy as getting a free bingo bonus. Before doing anything, you will need to decide what kind of model you want to approach. The business model basics boil down to what your main way of generating revenue is. This will determine your approach to getting funding, your marketing strategy, and the way you run your club. It’s important to pick one model and stick with it, as trying to do a bit of everything most often results in not doing anything successfully and joining one of the many clubs that fail within their first year.

There are three main business models that most gyms adhere to right now, with a possible fourth that’s growing on the horizon.

Membership Plan Model

This is the most popular way for gyms and health clubs to make money right now. It requires the customer to pay a fixed price, monthly or yearly, to access the facilities. This is often combined with tiered plans which offer access to more benefits as the price goes up, giving customers the freedom to choose the right plan for them.

The benefit of this business model is that not only are you giving your members a few options to pick from, you also ensure that you get a relatively consistent and predictable income. This allows you to make more accurate financial projections and forecasts and create timelines for future development. The signing of a contract can also have a positive influence on the member’s mentality, creating an incentive to engage with your business and promoting commitment.

There are also downsides to this business model, as people are becoming less likely to commit to a long-term plan since they might fear the feeling of being chained to a contract. As an operator, you will also need to constantly push for new memberships and engage with current members in order to keep retention rates up.

Pay-Per-Visit Model

While there are not many business model examples for this particular option, it is one of the most preferred by clients. The upside of this model is that you will have a strong selling point where potential clients will only have to pay for the services they use, whether it’s specific classes, group training sessions, or equipment. Getting clients through the door the first time won’t be as big a task as for a membership plan.

The downside of this gym business model is the lack of predictability in revenue flow. You might have more clients in January with the boom of New Year’s resolutions, and then no clients in February when that rush passes. Given that you will need to individually price your range of services, it might also lead to confusion.

If you want to go for this option, you need to be very confident that the service you offer is good enough to keep customers coming through the door for the sheer quality of the experience, since the commitment of signing a contract does not apply here. This would be a very good option if you’re looking to offer niche fitness services. Clients that are specifically interested will most likely return regularly, and this also allows you to charge extra since your service is hard to find anywhere else.

Hybrid Model

It combines business model elements from pay-per-visit and membership models to offer a more versatile customer experience. Gyms and clubs that follow this model allow their clients to choose between a membership plan which includes certain benefits, on top of which clients can purchase various extra services or a pay-per-visit approach where clients pay a fee for any service they’d like to use.

The upside of this business model is that you secure a steady stream of revenue while also giving clients the option of personalizing their experience to a much greater extent. The downside is that you will need to establish a complex system of options in order to ensure that both the membership and the pay-per-visit plans each have their own differentiated benefits. On top of this, you might still wind up with some clients having the feeling that they’re paying extra for something they’ve already bought.

Health Club Aggregator Model

This isn’t a gym business model in itself, but something to augment any of the above plans. Services like Gympass, Zeamo, and ClassPass have been popping up for a while now, working as a combination of a health club search engine and reservation platform. Since these aggregators have access to a plethora of business model metrics and perspectives, they can take out a lot of the stress and complexity of creating exposure and marketing your establishment. Their entire client base will be able to see your club, write reviews, and book classes through a dedicated app.

The downside is that it can’t be used as your sole source of revenue since the competition you’ll be facing will almost surely result in sporadic bookings, with no way of making any real financial predictions.

Build a Plan Around Your Business Model

Perform a gym business model analysis based on what your vision for your gym club is. Decide what sort of exercises you want to offer and what sort of long-term plans you have. Do you want to open a boutique studio that promotes niche workouts for fitness connoisseurs, or do you want to open a classic local gym in an area with less competition and the possibility of creating a well-rounded customer base?

Once you have your vision in mind, you’ll need to start looking for ways to finance it, whether from personal savings, a bank loan, or crowdfunding. There are quite a few options out there, but you will need to put your vision on paper in clear, well-defined terms. This will make it easier for you to understand what you want to achieve and get the money for your project if your plan is good enough to convince potential investors. 

This plan will also be useful once you will need to engage in business model key activities. As soon as you have the funding part squared away, you will need to do your marketing research and layout your marketing plan, acquire equipment, hire staff, and choose the right payment options for your clients.

Keep Your Vision Elevated, But Your Feet on the Ground

As long as you have a dream and are willing to work on it with a calculating mindset, considering all the practical aspects of what you’re trying to do while following a well laid-out plan and not just following what seems cool right now, your chances of success are well within reach.

If you know some other great gym business model ideas that you’d like to share, write them down below and get feedback from a community of passionate health-nuts that might just be your next clients.

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About the Author

William Benetton is a famous writer, professional photographer, and web designer. Last few months he has been creating interesting, informative blogs and websites.

If you want to contact William, please check his Facebook. He can’t imagine his life without sport, travel, and morning coffee.

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