A Breakdown for Developing Gym Membership Packages

You are in the process of opening your gym or you have owned a gym for some time and are looking to start boosting your revenue. In either case, you will have to consider the gym membership packages for sale. Developing well-priced, well-valued, and well-marketed gym membership packages can be a tricky but essential process. Here are some tips and guidelines for helping your gym develop and sell the best and the most valuable membership packages possible to keep drawing in and retaining customers.

Analyze Your Business Before Changing or Starting Your Gym Membership Package

If you are planning the grand opening of your gym, then you will need to consider average data for gyms of similar size, study the local market, and keep your gym’s niche in reference. Also, consider how much was spent on startup costs and what prices you have to set to start earning profit as soon as possible.

If you are doing an annual evaluation of your business model, then you have to consider how your membership packages and options are affecting your gym client retention and acquisition.

Don’t Devalue Through Gym Membership Packages

Consumers love an ultra-valuable package for a fair price, but how does that affect your business? The cost of providing multiple classes, training sessions, and access to the gym adds up. That’s why breaking down how much revenue each member generates is important to understanding how to price the membership tiers available.

Everything your gym has to offer IS valuable and should be priced as such! That’s why the free trial pass to gym access has become an outdated form of client acquisition. That form of marketing does not account for the value of access to the gym nor does it ensure that the client will return to the gym.

Calculate Your Gym’s Profit Margin

Calculate the profit margin necessary for your gym to stay in business. What is the minimum that you have to charge members on a base level to break even?

Calculate this by subtracting net membership sales from the cost of hosting all of the members. Cost includes maintenance, paying employees and trainers, rent, and utilities. Then divide that by net membership sales to find your gross profit margin.

Gross Profit Margin formula

To find what percentage of your revenue is your profit, then simply divide your gross profit by your total revenue and multiply by 100.

How Much Revenue Per Member

If your gym already generates revenue, then how much revenue are you actually generating per member? This is important to ask because you can then understand how much profit is made off of each member. Understanding the profit made off of each member is key to understanding the margin for increasing prices.

To calculate the revenue per member and the profit made off of each member, you need to calculate the lifetime value of each member.

  • How long, on average, do members stay loyal to your gym? In other words, what is the average lifetime of each membership?
  • If multiple membership options are already available, how much is the lifetime value of each member? What are members spending over the course of the lifetime of their membership with your gym?
  • Do you have products for sale that could increase that revenue? What members are purchasing what products and how often?
  • How much is spent on keeping the place running with employees, rent, maintenance, and marketing? Essentially, what are all of the costs of running your business and hosting the number of members you do or wish to?

How often are people attending your gym?

The frequency of members attending your gym attributes to the calculation of how much is being spent on each member.

Determine is the difference in attendance rates between new members and returning members. This is especially important if your gym hosts classes for members to participate in. Including classes in the membership packages builds value for them, so gather data on how often people are participating and who is participating.

Gym Membership Package Models

After gathering and analyzing the data around your prospective or current members, you now have the fun task of choosing the membership package model.

Monthly Subscription

These days, automated billing cycles make it easy to maintain consistent revenue generation without the hassle of keeping clients on top of their payments. We see this popularity in everything digital and streaming and effectively in the history of gym membership. However, not many gyms offer the “cancel anytime” policy and require members to sign up on a contract basis.

Contract

Contracts for Gym Membership Packages

Why is this method so popular?

Well in frankness, it makes gyms a lot of money because it ensures a longer lifetime value of the member. Whether or not the paying members actually attend the gym, the gym will continue to make money while spending less on that customer and subsidizing the cost of membership for customers who actually attend. For bigger box gyms and health clubs, if every single paying member were to attend the gym frequently, it would be wildly overcrowded. Yet, the cost of the membership is cheaper because the overhead is lower.

A simple example of this is when there is a shortage of oil, then gas prices go up. When there is a shortage of paying members, then prices must go up. The contract ensures that the member will pay for a set period of time regardless of whether or not they follow through with their goals of getting fit.

Specific laws exist to protect the consumer in situations of malicious practice. Read more about it here to ensure that you develop your gym’s contract in accordance with the law. After deciding on the pricing and packaging model, consider consulting a lawyer to ensure a legally sound contract.

Access to Gym

At the base of developing packages for your members, access to the gym itself is always in question. In a larger gym setting, a breakdown in access to amenities can generate more profit. This can make membership more attractive to customers who don’t need or want access to other areas of the gym. Thus they get a cheaper membership price and only use what they need. These members will cost your gym less!

The effectiveness of this breakdown depends on what areas of the gym members frequent and who those members are. By who they are, I mean the breakdown of their demographic profile and the behaviors they follow when attending the gym.

In a smaller gym setting, it might not be possible to segment access to particular parts of gyms, therefore your model should reflect and include the value of other services offered in your gym. Additionally, it should reflect the value of the amenities available. This is when you can take into account what other gyms of similar size in the area offer.

Access to Gym Plus Class Package

Including other services on top of access to gym amenities is the ideal way to build value around your packages. However, as mentioned before, consider the frequency of attendance in these classes.

Do members attend these classes so often that they are becoming not profitable, or vice versa? On the opposite, packaging classes not frequented by members means there is either a lack of availability, successful marketing, or poor execution of the classes.

Class Bundle

Gym membership packages - Class Bundle

Depending on your gym’s overall business model, a monthly class package could serve well for attracting and retaining clients. Consumers might not always find interest in the self-motivation and routine that comes with having access to a gym. Therefore, classes are more attractive to them. This can also break down your marketing efforts to specific audiences that would find interest in the classes your gym offers.

Digital Fitness or Hybrid

These days, especially because of Covid, more gyms are utilizing custom branded gym fitness apps to better reach clients. This is another huge value addition to what your gym can offer members. Minimally, all members of your gym should have access to the app and some functions. However, through different price tiers, you can deliver different fitness programs, live fitness classes, and other services that would affect your gym’s pricing.

An app provides a great method for consistent upsell marketing. For example, if members try to use specific features within the app, they will be prompted to upgrade.

Overall

Your gym has plenty to offer the community. Through a little bit of data crunching on your current members or prospective members, you can determine your gym pricing strategy and structure.

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