OT: Gym membership pricing question

[stephenmarklay]

I am lucky enough to be able to train people in a small group setting (1-8 people) at a gym. I do this really as a hobby and really enjoy it. The first real business I ran was personal training about 30 years ago and I still enjoy it.

This gym is half personal training and half group fitness. My group classes are not boot camp style nor Crossfit and not at all like typical classes at a box gym.

It is a lot closer to group personal training. Obviously, in a group setting it is very hard to get this perfect.

My question is about what the business is charging. The ownership changed at the end of last year and some clients left. The business is not thriving. At least the group side. I am slowly recruiting friends and last week took on two new clients. However, we are doing that with a Groupon rate of $75 for 6 weeks. Very doable for most folks. However, the normal rate is $139/month.

In less than a square mile I bet we have 5 gyms. In the past the conversion rate from Groupon has not been great and I think that the we are bringing in the wrong folks (those that can’t justify $139.) I feel like if we were priced at $99/month the conversion would be much higher and we would be able to build a much larger client base (referral base). Going from the 25 members to 50 would be a gain for the club.

What do you folks pay for this kind of training?

BTW I have no stake in the club but I certainly would love to see the owner be successful.

[AngryScientist]

location, location, location.

where is the gym? if it's in a thriving, bustling city where working professionals will pay a bit more for the convenience of a spot close to the office, the price certainly can be much higher. if it's in a less urban setting and people need to drive to it from wherever, the price goes down.

[R3awak3n]

$140 seems like a lot. In NYC there are gyms that cost way more than that it there are some that are half of that. Then again, when you say $140 that also he ncludes all classes?

[stephenmarklay]

Great input thank you.

Since we are not really in the downtown area we cater to the morning and evening crew. So we hold 3 morning classes 6, 7:30 and 9 and then again after work.

The classes are the same for each class for a given day but change per day and even week by week. With the membership you can come anytime.

[makoti]

My gym membership includes any class I want to take (there appear to be loads of different classes, although I don't use them), use of any if the equipment, pool, and any hours/days it's open (6am-10pm, every day). Personal training is extra, but two sessions are free. I wish I knew what sessions cost, because that would make this more apples to apples, but dues are $40/month. I'm sorry, but I wouldn't even go look at a club that cost $140 a month.

[nismosr]

planet fitness .. $10/month !

[stephenmarklay]

Yes big box gyms are cheap. Having said that we have long term personal training clients paying $650 a month.

[josephr]

local YMCA is $44/mnth and that includes access to other facilities, not just the one I go to.

[parris]

I've looked at several gyms in my area and here are rates I've seen within the last 3 months.

Planet fitness $10.00 Month
Anytime fitness $35.00 Month 2 locations personal training extra.
Local gym $99.00 Year
Local gym $35.00 Month 2 locations pool at 1 location personal training extra.
Local gym $39.00 Month pool personal training extra.
Martial arts school TKD $100.00 Month
Martial arts school TSD $90.00 Month price break for additional family member
Martial arts school TSD $85.00 Month price break for additional family member

I live in upstate NY which is pretty damn depressed so factor that in the above prices. There's also other local gyms/studios in the area but the pricing structure's going to be pretty similar to what's listed.

One of the things that's VERY important for me is that no matter what I pay for something I've got to believe that I'm getting value for the money spent. I belong to one of the above gyms and one of the martial art schools. If I notice that either tails off I'll bring it to the owner's attention and if things don't improve I'll vote with my wallet.

[stephenmarklay]

Thanks of the input. This gym is a little different. Since there is always a trainer involved it is like group personal training.

Big box gyms survive with members that join and don’t show up. This gyms survives on results and referral business.

In fact at least half of them pay for a box gym membership too.

[parris]

You're welcome.

How is the gym priced in comparison to the other local gyms?

You mentioned an ownership change. Are the new owner's genuine and friendly to new people or are they more cliquish? People can and often times pick up on behavior like that VERY fast.

What does the gym offer to clients that would make them want to stay vs go to one of the competitors? If it exists is this service being well promoted? If not why?

Just some food for thought.

[11.4]

I'd suggest that it's even a bit more complicated than that.

Location, obviously.

Second, there's the matter of whether you want rapid growth or low turnover. Both is perfect but hard to achieve. Anything that promotes low turnover is ultimately the more profitable option because you don't have to pay promotions, advertising, etc. to bring in new members. The longer someone is a member, the longer they are likely to remain a member. And that's money in the bank.

Then there's the combination of equipment. A weights gym attracts only a certain clientele but tends to have lower turnover simply because it's a dedicated gym. I had one in my last town and have one currently, and membership is slower to grow but doesn't turn as fast. If the gym has treadmills, stair-steppers, and so on, it's a different type of gym, competing with more of the gyms out there, and generally tends to be subject to higher turnover. A full complement of machines is somewhere in between -- more popular than pure free weights but not as popular as gyms with the stair-steppers, etc.

in short, one can choose one's audience and its fundamental economics by the mix of services you offer in the gym.

Then there's the whole question of crossfit. Crossfit gyms can be very inexpensive to put in place and the equipment companies tend to lease packages with very little down. Crossfit owners sign up a small number of members with promotional longer-term memberships (year, for example) before they even get the doors open. Crossfit gyms tend to compete with all kinds of gyms and tend to be more efficient economically. However, there are so many of them that they eat their own kind. Unfortunately, they harm the market for other gyms as well. So a gym that differentiates itself from the me-too crossfit gym has a better chance.

Gyms are a difficult dynamic. People want amenities, they want proximity, long hours, good coaches, low prices. The reliable low-turnover gym-users tend to be taken already and are hard to convert. The cheap 24-hour kind of gyms capture many of the casual first-timers and the most price sensitive ones. Getting the first couple hundred members can be good, but then it can stall out because you don't have enough showers or because one personality tends to overwhelm the gym (it's an iron gym or a yoga gym or a crossfit gym, for example). It's still true that a gym needs a differentiating characteristic to be successful, and pricing may help growth rates but isn't what makes or breaks a gym. I've helped a couple gyms get started and definitely had to resolve this issue. It's not easy.

[stephenmarklay]

You're welcome.

How is the gym priced in comparison to the other local gyms?

You mentioned an ownership change. Are the new owner's genuine and friendly to new people or are they more cliquish? People can and often times pick up on behavior like that VERY fast.

What does the gym offer to clients that would make them want to stay vs go to one of the competitors? If it exists is this service being well promoted? If not why?

Just some food for thought.

No these are great thoughts. The owner is a good guy but he is not really a business person. He is a trainer and you have hit the nail on the head. On the group side I am very very welcoming. I always thank people for coming when we start and when we finish. There is zero attitude and I think everyone is comfortable no matter where they are with their ability.

However, pretty much the only new members I am seeing are the ones I am recruiting. That is great but it is not enough.

[stephenmarklay]

I'd suggest that it's even a bit more complicated than that.

Location, obviously.

Second, there's the matter of whether you want rapid growth or low turnover. Both is perfect but hard to achieve. Anything that promotes low turnover is ultimately the more profitable option because you don't have to pay promotions, advertising, etc. to bring in new members. The longer someone is a member, the longer they are likely to remain a member. And that's money in the bank.

Then there's the combination of equipment. A weights gym attracts only a certain clientele but tends to have lower turnover simply because it's a dedicated gym. I had one in my last town and have one currently, and membership is slower to grow but doesn't turn as fast. If the gym has treadmills, stair-steppers, and so on, it's a different type of gym, competing with more of the gyms out there, and generally tends to be subject to higher turnover. A full complement of machines is somewhere in between -- more popular than pure free weights but not as popular as gyms with the stair-steppers, etc.

in short, one can choose one's audience and its fundamental economics by the mix of services you offer in the gym.

Then there's the whole question of crossfit. Crossfit gyms can be very inexpensive to put in place and the equipment companies tend to lease packages with very little down. Crossfit owners sign up a small number of members with promotional longer-term memberships (year, for example) before they even get the doors open. Crossfit gyms tend to compete with all kinds of gyms and tend to be more efficient economically. However, there are so many of them that they eat their own kind. Unfortunately, they harm the market for other gyms as well. So a gym that differentiates itself from the me-too crossfit gym has a better chance.

Gyms are a difficult dynamic. People want amenities, they want proximity, long hours, good coaches, low prices. The reliable low-turnover gym-users tend to be taken already and are hard to convert. The cheap 24-hour kind of gyms capture many of the casual first-timers and the most price sensitive ones. Getting the first couple hundred members can be good, but then it can stall out because you don't have enough showers or because one personality tends to overwhelm the gym (it's an iron gym or a yoga gym or a crossfit gym, for example). It's still true that a gym needs a differentiating characteristic to be successful, and pricing may help growth rates but isn't what makes or breaks a gym. I've helped a couple gyms get started and definitely had to resolve this issue. It's not easy.

Thank you very much for the thoughtful input.

[Ralph]

My guess is you are just too expensive. I understand you are a special kind of club, special clients, etc.....and you sound kinda super special as well.

But.....you just don't need to spend much these days to belong to a gym.

BTW.....I go three mornings to Planet Fitness. I just re upped at $100 for a year plus local tax. No $10 per month plus once a year service fee. Just a one time yearly fee.

My daughter is a member of LA Fitness. I think she signed for a two year contract...so pays $19 a month. Trainers extra....but about everything you could ask for....they have. She must take 6-8 yoga classes each week, zumba, body works, spin classes, you name it. She practically lives there.

I understand you are talking about something different.....but I've been to Spokane....it didn't strike me as a place you could build a gym and get a lot of members at $140 per.

[rkhatibi]

Additional data points from SF. My personal trainer moved to a new gym. http://www.fitnessurbano.com/services-pricing/#pricing-table

I keep the old rate and he gets a better split from the house. Also the space is really nice with a number of lifting racks and open area. I'm not required to join the gym and honestly with bicycling there isn't much need for additional classes.

I think the sell is coaching, injuries (the lack of), and performance targets. If you have a plan, a $10 gym is great. I lifted haphazzardly for years with decent overall fitness, but little gain. At the six month mark of working with a trainer, it's looking like I'll hit some reasonable goals and I got there safely by building up supporting musculature rather than going too big too quick.

I suppose the useful question is, are the services being promoted/sold correctly?

[ajhapps]

I suppose the useful question is, are the services being promoted/sold correctly?

1. I think that's a big part of the equation. It is really, really hard to cut through the noise when looking for a gym or a trainer... to earlier points, there is crossfit, Planet Fitness, Equinox, LA Fitness, 24 Hour Fitness, and the list goes on.

If you're looking to grow your customer base, what kind of a value proposition are you offering, meaning, what really differentiates you from those other places in a way that matters to clients? And how do you tell others about it? Maybe institute a referral incentive for your current clients who bring someone in who signs up for a 3 months trial?

Or, can you advertise in the local newspaper? Sounds like the Groupon promos aren't really getting the right customer segment for you (which is the criticism of all Groupons). Maybe target the typical profile of your customers? Are they young professionals? Near-elite level athletes? Where do they hang out? What media do they consume? Figure that out (talk to a few of your clients) and put your ads where people like them will see it.

2. Pricing and value. $140 sounds like a lot when you're marking it relative to Planet Fitness, but a bargain compared to Equinox. Would you be providing good service with 10 clients at a time vs. 8? Can you more easily get the incremental 2 customers by dropping prices to $125 (and have existing customers be more likely to refer)? Is it worth your time to take on 2 additional customers at the lower price for the extra $130/month? Could be worth a test to optimize the pricing structure.

All that being said, if there's fairly little price elasticity, don't drop your prices! Just figure out how to find those willing to pay what you charge (see above).

Those are some really broad strokes, so maybe not actionable, but hopefully food for thought.

[holliscx]

Outside is free just saying

[stephenmarklay]

1. I think that's a big part of the equation. It is really, really hard to cut through the noise when looking for a gym or a trainer... to earlier points, there is crossfit, Planet Fitness, Equinox, LA Fitness, 24 Hour Fitness, and the list goes on.

If you're looking to grow your customer base, what kind of a value proposition are you offering, meaning, what really differentiates you from those other places in a way that matters to clients? And how do you tell others about it? Maybe institute a referral incentive for your current clients who bring someone in who signs up for a 3 months trial?

Or, can you advertise in the local newspaper? Sounds like the Groupon promos aren't really getting the right customer segment for you (which is the criticism of all Groupons). Maybe target the typical profile of your customers? Are they young professionals? Near-elite level athletes? Where do they hang out? What media do they consume? Figure that out (talk to a few of your clients) and put your ads where people like them will see it.

2. Pricing and value. $140 sounds like a lot when you're marking it relative to Planet Fitness, but a bargain compared to Equinox. Would you be providing good service with 10 clients at a time vs. 8? Can you more easily get the incremental 2 customers by dropping prices to $125 (and have existing customers be more likely to refer)? Is it worth your time to take on 2 additional customers at the lower price for the extra $130/month? Could be worth a test to optimize the pricing structure.

All that being said, if there's fairly little price elasticity, don't drop your prices! Just figure out how to find those willing to pay what you charge (see above).

Those are some really broad strokes, so maybe not actionable, but hopefully food for thought.


A lot of great thoughts and I greatly appreciate them.