Improve Gym Revenue with a Fitness CPA

Trying to improve gym revenue for your fitness business? It’s no easy task. In fact, it is downright hard. Most fitness businesses will fail in the first five years and many of those will fail in the very first year. But it doesn’t have to be that way. We’re not about giving you some salesy unrealistic “formula to make millions.” We’ve helped business owners in all kinds of fitness businesses boost their gym revenue growth and found these 8 principles to be the best for this industry. So we wanted to share the good news. Let’s get started.
null

Improve Gym Revenue By Developing A Winning Intro Offer

Your business’s introductory offer has a big impact how you improve gym revenue. We’ve found that it’s one of the biggest factors in whether your business is successful or struggling.

Many gym owners start by just doing what their competitors are doing. To be honest, you might be unsure what a good offer is all together. But don’t worry, that’s why we’ve collected the data, run the numbers and figured out the best introductory offer for your new members.

We’ve looked at the trends from all the fitness businesses we’ve worked with over a period of 7 years, and this is what we found.

The ‘Free Class’ and the ‘Introductory Week Offer’ are killing your conversion rates and stagnating your ability to improve gym revenue. 

In fact, we’ve seen practically every promotional introductory offer possible, from “Free Class” to “Free Week” and even “$20 Week” or “30 Days for $30”. The data is in. New member conversion rates from a discounted month are much higher than those from ”free” introductory offers. The discounted month like a 30 Day Introductory Offer is the ideal promotional introductory offer because it has a perfect balance of price and length of time.

A 30 Day Intro offer:

  1. Gives the new member enough time to attend various classes, and experience different instructor styles, allowing them to see if they really like the vibe.
  2. Allows enough time for the new member to develop a healthy habit in their daily routine.
  3. Provides enough time for the new member to become a part of the community.
  4. Gives your new prospect a scan card, system login, or ID to make them feel like a member from the beginning.
  5. Adds revenue to your studio. Instead of giving away free trials, your studio or gym will be generating revenue right away. This resulted in $36,000-$72,000 in additional annual revenues at locations we’ve consulted with.

Are you concerned about new members being deterred by having to pay to try your fitness concept? We compared the numbers. Fitness Businesses who switched to the 30 Day Introductory offer sold nearly as many paid 30 Day Introductory offers as when the introductory offer was being given away for free. That’s how you improve gym revenue!

We recommend you don’t sweat those few members who don’t buy the 30 Day Introductory offer and monetize your introductory offer as soon as possible. Those members who don’t buy are never going to be paying members no matter what you do. Trust us, your team’s efforts are better focused on customers who understand the value of what you offer. So how should you price your discounted introductory offer? A rough rule of thumb for pricing is 1/3 of your monthly membership price, or about 1.5-2x your full priced drop in rate.

null

Improve Gym Revenue By Adjusting Membership Pricing

How did you decide what to charge anyway? Do you worry that you’re under or over charging, and how would you know if you were?

Here are three ways to ensure you’re earning every dollar to improve gym revenue:

  1. Survey competitors and determine what your value proposition is. What is your value proposition relative to the other fitness concepts in your community? Check out your competitors online, call around for pricing, stop in yourself or have your staff stop in to understand your competitors value proposition. If you are a bare bones garage gym with no bathroom and a garden hose for filling water bottles then you wouldn’t want to compare your prices to the local health club. Do you offer just a few specialized classes each day, or do you have a robust class schedule offering 10 classes in five styles each day? We call this the value proposition.
  2. Take a long hard look at your legacy price. We love legacy members. Legacy members have been there since the beginning. What we don’t love is legacy pricing. We don’t want to be Grinches here, but if you have members who signed up at $50 eight years ago and your pricing is now $120/month then we recommend a gentle, gradual price increase for legacy members. We get it, it’s nerve-racking. So, try starting with a $5-$10 increase. Your true members will understand. We especially recommend this tactic when your business is operating at or near capacity and turning away other full paying members.
  3. Don’t fall into the family trap. While we love slightly discounted student pricing, we do not recommend family pricing. If a family member wants to be part of the studio too, their decision to invest $99-$150 or more monthly at your studio will not be based on a $10-$20 per month discount. Would you add a $100+/monthly expense to your family budget just in case your spouse wanted to attend a fitness class on occasion? Of course you wouldn’t. That’s why family pricing needs to go.
null

Improve Gym Revenue By Selling Branded Gear

We love those Instagramable pictures of the perfectly laid out retail wall, but when an accountant sees a retail wall, they see profits. Let’s be clear. Your core business is fitness training, classes and memberships, so be sure to focus 95% of your efforts there. But with that last 5% of effort, you may consider adding a retail section to increase your gym revenue streams. We recommend finding someone on your team with prior retail experience to manage it for your business. It’s not enough to just have a section for retail.

Another recommendation to improve gym revenue:

  1. Sell branded gear for little profit, no profit, and even have free giveaways. Members are proud of where they work out, so let them be your walking billboards. Branded apparel gives your members a community to identify with. It makes them part of an identifiable tribe. Make your brand a lifestyle!
  2. Keep inventory fresh and constantly rotated. You can do this by having a discount rack to move inventory items and make space for the newest athletic pant patterns or seasonal changes in clothing.
  3. Pay attention to what kind of clothing members are wearing and stock similar items that can’t be found locally.
  4. Offer discounted retail to monthly members.
  5. Build relationships with clothing and supplement vendors for special pricing.
  6. Encourage staff to use and wear the items you sell by offering a staff discount. It’s a not-so-subtle way of promoting your retail products.

Retail is an add-on, not a primary gym revenue stream, but it can add up to $5,000 – $10,000 per month of additional revenues. With profit margins of 40-60%, this could result in $2,000-$6,000 of additional profit per month. But be careful, one of the pitfalls of retail is having high sales and not tracking your actual profit margins after discounts and giveaways. We’ve seen some clients pour a lot of hard work into their retail section only to realize a much smaller profit than they were hoping for. In this instance, it may be time to increase your prices. In general, prices should be twice what you paid.

null

Improve Gym Revenue By Running a Workshop

Workshops are those evening or weekend sessions that build community and enhance the skill sets of your members. A reminder though, workshops are another add-on gym revenue service secondary to classes and memberships which are the foundation of your business. But workshops can improve gym revenue while building a sense of community among your members – which will improve member retention.

Workshops can last from 90 minutes to four hours and members pay anywhere from $30 to $150 on top of their existing membership to attend. If you have workshop material ready to go, you just need to find an instructor, set a date and time, and start promoting. Instructors who use your programming should be paid a flat rate like $50 for a 90 minute workshop. This could be something close to, or maybe slightly better than their current pay rate.

If you need to start from scratch and develop a workshop, ask your instructors if they would be interested in creating and executing the program themselves. In these instances, we find revenue shares with instructors work well, often giving the instructor 50-60% of the gym revenue while the fitness business owner sits back and collects 40-50% of the earnings for providing the space. After all, it takes a lot of hard work to develop a workshop.

TIP: Ask around for a ”guest” instructor from another gym, or even from another part of the country to bring a special skill set to your members and staff. It will also give your members the latest fitness know-how.

Want to Read More? Download Our Full How-to Improve Gym Revenue Guide

Running a fitness business is no easy task. In fact, it’s downright hard. But it doesn’t have to be that way.

 

DOWNLOAD FREE REVENUE GUIDE

ABOUT THE FITNESS CPA

We’re accountants who help fitness business owners improve gym revenue. We understand the massive investment of money, energy and time that was bet on your fitness studio. We’re passionate about fitness, too, and we know that no one starts a fitness business without loving it first. We LOVE the transformative opportunity you provide to your members, and we’re here to help you do it even better.

HOW WE WORK

null

TELL US

You tell us what’s bothering you, and what excites you
null

IMPROVEMENTS

We talk about the areas you can improve
null

PROPOSAL

We give you a quote