Gym membership pricing will go a long way in determining the profitability of your fitness business. If your gym membership prices are too low, you may end up missing out on potential profits. Also, if your gym membership pricing is on the lower end, it’s highly likely you will overfill your fitness studio, which means your clients will not get quality workout time.
On the other hand, if your gym membership pricing is too high, you will miss out on potential fitness clients as well as more profits. The question is, how do you set up an effective gym membership pricing that will help to boost your gym’s profitability while making sure you offer value to your clients? Well, this guide has the answers.
In this article, we will take a closer look at some of the main factors to consider when setting the prices of gym memberships. We will also walk you through different gym pricing models, to help you choose one that aligns best with your fitness business model.
1. Considerations When Setting Gym Membership Prices
Coming up with gym membership pricing is one of the biggest challenges that owners and managers of newly opened gyms face. But as noted above, gym memberships pricing is an integral part of a gym’s success and growth. If you get it right, your profits will soar. And if you get it wrong, you will struggle to break even. With that said, here are the factors to consider when setting the prices of gym memberships.
1.1 Your Operational Costs
Regardless of the type of gym you own, your gym will need money to run. For instance, you will need to pay for rent or lease, the trainers, buying new equipment, replacing old equipment, utilities, and insurance, just to name a few.
And as you may expect, different gyms will have different operational costs. For example, renting a street-level facility to set up your gym will cost more than someone whose facility is located in the basement.
So, when setting up your gym membership pricing, you will need to factor in the average, monthly cost of running a gym. Determining your monthly operational cost will help you to set gym membership prices that will not only be competitive but will also help your gym to be profitable.
1.2 The Competition
You also need to analyze how much your competitors are charging when setting gym membership prices. At the end of the day, most of your potential fitness clients will compare prices in your area and then decide which gym to choose. Hence, if your gym membership price is higher than the competition and you are not offering anything different, you will have priced your gym out of the market.
So, make sure you survey the local competition, check what they are offering as well as the prices they are charging. Once you’ve gathered that information, you will have two options to explore. One, you can decide to charge slightly lower rates than those that your competition is charging.
Second, you can decide to offer something different or additional service, which will help your fitness club stand out. And with that, you can then be justified to charge slightly higher gym membership prices.
1.3 Your Location
Your gym membership pricing will also depend on where your fitness center is located. For instance, if your gym is located in a rural town, your prices may not be the same as that of a gym located in a busy urban center.
According to a report published by the United States Census Bureau, people who live in cities have a higher disposable income, compared to those who live in rural areas. So, if you were to charge the same rates as a gym located in the city, you will struggle to get any clients.
At the same time, if your gym is located in the city and you are charging rates similar to those charged in a rural town, your target audience in the city may feel assume your gym is substandard, thus the reason your prices are highly discounted.
Simply put, you need to find a sweet spot. The rate shouldn’t be too low that your target audience cannot afford it or it’s too discounted that your target clients may assume your facility is substandard.
1.4 Customer Demographics
Your gym pricing strategy should also consider customer demographics. For example, if your gym is targeted at older clients, then you can afford to charge higher gym prices, compared to a gym that is targeting high school and college students.
Older clients may need more personalized training, compared to younger fitness clients. And this means you will have to hire specialized personal trainers, whose rates are higher. Furthermore, older clients may require specialized training equipment, which will cost more than generic equipment.
2. Different Gym Pricing Models
Gym managers and fitness club owners have numerous pricing models to choose from today. In this section, we will take a closer look at some of the gym pricing methods available. And with this information, you can then choose a membership method that aligns best with your gym’s membership and business model.
2.1 Monthly or Annual Membership Pricing Method
The monthly or annual gym membership method is ideal for most fitness studios. It’s simple to apply and provides a consistent stream of revenue for gyms and fitness clubs. As its name suggests, the members will pay a monthly or annual fee to access your gym’s equipment and training services.
With the gym membership pricing model, you have the option of providing a three-month package, six-month package or even a 12-month package. Simply put, the client gets to choose how long they intend to train in your gym. It’s a simple gym membership pricing method for both you and your clients.
2.2 Dynamic or Time-Based Gym Pricing
A dynamic or time-based gym membership pricing model allows a gym manager or owner to adjust the prices based on the demand. For example, in a dynamic pricing model, a 7 am class or a 5 pm class will be priced higher compared to a 1 pm class.
The reason behind this is that most people tend to go to the gym either early in the morning or in the evening after work. And your gym may not have the capacity to accommodate everyone who wants to train during these peak periods.
But, instead of turning away potential clients, you can instead have a highly discounted mid-day class, where you offer the same type of training as the peak classes. A time-based pricing model will help to fill out classes that would ordinarily be emptier. Besides, it helps to ease pressure on your gym’s facilities, since it will reduce overcrowding.
2.3 Bundling Gym Pricing Model
The bundling pricing model is increasingly becoming popular in gyms across the country. With this gym membership pricing method, clients will pay a base membership fee and then pay for some add-ons, in case they want to access other facilities.
For example, a gym can have a sauna or swimming pool, offered separately from the monthly membership charges. Therefore, those who want to access these facilities will pay an additional fee, on top of their monthly gym membership fee.
Most clients will prefer this method since they don’t have to pay for facilities they don’t use. For the gym owner, you will get a consistent income for your gym as well as an additional revenue stream.
2.4 Pay-as-you-go Gym Pricing Model
For this pricing model, your clients will only pay when they show up and use your services. Some fitness clients prefer this training method due to its flexibility since they don’t have to be tied into contracts. For example, a non-member can show up in your gym, attend a single training session and pay for that single session on the spot.
But as a gym owner or manager, you cannot depend on this method alone to provide a stable income for your gym. For instance, if everyone fails to show up, it means you will not earn anything that day. And if this happens severally, your bottom line will be affected.
So, it’s not advisable to use this pricing model as a stand-alone method. Instead, you should combine it with others such as the annual or monthly membership models for a consistent revenue stream.
Combining the monthly gym membership pricing model with the pay-as-you-go model will provide balance and variety to your fitness clients. Furthermore, your income will not be affected.
3. Wrapping It Up
The rates that you come up with for your gym can mean the difference between establishing a profitable fitness studio and struggling to break even. So, make sure you spend ample time conducting research and then come up with a rate that will ensure your fitness business will run profitably while making sure your clients are getting value for what they are paying for. Therefore, your gym membership pricing needs to be both competitive and realistic. And by effectively pricing your fitness business, you can target and attract the right clients, increase your profit margins and grow your fitness brand.