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There's a dangerous assumption in the gym industry: more revenue means more profit. It sounds obvious. It feels true. And for a lot of gym owners chasing that next revenue milestone, it's the belief driving every decision they make.
But it's wrong.
During a recent PushStart webinar, PushPress co-founder and Head of FinTech Brian Aung walked through a side-by-side comparison of two gyms that made this painfully clear. One gym was pulling in $80,000 per month in revenue. The other was doing half that — $40,000. Most people in the room assumed the bigger gym was in better financial shape.
They weren't even close.
Want to catch up on everything you need to know about your gym's P&L? Watch the full PushStart webinar on-demand.
The tale of two gyms
Gym A looked great on paper. Eighty thousand dollars a month is a number most gym owners would celebrate. But when Brian pulled back the curtain on how that revenue was actually generated, the picture changed fast.
Gym A had loaded up on retail, supplements, and other low-margin revenue streams. Merchandise, branded apparel, recovery products, protein powders — all of it stacked on top of memberships to push that top-line number higher. The problem is that every one of those line items comes with a significant cost of goods. Supplements might carry 40–50% COGS. Retail can be even worse depending on sourcing and inventory management. So while the revenue looked impressive, the margins on a huge chunk of it were razor-thin.
After accounting for cost of goods, payroll, rent, and operating expenses, the owner of Gym A was taking home less than the owner of Gym B.
Gym B, doing $40,000 per month, ran a leaner operation. The revenue mix was built around high-margin offerings: memberships and personal training. There was no retail bloat, no supplement inventory tying up cash. The cost of delivering a group class or a PT session is mostly labor — and when payroll is managed well, the margins on those services are dramatically better than anything sitting on a shelf.
Brian called this the "Busy But Broke" problem. And it's far more common than most gym owners realize.
Why revenue mix matters more than revenue size
The issue isn't that retail and supplements are bad. They can be valuable additions to a gym's offerings. The issue is that many gym owners treat all revenue dollars the same — and they're not.
A dollar of membership revenue and a dollar of supplement revenue look identical on the top line. But they behave completely differently on the way down to net profit.
Membership revenue typically carries very low direct costs. Your fixed expenses — rent, utilities, equipment — are already covered. Adding one more member to a group class costs almost nothing incremental. The margin on that membership dollar might be 70–80% or higher.
Supplement and retail revenue, on the other hand, comes with real cost of goods. You're buying product, storing it, managing inventory, and accepting the risk of unsold stock. The margin on that dollar might be 30–50% before you even account for the labor involved in selling and managing it.
Personal training sits somewhere in between. The margin depends heavily on how you structure coach compensation, but a well-run PT program with smart pay structures can deliver strong margins — often 50–60% or better.
When a gym tilts its revenue mix toward low-margin streams, the total revenue number goes up, but the profit doesn't follow at the same rate. In extreme cases — like Gym A — it barely follows at all.
The benchmarks that actually matter
If revenue isn't the right scoreboard, what is? During the webinar, Brian and PushPress CEO Dan Uyemura laid out the financial benchmarks that healthy gyms consistently hit.
Payroll: 30–40% of total revenue. This is the single biggest controllable expense for most gyms, and it's the one that gets out of hand fastest. That 30–40% range should include everyone — coaches, front desk staff, cleaning crews, and critically, a market-rate salary for the owner if they're also working in the business. More on that in a moment.
Total operating expenses: under 30%. Rent, utilities, insurance, software, marketing, supplies — all of it. When operating costs creep above 30%, there's almost always a lease that's too expensive or a spending category that's grown without anyone noticing.
Facility costs: under 25% of realistic revenue. Brian was specific about the word "realistic" here. Your rent should be benchmarked against your average monthly revenue, not the revenue from your best month ever. Signing a lease based on optimistic projections is one of the fastest ways to end up underwater.
Net profit: 15–25%. After everything — COGS, payroll, operating expenses, owner salary — a healthy gym should be keeping 15–25 cents of every dollar that comes in. If you're below that range, your P&L is pointing you directly at the problem. If you're above it, you're likely underinvesting somewhere or underpaying yourself.
The owner pay trap
One of the most important points Dan made during the session was about how gym owners pay themselves. Too many owner-operators treat their own compensation as "whatever's left over" after all the bills are paid. That's backwards.
Your salary as the person running the gym should be a line item on your P&L — at a market rate. What would you have to pay someone else to do your job? That's your salary. It goes on the books as an operating expense, just like every other team member's pay.
Profit is what's left after that. It's the return on your investment in the business, separate from the compensation you earn for working in it.
When owners skip this step, they end up in a situation where the gym looks profitable on paper, but only because the owner is effectively working for free. That's not a sustainable business. That's a job with extra risk and no benefits.
How to diagnose your own gym
If any of this sounds familiar, the fix starts with actually looking at the numbers. Brian recommended a straightforward self-check that any gym owner can do today:
First, pull up your P&L. If you don't have one, that's the first problem to solve — and it's exactly the kind of thing a bookkeeping system or a quick conversation with a financial professional can fix fast.
Then ask yourself three questions. Is your payroll between 30–40% of total revenue, including a real salary for yourself? Are your facility costs under 25% of your realistic, average-month revenue? After everything, are you keeping 15–25% as net profit?
If any of those numbers are off, it doesn't mean your gym is failing. It means your P&L is telling you where to look. Maybe your revenue mix is tilted too far toward low-margin products. Maybe your payroll has crept up without a corresponding increase in revenue. Maybe your rent made sense when you signed the lease but doesn't anymore relative to where your revenue actually landed.
The numbers don't lie. But you have to actually look at them — and Dan was blunt about the cadence. Monthly P&L reviews are non-negotiable. Anything less frequent and you're flying blind.
The bottom line
Revenue is vanity. Profit is sanity. A gym doing $80,000 a month can absolutely be less profitable than one doing $40,000 — and the difference almost always comes down to revenue mix, expense discipline, and whether the owner is actually paying themselves.
The "Busy But Broke" trap is real, and it catches gym owners who focus on growing the top line without watching what's happening underneath it. The gyms that win long-term are the ones that understand their margins, know their benchmarks, and review their P&L every single month.
If you want a second set of eyes on your numbers, Brian is offering free 30-minute P&L review sessions for gym owners. No pitch, no pressure — just a finance expert who's looked at hundreds of gym P&Ls helping you understand yours. Book your free P&L review.
