Starting a gym isn’t just hard—it’s expensive. Renting a space, branding, remodeling, polishing it, and all of the in-between. Don’t forget actually filling it with equipment, which may be one of the most expensive parts.
You can choose to buy all the equipment and own it outright, but we’re going to explain why that might not be the best option for every gym owner, as well as the pros and cons of renting the equipment instead.
This will help you make a full-fledged decision on whether you’ll be outright purchasing or renting your gym equipment.
Purchasing CrossFit Equipment
Buying something outright feels good, doesn’t it? You don’t have to answer to anybody regarding that purchase, but if some of your equipment dies out of nowhere, there’s no contract with a rental company to revert back to.
You’re on the hook for the total cost; it’s sunken funding, so that’s something to keep in mind. While many gym owners would prefer buying their CrossFit gym equipment, there are some arguments for renting that you might not expect.
If you buy a treadmill, it can be around $600. If you rent a treadmill, it’s about $50 per month. At the end of the year, you’ve essentially paid for that treadmill’s MSRP, so will you own it from the beginning, or eventually sink money into the rental costs?
Consider repairs. You’re likely not a repairman capable of fixing every different type of machine in your gym. Even if you can do that, your time as an owner/affiliate is best spent on other tasks. So now you have to pay for a repairman and that costs $250 including parts. If it’s rented, the pricing structure is different, and it might be covered in rental insurance on that equipment.
- It’s Yours to Keep: With rentals, you have to worry about so much. You have absolutely zero worries with owned equipment because if it gets damaged, it’s nobody’s problem but yours. You don’t have to explain it to a rental company and then pay a premium. This lack of stress makes it easier to run your gym.
- Higher Monthly Profit Margins: The equipment is a startup cost. It gets wrapped up into the “debt” you took on when you built your gym. That number doesn’t impact your monthly profit margins. When your monthly margins look better, it’s easier to get loans, evaluate your business, and have growth on the books. You can use profits to essentially pay back the startup money, but when it’s a monthly cost with equipment rentals, it can dig into your growth.
- You Control Repairs: Need to get something fixed? You can have someone out as soon as possible without requiring approval by a rental company or waiting for their (usually expensive) handyman to come out.
- Better Second Year: After the first year’s earnings help pay back the cost of starting up your gym, profits increase. If you’re still tied down with equipment rental costs in your second year of operations, you’re actually paying more than the MSRP of the machines (on average, this varies machine to machine, and company to company). Eventually, you’re paying extra money when you don’t have to.
- Higher Initial Investment: It goes without saying, but buying gym equipment isn’t exactly cheap. You have to either have the money on-hand so there’s no debt associated with the purchase, or have an investor lined up. Gyms can easily spend $50K+ on initial equipment purchases, and if the gym doesn’t take off, then you run into a major problem.
- Gym Equipment Depreciates in Value: That treadmill you spent $600 on isn’t going to be so useful after a year of wear-and-tear from anyone and everyone who uses your gym. This equipment loses value over time, so if you ever plan on re-selling it, you’d be lucky to get even 50% back.
- You’re Stuck With it: If you realize that you bought too many spin bikes because they’re barely getting used, you have a crowd that’s not into cardio. No big deal, but now you have to find a way to offset the cost of those bikes and use the money to buy more free weights. You’re stuck with those bikes (which as we said, have depreciated in value) and all the cost is on you to replace them with something that your patrons will use more.
Renting CrossFit Equipment
Renting equipment comes with its own hassles, but it also has freedom with it. Sure, you might pay for some dings or damage to a few machines here and there, but if you end up closing up shop someone else has to worry about all the equipment.
You don’t have to auction it off. Renting equipment will decrease your monthly profits, but overall may actually impact your annual revenue in a way you don’t expect.
Renting equipment is a lot more economically friendly than purchasing it, at least in the beginning. In fact, it has a great point for early gyms that are still marketing and ramping up their member count.
It can take a few months for people to get familiar with your business, so renting, in the beginning, would make sense. Just be sure you aren’t locked into super long contracts.
On average, you will pay around 1/12th of the cost of the gym equipment per month for standard gear, such as treadmills, weightlifting benches, and exercise bikes. Equipment like smith machines and actual weights themselves might be around 1/15th of the total cost per month, up to 1/20th.
In short, renting isn’t a long-term solution, but it’s better to rent and only spend half the cost of equipment by the six-month mark if you find out that the gym isn’t going to be sustainable in the long-term. You’ll save money, and have less of a hassle when it comes time to close up shop if that’s a possibility.
- Not Your Problem: If you’re upgrading your equipment or closing up shop, you just talk to the rental company and then give the equipment back. Oftentimes, they’ll come to pick it all up, so you don’t have to lift a finger. This is some nice peace of mind for anyone who’s uncertain of how their first six months are going to go in their new gym business.
- Upgrades Are Available: If the equipment is feeling a bit outdated, that’s just because it might actually be outdated. If you’ve already been renting for a year, and you know you need some better treadmills, you can talk to most equipment rental companies and talk about an upgrade to their newest models. It might come at an additional cost, but if your gym memberships have grown over the last year, it could absolutely be worth it.
- You Save Money: In the beginning, monthly rental costs (plus a possible delivery fee for bringing the equipment and setting it up) can be an excellent way to save money on the startup cost of your gym. It’s unlikely to hit $100K in ARR within your first month of opening up the doors, which means sinking the cost of purchasing equipment is a scary and potentially dangerous financial decision. In the first year, you save money with rentals.
- Equipment Optimization: Let’s say that six months into your gym, you realize that half the treadmills aren’t being used, but you need more smith machines. Call the rental company, arrange a pickup and dropoff, and get those unused treadmills out. They’ll bring the equipment you need, and then your gym not only looks fuller, but people are actually getting more value and access to the machines that they want to use. Your gym benefits because of this.
- You Don’t Own It: Seems pretty obvious, but that means you have to be worried about the machines getting dinged up more than you would if you owned them. It’s like a car rental; there’s a little more stress with renting it than with owning it, because at least if you own it, you can deal with the damages in your own time. You’re on the hook for the quality of these machines when they come back to the rental company, and that can be stressful.
- Limits on Repairs: In some contracts, you can’t call someone to repair your rented equipment because they may not meet the standards of the rental company. This is a bit ridiculous, but also understandable on behalf of the rental company. They want to choose how their equipment is repaired, or they may even have their own repairman on the staff. Either way, this can be hindering and take longer to repair machines, and nobody wants their gym to look run-down in the meantime while they wait for repairs.
- Depreciation Over Time: Let’s say your first six months go great, then you hit the slow season. Can you still hit that ARR? At this point, you have enough data to know what your business is doing, and the value of renting equipment depreciates over time. On average, you pay about 1/12 the cost of the equipment’s MSRP for renting it. That’s fine when you have a rough or unknown financial future for your business, but eventually it’s much more lucrative to own the equipment. After about a year, you’re paying money on top of the actual cost of the equipment. It’s a necessary evil to do so, but at some point you have to consider sinking profits into purchasing equipment instead of renting it to increase your monthly profits.
How to Determine What Will Work Better for my CrossFit Gym
In another post, we discuss pricing your CrossFit affiliate gym. One section talks about rates and whether or not you’ll be charging flat rates or variable rates. Depending on the rate structure you decide upon, you’ll need to set expectations.
Buying basic gym equipment is usually something that can be financed. Then you own all the equipment, so if anything bad happens with your business, you can sell it. Buying equipment makes sense when it will be used for specialized pricing and plans for gym clients.
If you’re going with a flat rate structure, or at least you’re choosing a flat rate structure to open your gym with (it makes the beginning a lot easier), you could rent your equipment for that time period. Let’s say you want to see how it works over the course of 12 months.
Your equipment rental is wrapped up in your expenses, and you can calculate your expected annual revenue in a short amount of time. It will let you know if it’s worth it to keep renting, or if you’re in a position where you can buy the equipment and stand to make more profit each month. Maybe in some cases, it’s actually smarter to buy equipment to increase those profit margins for eventual investors.
The point is this: it’s a gray area, and depending on your own KPIs and goals, you’ll have a better understanding of which route you want to take. Know your demographic and median household income of your target market before you make a huge financial decision, such as fitting your entire gym with equipment.
Decide What’s Best for Your Business
Your business needs adequate machinery before you can even open the doors. That’s an expensive thing, so what are you going to do about it?
Are you going to loan out the capital necessary to buy all the equipment, or are you going to rent it until you know the long-term risk, and save some money in the process?
Do what works for your business, the capital you have to spare, and understand your own dedication to opening a CrossFit gym before you really sink your teeth in. You’ve got this, you just have to make sure your wallet doesn’t bite you back when all is said and done.