Over the years, the PushPress team has helped a lot of gym owners start their fitness business because quite a few of us are gym owners ourselves. As a result, we’ve seen the same question come up time and time again: How do I set my gym membership pricing?
This is an important piece of your revenue puzzle and shouldn’t just be a shot in the dark. You’ll want to consider all options, and how they’ll affect your goals and objectives for running the gym. Factors such as market demand, distribution channels and competition will all come into play.
Ultimately, your pricing strategy will work in tandem with your marketing. After all, there’s no point in having the best gym in town if no one knows about it. So think ahead to things like discounts, promotions and bundling services, and how they’ll affect your bottom line.
Here’s are some steps to help you get started.
Start At The End.
When setting your gym membership pricing, it’s best to “reverse engineer” the entire process. Start by outlining your revenue goals for the first 90 days, six months and one year. Since you’re just starting out, these numbers will be projections, so do your best to be realistic, erring on the side of conservative. If the plan goes better than expected, community ice cream social for everyone!
Keep it simple when outlining your revenue goals: Start with your projected expenses. What is it going to cost to run your gym? From there, you’ll need to match that number in revenue to break even, and exceed it to make a profit. So those are the numbers you’ll focus on to set your gym prices.
For example, let’s say it costs you $7,000 per month to run your gym. If your goal for month one is just to break even, you’ll need to make $7,000 in revenue. If you’re charging $100 per membership, you’ll need 70 members. But if you charge $350 per membership, you only need 20.
Setting the price also sets the stage for what kind of people and clients you want to attract. As Blake Ruff of LASSO explained, discount gyms attract a different type of clientele.
“People looking for free aren’t going to go from free to $200 to $300 a month,” Ruff said. Assessing gym membership pricing and the associated marketing will all play into the long-term goals.
Ultimately, the cost of your memberships must take into account what people are willing to pay, what they value most and why your gym can provide it.
Explore Your Gym Membership Pricing Options.
Here are some of the more common pricing model options. You can use these as a template, then customize as needed to set the gym membership pricing for your gym specifically.
1. Monthly Memberships.
Monthly memberships are the most popular option among gyms. Because this model is the most common, straightforward and easy to understand, it’s what most potential members will expect. It offers a predictable, monthly payment in exchange for access to your gym and classes. As long as their membership is current, they have access.
2. Dynamic Pricing.
Dynamic pricing means a member’s fee fluctuates based on various factors like length of membership. For example, if the monthly membership fee is normally $200 per month, a client could pay $190 per month for a 6-month agreement, or $180 per month for a 12-month agreement.
Other dynamic pricing factors could include things like time of day (ex: charging less for off-peak hours), supply-and-demand or season.
3. Membership Tiers.
Some gyms choose to offer multiple tiers for members to choose from, based on their expected attendance. Generally ranging from two visits per week to unlimited classes, this option gives members the feeling of personalizing their membership.
One thing to note when setting your gym membership pricing with tiers: We’ve found that the people who choose the lowest level are generally the least committed. By offering a “minimum” option, you may be setting them up for the minimum commitment. In addition, the fluctuation in tiers makes it harder to project your longer-term monthly revenue.
4. Class Packages.
Class packages - or punch cards - are often the preferred option for those who don’t want the perceived commitment of a monthly membership. This pay-as-you-go model is often a higher price per class than a typical gym membership. Class packages are paid up front and allow someone to attend a certain number of classes before the package runs out.
As mentioned above with membership tiers, class packages usually indicates a low commitment level. Although the upfront investment from a class package gives you some revenue whether they show up or not, this generally isn’t the best option for increasing gym member retention.
5. Gym Variety Passes.
The gym variety pass allows members to access various classes, studios and gyms without committing to one in particular. ClassPass is the most well-known company to successfully offer this model. ClassPass members customize their packages, purchasing credits to be able to use for fitness classes around their city.
There are pros and cons to your gym participating in a model like this. You may get new people through your doors that may not have found you otherwise. If they love what you offer, they may end up ditching their ClassPass membership to come to your gym exclusively. On the flip side, there’s a reason people choose a gym variety pass: They don’t want to commit to one gym. As a result, you’ll have people in class who have no intention of joining your community full-time.
Do What’s Best.
So what should your members pay? Since there is no one-size-fits-all model, perhaps the better question is: What will you provide them that’s worth the amount you’re charging?
First, take your operating expenses and the local market into consideration. As discussed above, figure out the revenue you’ll need to make a profit. Also analyze what people in your area are paying for similar services. Even though your pricing shouldn’t depend on what your competition is doing, you want to make sure your pricing model and strategy fit your local market.
After that, your gym membership pricing should match the value you're providing customers.
Note that nailing your gym membership pricing on the first try is pretty unlikely. Spend adequate time getting a great starting point and then dial it in as you go. Make adjustments as needed based on data and (useful) member feedback. Review regularly and adjust if needed based on any new offerings, upgrades or incentives for your members.
Here are three ways to provide the value they’re looking for:
1. Know Your Target Members.
If you're going to provide the things your members are seeking, you need to understand the members themselves first. If you don’t, you can’t design a program or service that fits their needs.
What are their goals? Are they looking to lose weight or become stronger? What do they enjoy doing? Do they have any injuries to be aware of? What is their budget?
People have different goals and budgets for their training. Not only will this information help you create a more effective gym membership pricing structure, but it will also provide valuable insight into attracting new members.
2. Give Them What They Want.
A gym that provides exceptional value to its members becomes the gym people want to be a part of. This is how you create brand loyalty, long-term relationships and gym member referrals.
Your gym should not be simply "good enough" to attract new members. You’ll stand out among your competitors if you create a significant gap between what you offer and what they offer.
Start with the basics: Safety, cleanliness and well-maintained equipment. Emphasize a welcoming experience for newcomers and season athletes alike. Next, focus on providing professional, organized classes led by knowledgeable, experienced staff.
Promote your gym as place to learn and develop fitness skills, highlighting personal attention and coaching. Provide training options specific to members’ individual needs, versus the trends everyone else is following.
Finally, show them why your community is a game-changer for motivation, fun and accountability. Explain to them how they’ll be surrounded by people just like them in an inclusive environment that welcomes all ages and abilities. They’ll be treated like a member of the family instead of a number. And they’ll get way more than what they paid for or expected.
3. Get Creative With Upselling.
Once you’ve determined your gym membership pricing and you’re running the best gym in town, you’ll develop a solid base of members. Now it’s time to get creative with upselling strategies.
When your members trust you and want to support your business, you have a unique opportunity to fill more needs for them than just fitness. From nutrition to mobility or recovery, they may be going elsewhere for these services so why not offer them in-house? Also consider supplements, apparel or grab-and-go products like energy drinks or protein bars. You could even offer bundles, giving them a small discount for purchasing products and services together.
All of these things increase your MRR (monthly revenue per member) and affect your initial decisions when setting your membership pricing.
In Summary: Don’t Sleep On Your Gym Membership Pricing
One of the most important steps for the financial success of your fitness business is setting your pricing. First, consider the amount of revenue you’ll need to make a profit, based on your operating expenses. Then ask yourself what you can provide to your members that is worth the amount you’re charging. Make the value match the investment for them.
You’ll do this by getting to know your target audience, providing products and services they need, and finding creative ways to upsell. Finally, note that getting it right on the first try is rare. Analyze your data and make adjustments as you go.