How to Choose the Right Gym Business Model

The coronavirus pandemic has turned the fitness industry on its head. It’s more important than ever to critically think about the way your gym makes money. To succeed in the world of fitness, your gym’s business model needs to be relevant and meet the needs of your target audience. 

With the rise of digital and home fitness, you need to stand out from the competition and meet consumer demand. Now is the time to future-proof your business. Over the last year, many fitness brands have pivoted the core way they operate and deliver services. As the fitness industry evolves, you need to stay on top and remain the go-to option in your niche. In this article, we talk about the effects of the coronavirus and seven successful gym business models to think about. 

Skip ahead to:

• What is a Gym Business Model?
• The Effects of the Coronavirus on the Fitness Industry
• Which is the Right Gym Business Model for Your Fitness Business?
• 7 Successful Gym Business Model Types

What is a Gym Business Model? 

When it comes to gym business models, there isn’t a one-size-fits-all approach. There are multiple ways you can structure your business to make money. At its core, your business model describes how you generate revenue. Simply put the business model will explain the price of the product you’re selling, the type of customer you are selling too, the value of what you sell and the cost that goes into what you are selling. 

While owning a business requires enthusiasm and passion, you also need to be a clear, strategic thinker. Your business needs to make money. It’s a simple fact. You have bills and salaries to pay. You need to make enough revenue to pay all of these and ideally make a profit. And the reality is that trends change and consumer tastes change – a profitable fitness business owner is hyper aware of any changes happening in the industry and can adapt their business model quickly. 

The Effects of the Coronavirus on the Fitness Industry 

The Covid-19 crisis has changed every part of our lives. It’s the biggest disruption the fitness industry has seen. With gym closures, financial uncertainty, job losses, and stay-at-home orders, the industry is seeing a major shift. As more people invest in home fitness equipment and, with the rise of digital fitness, exercise behavior has pivoted. Home fitness is being welcomed with open arms as a convenient and effective way to work out. 

Before the pandemic, the online fitness market was estimated at $6 billion. It’s now predicted to grow at 33.1% CAGR to $59 billion by 2027. It’s difficult to say what the permanent effects of the pandemic will be. As restrictions ease throughout the world and the vaccine uptake continues, it doesn’t look like virtual fitness will be ending anytime soon. With more people isolating and staying at home, mental health services demand continues to increase. The online fitness explosions coupled with the need to maintain mental and physical health at home have transformed the industry. 

Industry experts believe the shift to online training will be permanent. The pandemic has accelerated the adoption of hybrid business models with both in-person and digital elements. While some brands have shifted to a hybrid business model, others have gone fully digital. Many brands offered on-demand and live streaming fitness classes to survive during lockdown and generate revenue. But now, digital fitness is a part of a thriving and successful fitness business that meets consumer demand.

The Fitness Founders Podcast explores this topic further with Adam Zeitsiff, the President and CEO of Intelivideo. Adam talks about how fitness operators can deliver a winning hybrid experience and transform their business into a hybrid model. 

Which is the Right Gym Business Model for Your Fitness Business? 

Thorough and in-depth research will help you to identify the right business model for your fitness business. To excel in your niche and find a profitable part of the fitness market where your offering is in demand, research is essential. Based on your research, you can determine your target market, the services you offer, and figure out the best way to generate revenue. 

Be Adaptable 

It’s important that you have a clear and simple business model that works for your gym. But that’s not to say it’s set in stone. The right business model evolves with your business. As you find out more information about your audience and trends rise in the industry, you can refine your model and adapt. As new fitness centers and business models come to the surface, being adaptable is key to thriving in a fiercely competitive industry. 

Be Scalable 

Try not to get too comfortable with how you run your business. Stay on top of the latest fitness trends to find a gap in the market where you can engage more with members and reach a larger potential target market. Your business model should grow with you. If you find that you hit a certain level of success and your business model is too rigid to catapult you further, that’s a problem. 

Be Ahead of the Competition 

The fitness industry is highly competitive. Your business model should support your overall goals and drive value. Your business model can offer a new level of flexibility for your customers. Successful businesses in the fitness industry have a competitive edge that distinguishes them from other companies.  

Fitness business consultant and the host of The Business of Fitness Podcast, Vanessa Severiano, has an interesting viewpoint on why mission-driven companies will win long-term. In the Fitness Founders Podcast episode, Vanessa talks about changing consumer expectations and where you need to focus your sales and marketing efforts. 

7 Successful Gym Business Model Types 

Traditionally, the fitness industry followed a membership or subscription model. Members commit to a certain time period in return for access to your services. Over time, gym business models have evolved and now you have different types of models that you can integrate into your business. What’s great is that you don’t have to solely stick with one business model. It’s about finding a balance that both increases revenue and works for your client base. Here are seven successful gym business models to consider. 

1. Membership-Based

When you think about a gym or fitness studio, you probably think about a membership business model. No doubt, it continues to be one of the most popular ways to make money as a gym. For your members, it provides a fixed price, usually monthly, to access your facilities or services. The idea is that when a member makes a financial investment, they are more likely to engage with your studio and go to the gym. 

The major benefit of this business model is that the operator gets a predictable and consistent income. It reduces the risk of widely fluctuating cash flow and gives you the opportunity to make more realistic financial plans. The downside is that sometimes members feel trapped in a contract and they can end up paying for something they don’t use that frequently. There is also pressure to sell gym memberships constantly and keeping members engaged even when they don’t visit your facilities. 

2. Hybrid Fitness Business 

The coronavirus pandemic has accelerated the number of businesses adopting a hybrid business model. With a hybrid business, you operate both digital and in-person arms of the business. For example, you have a gym location as well as a digital streaming platform and an on-demand library of workouts. This works well because of a couple of reasons. Firstly, digital fitness compliments your in-person services. Secondly, you can target digital-only members. All of a sudden your potential target audience isn’t location-dependent and you have a much larger reach. 

A hybrid fitness business model works for a range of fitness businesses from personal trainers to gym business owners and Pilates studios. When your existing members don’t want to work out solely online or in-person, this hybrid approach offers a new level of flexibility members didn’t know they needed. But now, this level of convenience is an expectation. This podcast on the fitness industry explains it perfectly stating that you need to learn how to go hybrid or get left behind. 

3. Franchise Business 

Franchising is a way of growing a business without investing your own money into more locations and services. As a franchisor, you sell your franchise licenses to franchisees. This gives them the right to operate the business with your branding and name. There are a ton of fitness franchise opportunities like Orangetheory Fitness and F45 Training. It gives you the opportunity to start a business that already has a tried and tested business model. 

You can combine a hybrid business model with a franchising model to future-proof your business and leverage the demand for online fitness. Again, being adaptable and scalable is key to a great business model. The same applies to fitness franchises. 

4. Digital Subscription 

Many gym members have turned to home fitness to stay fit and healthy during the coronavirus pandemic. There is a clear shift towards virtual fitness and online services. Some brands have taken the decision to go fully digital, at least for now. You even have new brands emerging as digital-only fitness studios. In comparison to a brick-and-mortar health club, the cost of setting up a virtual fitness club is considerably less. 

With a digital subscription business model, you don’t have to worry about social distancing or capacity limits. You have a potentially global reach with no need for instructors to be in any one physical location. When members can eventually travel, they don’t have to pause a membership, they just take you with them. A digital-first approach to fitness is clearly increasing in popularity. However there will always be people who love in-class and gym experiences. But, for some a digital fitness monthly subscription is enough, especially for the home fitness crowd. 

5. Group Fitness Business

Group fitness remains as popular as ever. As group fitness classes can resume to their former glory and restrictions continue to ease, members can gather together once more. There is something about group fitness that fires up members. They feel a sense of community and have an increased motivation to come to class. Many successful fitness brands use a group training business model where members pay for a series of group classes. 

When it comes to gym business models, you don’t have to settle with one. It’s about creating a revenue model that works for your gym and members. Maybe a combination of memberships of group fitness packages alongside your digital fitness platform offers the type of flexibility and convenience your members crave. 

6. Pay as You Go 

With a pay-as-you-go business model, clients pay for your services as and when they need them. This can work for using gym equipment or attending classes as well as streaming live fitness classes. The drawback of this type of model is that you can’t always predict your cash flow. 

However, you appeal to an audience that wants a boutique fitness experience across multiple facilities. Nowadays, it’s normal to attend a range of classes and gyms and not be tied into one membership. You pay per class, both in-person and for streams. Or you can buy a set of classes or packages. This model works well for this type of business and continues to be a good option for members.  

7. Tiered Membership Models  

A tiered membership business model offers members access to different tiers for varying prices. For example, the bottom tier may give you access to your facilities, while your top tier includes your facilities, all classes, and access to a monthly personal training session. It takes into account that you have different member personas. It helps to segment members and provide a solution that suits them. 

The main selling point with this business model is about giving members choice. Sometimes it feels like there isn’t any flexibility with certain memberships. Customers have one option and it doesn’t always suit them. By increasing your choice and creating a system based on the needs and demands of your members, you can look to develop a tiered membership business model with much more flexibility. 

In Summary 

The best gym business model may combine a few different elements. But the one thing that remains the same is that it meets the needs of your target audience. Members are looking for flexibility, convenience, and a great customer experience. By choosing the right business model for your business, you can continue to expand and drive value to your members.