Evolving your business can strengthen your position in today’s world. As consumer behaviors and priorities change, you need to shift and adapt to stay relevant. While the core of your business and the reason for starting remains the same, it’s natural to evolve with your customers, over time.
There are several different types of gym business models. There is no one perfect model for a fitness business. Most of the time, a great gym utilizes different business models and revenue streams to tap into an ever-growing market. Some of the most well-known fitness brands are now a lifestyle; they create an experience. By leveraging technology and connectivity, they continue to innovate and implement the right type of business model to support their membership base.
So, how do you select the best model for your business? In this article, we talk about the future of the gym and fitness industry and how different types of business models impact your overall business.
Skip ahead to:
- The future of the gym and fitness industry
- What business models do gyms use?
- electing the right business model for your gym
- 8 different types of gym business models
The future of the gym and fitness industry
The global health market industry is worth about $96.7 billion. In the past decade, the health and fitness industry has boomed with exercise being an essential piece of the greater wellness puzzle.
The demand for healthier lifestyles and health incentives from employers were growing well before the pandemic. Now, awareness around health is at record levels. Months of government messaging explaining the benefits of exercise and the need to be healthy are at the forefront of thinking. Although the outbreak of COVID-19 shut the doors to many fitness facilities and paused membership payments, the fitness industry had to find a way to reinvent fitness. With different types of workouts, virtual fitness, and huge adoption of fit-tech, both in the home and the gym, there is a huge opportunity to expand within fitness.
Despite there being a clear shift to working out in a home gym and some decline in gym memberships, cities around the world are looking to resume normal activities. For many, heading to the gym or going to your favorite spin class is part of that normalcy. While this change in consumer behavior to a virtual setting could be harmful to brick-and-mortar businesses, it creates a new opportunity to bridge the gap between virtual and in-person. The pivot to a hybrid business model has allowed many fitness businesses to not only survive but thrive and expand on a global scale.
While we can’t predict the future of gyms, we can see that a shift in business model and thinking is necessary to keep up with the ever-changing landscape of fitness. By allowing members to have full control over when and how they exercise, the challenge for many gyms will be creating an authentic brand experience both in-person and online.
For expert insight, listen to Adam Zeitsiff, the President and CEO of Intelivideo, on The Fitness Founders Podcast. He talks about how fitness operators can deliver a winning hybrid experience. Adam discusses the hybrid model and how you can get ahead of the competition with hyper-personalization.
What business models do gyms use?
Your gym business model outlines how you make money. Essentially, your business model should explain what service you sell, how you plan to market your service, the type of expenses you will have, and you expect to turn a profit.
Even within the fitness industry, there are so many different types of business models. Years ago, when talking about gym business models, it would simply be membership-based. You charge members a monthly or annual fee to access your service. This would be how you generate revenue. While this is still very true for a lot of businesses, the gym business model continues to evolve. With services like ClassPass and the disruption of COVID-19, we’ve seen a huge shift to hybrid and digital ways of running a gym business.
Nowadays, if you look at some of the most successful fitness brands and gyms, they tend to use a model that allows them to generate multiple streams of revenue. Often, gyms layer elements of different business models to make the most out of the services they offer and maximize revenue. For instance, Peloton’s main source of income comes from its memberships and selling premium gym equipment itself. The on-demand and live streaming platform is accessible by Peloton and non-Peloton owners. Peloton focuses on content, hardware, software, and sales alongside an aggressive expansion to become a household name in the fitness industry.
Selecting the right business model for your gym
When it comes to choosing the right gym business model, typically there isn’t one perfect answer. Often, the best fitness businesses use a combination of business models. The right model for your gym depends on several factors like your market fit, target audience, and competitor research. If your business is built on great market research and product fit, your business model supports your vision and goals by pinpointing how you expect to turn a profit.
It’s important to remember that your business model isn’t necessarily set in stone. As mental health continues to be a clear priority for people and the way consumers interact with brands evolve, it’s essential that you can adapt and scale with the industry. While many people still want to go to the gym in-person, it’s clear that at-home fitness solutions are here to stay.
The Customer Discover more
for Your Fitness
For example, one of your members missed their bus so couldn’t make it to your last spin class or free weights session. However, because you have an on-demand app, they can head home and still fit in a 30 min class on their spin bike or follow along a bodyweight workout with push-ups and kettlebell swings. Just because members like to have the option to work out from home, many people head to the gym to socialize, connect, and feel like they are a part of a larger community.
By staying on top of the latest trends, you can identify opportunities in the market. A rigid business model with no room for growth could hinder your ability to find a new level of success and stay ahead of the competition.
8 different types of gym business models
Whether you’re starting a new business or looking to evaluate an existing one, there are several ways you can run and manage a gym. By understanding all your options, you can see how you have the opportunity to layer and evolve your gym business model so that you can maximize your ability to generate revenue and build your brand. After writing a great gym business plan, it’s time to explore your gym business model options.
1. Membership model
Naturally, when talking about gym business models, the first option that comes to mind is the membership model. For fitness centers and health clubs, collecting membership fees is the most traditional model. Members will pay a monthly or annual fee to access your services. For this type of business model, typically extras like group fitness classes and personal trainer services are an additional fee. Many big box gyms with rows of barbells, dumbbells, and cardio equipment tend to use this business model. Although it’s a straightforward model, you can still retain flexibility by offering payment plans and customization catered to your target audience. The benefit of this model is that you receive consistent and trackable revenue. The downside is that committing to a membership can be off-putting to some people and members can easily stop their membership if they stop seeing value in your services.
2. Group fitness
Group fitness is still a hugely popular form of working out. Whether it’s Pilates, aerobics, kickboxing, or bodyweight fitness classes, there’s a massive variety of group training. The core of a group fitness business model is that customers pay for various types of workouts in your group training class. The business is centered around group fitness training. But within a group fitness business model, you have a few options. You can go down the subscription route where members pay a monthly fee to access either a certain number of classes or an unlimited amount of classes. Or, you could give clients the option to pay-as-you-go. Many group fitness businesses layer different models so that they can offer potential customers more variation. Whether members pay a monthly fee, purchase a bulk number of classes, or pay a drop-in fee is down to you.
The pay-as-you-go business model simply means that customers pay each time they use your service. Some fitness businesses rely solely on this method, while others use it alongside other options to give members more flexibility. For example, Barry’s Bootcamp classes combine strength training, cardio, and weightlifting to create a high-intensity interval training (HIIT) experience. They charge a pay-as-you-go rate and have monthly options for a certain number of classes. Many gyms offer pay-as-you-go alongside unlimited access monthly options for members.
4. Digital subscription
The digital subscription business model has skyrocketed in popularity. Often, digital fitness platforms are more affordable than the in-person gym membership counterpart. Yoga platform CorePower on demand charges $19/month and Crunch Live costs $10/month. Typically, there will be a digital platform suitable for a huge range of price points and abilities from beginners to experts. Today, many gyms run high-quality digital subscription services alongside their in-person offering or as standalone products. The benefit of a digital subscription is that you open up your target audience to practically anyone with a stable internet connection. While your in-person members are dependent on location, a digital arm to your business can give you the ability to expand and scale further.
5. Hybrid business
A hybrid fitness business gives members the option to head to the gym in person, or join your latest class online from the comfort of their own home. In the early stages of the pandemic, many gyms and fitness franchises launched digital fitness platforms to continue to generate revenue and support their members. By combining in-person and online fitness services, you can offer a new level of convenience and flexibility to cater to an expanding health-conscious audience.
6. Private training
Private training involves a client paying for private support. This could be in personal training, nutrition, sport, bodybuilding, or fitness. There’s a huge variety in the demographics you can target here and typically, you charge a fee for a personalized program and workout routine. You may want to use the private training model for additional gym services alongside your memberships to help members meet specific fitness goals. There are also options for semi-private training where you train or coach clients in small groups.
7. Integrated gym business model
An integrated business model takes the best parts of multiple business models and creates more flexibility for members. This could look like a monthly membership with pay-as-you-go options and a digital subscription to target an even bigger clientele. The benefits of having this type of business model is that it can create multiple streams of income and provide the type of flexibility consumers crave. The downside is that when you layer business models, it can require more managing to oversee different payment options.
While the manufacturing avenue may not apply to all gyms, you may have the option to produce your own branded products alongside your in-person gym and streaming services. This could include fitness equipment like rowing machines to yoga mats and branded supplements. For example, functional fitness brand F45 Training offers branded supplements and collaborates with designers to produce footwear. This creates another arm of the business.
Despite the initial severe impact of the pandemic, the world is opening back up. While the fitness industry has clearly shifted, we’re seeing how businesses are innovating to keep up with changing consumer demand and expectations.
There are pros and cons to various types of gym business models. As gyms continue to evaluate their business model, businesses are proactively changing their approach to member retention and engagement. By evolving with their customers and the fitness industry, gyms will be in a better place to succeed now and in their future.