Two simple solutions for owner-operator run fitness businesses
Gyms and leisure facilities are facing a 100% increase on the costs of gas and electricity when compared to 2019 – we’re all feeling the pinch.
And energy costs are only part of the picture: today’s challenging economy has pushed business insolvency rates up 40% since 2021. Thanks to a nationwide hiring crisis, many gyms are also short-staffed, with a 30% increase in unfilled vacancies in the leisure and hospitality sector in the last 12 months. To stop our profit margins dwindling into nothing, owner-operated fitness businesses need to take steps now to offset the rising costs.
Solution #1: Sell More Memberships
Increasing member numbers – and therefore revenue – might be your first port of call for riding out the energy cost surge.
And despite how things may feel from an operator’s perspective, there’s plenty of potential to market and sell to new clients. The global fitness and wellness industry is worth 1.5 trillion USD, and growing 5 to 10% annually. In the UK, market penetration is sitting at 15%, and due to rise to at least 20% by 2030. This is a massive opportunity for us to capture these newcomers to the industry.
It’s likely that many of these newbies will be inexperienced beginners who lack confidence in the gym. Our brand messaging and new member onboarding process should take this into account, built on a solid foundation of the Three Ps – Product, People, and Place.
Solution #2: Raise Prices
The other solution to rising energy costs is to increase your average yield per member. The simplest way to do this: raise prices. You can choose to do this in a staged approach (bit by bit), or rip the plaster off and introduce a 5-10% raise across the board, bringing legacy members on rock-bottom fees up to level with the rest of your members.
When it comes to communicating your fee increases, don’t be tempted to go down the apologetic route. Instead, lead with the value you have been giving (and continue to give) and be clear on why your prices need to go up. You’re not milking it for your own benefit – everyone has been impacted by the surging energy costs, and your business is no exception.
In an ideal world, price raises should be baked into your Ts and Cs and diarised regularly. This allows you to raise staff wages and keep the business current – although in the current atypical climate you may need to take a view on costs/prices and adjust the frequency of your increases. Don’t try and keep your prices the same for a few years in a row, then suddenly realise that your model isn’t financially viable and be forced to suddenly hike them up dramatically.
The other solution to boosting yield per client is to increase secondary spend. If you haven’t already, explore ‘bolt-on’ purchases for existing clients, like a Nutrition or Fat Loss Accelerator. It’s also worth reviewing your approach to food and beverages, apparel, and other retail opportunities that could create additional income streams.
Looking for one-on-one support with your pricing strategy and how to increase yield in your gym?
JC Vacassin is offering a limited number of standalone coaching calls to give targeted guidance to independent operators.
Drop us an email on holly@jcv.inc to find out more.