How to price gym memberships: A gym owners guide

Suppose you are a gym owner who provides phenomenal services to your clients but still feels that you are not charging enough. Congratulations, you are like most gym owners worldwide. Most gym owners who provide remarkable services to their clients are probably not charging enough for their bow. As per Statista research, the average profit margin in the fitness industry is around 10-15%. If you are not charging enough for your gym membership, you are reducing this 10-15% profit margin to a bit lower. 

As a gym owner, you might have a question about how to price gym memberships to increase profit margins without compromising clients’ user experience. You might think that if you increase the membership price suddenly, it leads to a loss of potential clients, which you are not able to afford in any case. Now, you don’t need to worry about the gym membership pricing plan, as we have highlighted all the essential steps that enable you to make an effective pricing strategy. So, you can provide remarkable services to your clients and make them stay in your gym. 

Why you need to hike gym membership prices

At the end of the day, as a gym owner, you want your gym to be profitable. So you can spend more time providing exceptional services to your clients. Some gym owners work continuously to ensure that their gym operates at profitable margins, while others burn the candle at both ends without ensuring their business sustainability. 

If you want to run your gym profitably, you have to understand that this is possible only when your clients pay what you’re worth. As your gym involves various expenses such as equipment, maintenance, top-notch fitness trainers, utilities, etc. So, to pay all these expenses, you need to make a pricing plan that enables you to drive a suitable profit margin. As per the Fin Models Lab’s research, the cost of replacing equipment may be around $5000 to $7000, depending upon the size of the gym. Moreover, your proficient team and the knowledge you have gained about fitness are also more valuable. So, with time, you have to develop a pricing strategy that enables you to cover gym expenses and define your experience value. 

Factors to consider when setting gym membership prices

Before starting your gym, it is essential for you to consider all factors that enable you to draw profit margins. Whether it be studying your competition or determining your market position. So, you can answer the questions about how much a gym membership, on average, costs or how much a gym membership costs monthly. Here are the essential factors to consider before setting a gym membership price. 

Analyze your competition

Before laying the foundation of your gym, it is crucial for you to understand your competition. So, you can serve your clients with the services your competition provides while offering a unique value proposition. Moreover, this analysis also enables you to analyze the profit margin of the gym that operates in the area where you are going to open your gym. 

You can start your competitive analysis journey by identifying the area where you are going to operate. This allows you to understand the community members and what price they will offer when joining your gym. After understanding the community, you can offer a price slightly lower at the start or the same price your competition provides with a combination of remarkable services.

Research your target audience

With analysis about your competition, it is also essential as a gym owner that you make an analysis about your audience. For example, you operate your gym in an area where people of the community visit the gym 24/7 and perform their workouts. People in that area like high-strength exercise, and most of the gym goers in that area lie between the 25-35 age bracket. Then, you have to make sure that your gym offers its members 24/7 gym access and entertains the age bracket. So, you can operate your gym successfully in that area and improve your gym’s profit margins. 

Moreover, you must consider the average income people in the area spend on their fitness. This gives you the freedom to decide whether to offer a reasonable price or split the gym access into membership ties. Thus, you can attract community members not only with your gym’s exceptional service but also with your gym’s resonating pricing structure. 

Determine your gym profit margins

After doing research about the competition and the target audience, you have to determine what profit margins you need to set for your business. At the end of the day, all you want to see is your gym profitable. As per Sharpsheets’s research, only 68% of the fitness clubs and gyms that have been operating for 8 years are profitable. So, if you want your gym to be part of th 68% and witness long-term success, you have to set an adequate price for your services. 

You have to make sure that the price you offer to your clients balances affordability and also justifies the services your gym offers. The price you offer to your clients can neither be higher, as it will put off clients, nor low, as it will not even allow you to manage the gym expenses. Thus, an adequate price for your gym services enables you to attract the target audience and improve your gym’s profitability. 

Steps for increasing gym membership prices

Although you have decided on an appropriate price for your gym memberships, inflation leads to an increase in prices. Thus, to keep up the profit margins and ensure that your clients enjoy remarkable fitness services, you need to increase the gym membership fees. Here are the steps that you have to take to make a reasonable increase in price. 

Highlight your value

Suppose you are the only gym in the town that offers dance, yoga, Zumba classes, and traditional exercises. Your gym has the best trainers in the city who have done different PT training certifications that aid your clients with diet plans. Moreover, your gym uses the best gym management software to ensure a seamless fitness experience for your clients. All these top-notch facilities enable you to set a USP for your gym that differentiates it from your competition. 

Furthermore, it also enables you to highlight your value in the native fitness market and justify if you made an increase in the membership price. As this USP paints pictures of your clients, why do they need to buy your services instead of your competition? So, highlighting your value and providing exceptional services to your clients act as proof that enables your clients to pay a little higher price for your gym services. 

Calculate the price you need to charge 

Before making even the slightest change in the pricing structure of your gym membership, you need to calculate each aspect that is going to be influenced by it. For example, you have recently started HIIT training in your gym and hired the best personal trainer for your guidance. Moreover, you have bought special training equipment for this training. Now you have to make the calculation about the price you need to charge for this class along with the membership price. 

You have to calculate precisely what you need to charge for the class, as this helps you change the trajectory of your gym. However, you have two options: either to charge the price of HIIT along with a hike in membership or simply advertise HIIT as a separate class. The calculation you made about the class is not based on what your competition is charging. It must be based upon the fact that your course and gym deserve to be paid for their exceptional services. Then, your clients will give you the price for the membership that you need to charge.  

Simplify your membership levels

If the membership level you introduced at the start of the gym is still in use with a hike in price, then you have to restructure the membership plan with more refined pricing. You simply have to use and restructure the pricing plan by making different variants. Each variant of the plan carries specific features with limited access to your gym. For example, you introduce multiple pricing plans. 

Thus, the table shows three pricing plans that you introduced. This allows you to attract new clients as you give them the freedom to choose the plan that they need. Moreover, if you have an issue with client retention, you can also give your clients gym membership discounts or referral discounts. Thus, simplifying your membership plan enables you to attract new clients while increasing your gym’s profit margin. 

Include a grace period

When you want to increase the price of your gym membership, you have to give your clients a grace period between the time they receive the information and when the decision to hike will be implemented. This grace period gives your clients the time to understand the root cause of a price hike. Moreover, during this period, they come to you and discuss the issues the gym is facing. 

For example, you mailed all your clients in early December about a $10 increase with each membership plan and that this hike would be affected by the January billing. During this time, your clients came to you and asked the reason for it. Thus, it allows you to gain your clients’ trust and foster a sense of belonging among them.

Anticipate a loss of members

However, increasing gym membership prices allows you to increase your gym profit margins. It is also important for you to get prepared for negative churn or feedback. Increasing gym membership prices might lead to losing members as they surrender their gym memberships. This happens sometimes when people leave the gym due to a hike in the membership price. As per Livestrong’s research, 38% of the clients quit the gym based on membership cost. 

But, with an increase in price hike, you have also introduced several new classes in the gym and taken all the necessary steps before making a minor increase in price. Thus, it allows you to increase the client’s retention rate. 

Bottom line

As a gym owner, you need to create a pricing structure that increases your gym’s profit margins. If you feel your gym membership fee is undervalued and needs to be improved, you must consider several factors and take the necessary steps. These steps enable you to increase your profit margins and provide your clients with exceptional fitness experiences.