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How to Forecast Sales Based on Pay as You Go Revenue vs. Traditional Membership Models

Corey Loehr
October 26, 2017
membership models

Traditional gym membership models have suffered a few blows in recent years. From the Orange Theory Fitness investigation into unfair membership contracts to the Twitter storm after LA Fitness refused to cancel the contract of a couple when the woman became pregnant and the man had lost his job, fitness club members are gun shy of the long-term contract associated with traditional membership models.As more and more people are turning their heads (and their wallets) to no contract, pay-as-you-go boutique gym membership models, one question lingers. What membership model is best for your fitness studio?

Pay-As-You-Go Gym Membership Models

Boutique fitness centers cater their gym membership models and offerings to a niche fitness bracket, appealing to a specific demographic. Typically, boutique fitness studios offer flexible pay-as-you-go gym membership model that appeals to the masses that don't want to get locked into a longer-term fitness contracts.If your fitness studio offers members a specific type of workout and fitness community, such as barre, yoga, spin or Pilates, a pay-as-you-go membership models may offer the perfect membership model for your studio needs.The pros - with a pay-as-you-go gym membership model, you appeal to clients who are specifically seeking your clients. This helps to create brand awareness and builds your fitness community. Pay-as-you-go gym membership models range from pre paying for monthly services (without a contract) to centers offering punch card options so clients can pay for the exact amount of classes they want. They also appeal to members who want a boutique experience across a variety of fitness platforms. For example, they want to take a few specific yoga classes and barre classes each week.The cons - with a pay-as-you-go gym membership model, you are not guaranteed revenue. Essentially, your fitness center patrons may purchase five classes one week and zero the next. Unlike a traditional gym membership model, where you can easily track your incoming revenue based on current membership numbers, there may be more fluctuations with a pay-as-you-go gym membership model, making it hard to budget for long-term growth and forecast gym sales.

Traditional Gym Membership Models

According to Market Watch, “Traditional gym operators are disadvantaged relative to some boutiques due to their high fixed investments in real estate and equipment.” Additionally traditional gym membership models face pressure from budget-oriented, boutique fitness centers, which are gaining popularity and market share.To tackle this conundrum, some traditional fitness center owners are transitioning to tiered gym membership models. Essentially it's a "middle of the road approach" where members pay extra for certain amenities that appeal to their fitness plan and lifestyle, such as pools, childcare, yoga, etc.The pros - for clients, value lies in convenience. The autopay option for a traditional gym membership model is very appealing for fitness members. As a fitness studio, traditional membership model also provides studio owners with the ability to predict revenue through their recurring membership fees.The cons - more and more people are avoiding the long-term membership contracts associated with traditional gym membership models. They want to pay for the services they use and not waste their funds on amenities and classes they aren’t using.

Which Gym Membership Model Works For Your Fitness Studio

When it comes time to establish the membership pricing model for your fitness studio, only you can decide what your clients want.Start by considering the services you offer. Does your fitness studio offer niche fitness classes or a large variety of fitness options? Pay-as-you-go gym membership models are ideal for boutique fitness studios, specializing in a specific fitness market (i.e. Pilates or cycling). Whereas traditional membership models appeal to traditional fitness centers, offering access to multiple amenities (i.e. pool, group classes, exercise equipment, etc.).Next, take a look at the membership models that are appealing to clients in your area. Are more fitness centers offering traditional gym membership models with contracts or is your fitness studio in a heavily saturated boutique fitness center area? Essentially, you need to be able to compete with the fitness centers in your area, providing the membership model that appeals to your market. Consider investing in fitness reporting software designed to keep you on top of the operations of your business so you can make decisions that will enable you to grow and continue to build a successful fitness business. Your reporting software will help track the services and classes your patrons are using, and can help you determine the gym membership model for your fitness studio.Ultimately, as you grow your brand and develop your fitness community you will begin to know and understand your target demographic. As this happens, you can make an informed decision as to which gym membership model will work best for your fitness center.