Do Premium Gym Memberships Have A Future?

Why are there some gym business models that seem to be in huge demand while still charging top dollar for memberships? I think that the simple answer is that there are enough members who are shopping by value and not price. It’s not about competing based on what the gym across the street is charging, it’s about finding the things that you are truly great at and which are in demand and matching the two together.

Too many small businesses fail to understand this important distinction, not just in the gym business but also across all industries. If you have the capital to invest it is not that hard to start a gym and it’s very understandable to want to do it. That was my dream and it got me here, so I don’t judge. However, better service, branding and unique programs make a big difference to the value that you can give to your members.

Commodity Versus Quality And The Race To Zero Profit

In economic terms, when every seller in a given market is selling exactly the same thing, that thing is a commodity. This is how things like oil, wheat and livestock are handled because they are assumed to be identical and interchangeable. When you provide an undifferentiated service that only does what the rest of the market provides you are effectively treating your service like a commodity. The real danger here is that if your costs are the same as everyone else’s then it turns into a race to zero profit.

Compete On Price And Still Add ValueValue and price

So, it’s a rhetorical question really because the answer is self-evident: Yes, premium gyms do have a bright future. Members are looking for value and are willing to put a sizable chunk of disposable income into their fitness regimes, if they can find what they want.

It helps when you can associate your name with that of some successful and popular program such as CrossFit or UFC. On the other hand, originality is a powerful tool if you can creatively match your ideas to the desires of members. One example is SoulCycle, which was started because the founders couldn’t find a program that fit their own ideas of what they wanted.

Well Excluuuuude Me!

Not everyone is willing to shell out hundreds of dollars each month for gym memberships, no matter how exclusive a club is. There will be people who still have to count the pennies and these members deserve great service too! Even the most utilitarian recreation center can still draw in a crowd of local residents but by putting some pride into your enterprise and imaginatively delivering something that they can’t get elsewhere, or within the price range will help to keep your membership levels up and the occupancy high.

The point is that you are competing in the market that is geographically close to your club. If there are a lot of low price commoditized clubs around you, think about being different by going premium. If there are a large number of premium gyms as there are here in Las Vegas you might want to fight by the price. The contrarian strategy can catch the attention of consumers who are dissatisfied with the most widely available options.

Finding The Premium Gym Membership Sweet Spot

Creativity always creates options but when it’s easy for the competition to copy what you’ve built then you need to keep moving. Ideally, when you create a gym service that is different from the norm you do so in a way that will be proprietary, which means that it won’t immediately be copied and turned against you. This comes down to the skills of your people to lead the membership and to up-sell to premium services.

It might prove effective if you lose just a few of the most price-sensitive and at the opposite end, the most demanding members who expect to be infinitely pampered. This sort of balancing act could be the compromise that gets the best of both worlds. There is always going to be a battle between price and service quality and it is up to you as the business owner to find the right combination of them both to maximize the value of your business. Premium gym memberships put the emphasis on value and not on price and they are going to be a round for a long time to come. New and small gyms can get a foot in the door by matching premium value at a lower price.

Bibliography

Fagan, Lawrence. Fitness Firm Case Study: UFC Gyms. July 24, 2014. https://blog.gyminsight.com/2820-fitness-firm-case-study-ufc-gyms/ (accessed November 13, 2014).

WeightTraining.com. The Ten Most Expensive Gym Memberships. 2014. http://www.weighttraining.com/blog/the-ten-most-expensive-gym-memberships (accessed November 13, 2014).

 

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