Planet Fitness Business Model (How They Make Money)

Physical activity has a positive impact on health. Both mental and physical. We don’t need to convince you of this if you are here with us on this fitness blog. But let’s go one step further. 

Sports and recreation are profitable business industries. You can make a lot of money there if you have the right idea. An example of perfect market fit is Planet Fitness franchise. 

Its unique business model made Planet Fitness a $6 billion brand. Newsweek recently ranked them as number one in customer service among fitness clubs. How do they do it? What does their daily operation look like? What kind of business idea is this? We’ll tell you.

Planet Fitness Beginnings

Planet Fitness History

Planet Fitness was established in 1992 in Dover, New Hampshire, by brothers Michael and Marc Grondahl. 

Initially, the gym featured extensive free weights. There were juice bars, group exercise classes, daycare services, and more. It was primarily a facility for fitness enthusiasts to further enhance their fitness.

A man lifts dumbbells at the rack in Planet Fitness gym

Planet Fitness Name

The name “Planet Fitness” was chosen to convey a sense of hospitality. The idea was to create an all-encompassing environment, suitable for anyone regardless of their fitness level. 

Like a whole new world (planet) of fitness where everyone could feel comfortable and supported. 

Planet Earth as a symbol of an egalitarian and accessible gym - Planet Fitness.

The name also reflects the brand’s mission to be a “Judgment Free Zone®”.  The gym is a friendly and non-intimidating space for people from all walks of life.

Look at more ideas on how to create names for gyms and other fitness places.

What is the Planet Fitness business model?

Planet Fitness operates on a distinctive business model. They focus on accessibility, affordability, and a non-intimidating atmosphere. Here are the key elements of its business model:

A woman exercises at the gym in a purple outfit, which is the showcase of Planet Fitness.

1. Low-Cost Memberships

  • Affordable Pricing: Planet Fitness offers low-cost memberships, typically starting around $10 per month, making it accessible to a wide range of customers. This pricing strategy aims to attract budget-conscious individuals who might otherwise avoid gym memberships due to cost.
  • Membership Tiers: They offer different membership tiers, with the higher-tier “Black Card” membership providing additional benefits such as access to all locations, guest privileges, and extra amenities like tanning beds and massage chairs.
  • Look at the detailed Planet Fitness membership FAQ.

2. High-Volume, Low-Price (HV/LP) Strategy

  • Volume Focus: By keeping prices low, Planet Fitness aims to attract a large number of members. This high membership volume helps to offset the lower per-member revenue.
  • Economies of Scale: The high membership volume allows Planet Fitness to achieve economies of scale in their operations, reducing per-unit costs and increasing profitability.

3. Judgment-Free Zone® – we got emotional 🥹

Planet Fitness website content, describing Judgment-Free Zone®
  • Non-Intimidating Environment: The “Judgment Free Zone®” ethos is central to Planet Fitness’s branding. It promotes a welcoming environment for people of all fitness levels, particularly targeting those who may feel intimidated or out of place in traditional gyms.
Planet Fitness website content, describing Judgment-Free Zone®
  • Minimalist Approach: The gyms focus on basic equipment and amenities, avoiding high-end or advanced fitness gear that might intimidate beginners.

4. Franchise Model

  • Franchise Expansion: Planet Fitness predominantly operates through a franchise model. Franchisees own and operate the majority of Planet Fitness locations, providing a scalable way to expand the brand rapidly across different markets.
  • Support for Franchisees: The company offers substantial support to franchisees, including marketing, operational guidance, and a recognizable brand, which helps maintain consistency and quality across all locations.
  • Read more about franchise business model: How to Open a Gym Franchise in 2024 (Step-By-Step Guide), Gym Franchise Cost in 2024 (100 Gym Franchises Cost List)

Franchise Revenue:
Franchise segment revenue increased by 17.7% to $387.9 million in 2023, driven by higher royalty revenue and new store openings​ (Planet Fitness)​.

5. Additional Revenue Streams

  • Merchandising: Sales of branded merchandise, such as clothing and fitness accessories, provide additional revenue.
Merchandising as one of the Planet Fitness gyms’ additional revenue source
  • In-Gym Advertising: Planet Fitness also generates revenue through in-gym advertising partnerships, leveraging its large membership base.

6. Operational Efficiency

  • Lean Staffing: Planet Fitness gyms typically operate with lean staffing models, focusing on self-service and minimizing labor costs.
  • Standardized Facilities: The gyms are designed to be functional and cost-effective, with standardized layouts and equipment to streamline operations and reduce maintenance costs.

7. Marketing and Brand Positioning

  • Aggressive Marketing: Planet Fitness invests heavily in marketing and advertising to maintain high visibility and attract new members. Their campaigns often emphasize their low-cost, non-intimidating environment.
  • Strategic Partnerships: The brand engages in strategic partnerships and sponsorships to enhance visibility and credibility. There are often celebrities and influencers to advertise Planet Fitness gyms
Influencer marketing is an important part of Planet Fitness whole strategy

In summary, Planet Fitness’s business model leverages affordability, a welcoming atmosphere, and operational efficiency. The aim is to attract and retain a broad customer base. Their franchise model facilitates rapid expansion, while their focus on maintaining a non-intimidating environment helps differentiate them from traditional gyms.

Understanding the core principles of Planet Fitness

Planet Fitness focuses on creating a friendly and non-scary place for everyone, especially those new to exercise or who don’t go to the gym often. Their “Judgement Free Zone” means they want everyone to feel comfortable and supported. 

Planet Fitness’s business model aims at maximizing the incomes by opening to a bigger clientele. In comparison to typical fitness centers, which have a more specific and therefore smaller target group.

They offer low-cost memberships, easy-to-use equipment, and various classes to make working out simple. 

Planet Fitness gyms are for everyone. For those who come to train once a year too…

Advantages and disadvantages of Planet Fitness business model

A large target group providing opportunities for higher earnings.A large hall with equipment, a crowded place, and little sense of privacy.
Easy-to-use and mid-range equipment, which reduces the costs of the initial investment.A non-personal approach, focusing on quantity.
A well-known brand, the first subconscious choice of the customer.Low-quality equipment, frequent breakdowns.
Possibility to find a Planet Fitness location in many places throughout the country, high availability.No strength training equipment options for advanced users. 

Bad Sides Of Planet Fitness

Watch this video, which shows many bad aspects of the Planet Fitness chain’s offer and business idea. The authors pointed out many weaknesses from the customer’s point of view. These flaws strongly influence the image of PF throughout the country.

We don’t say this to be mean. This is a great opportunity for new gyms to learn from the mistakes of old-timers.

Use Gym Management Software

Want to be as effective as Planet Fitness? Introduce gym management software into use.

Reducing costs is also a method to increase your monthly financial result in the fitness industry. Saving time, which you can spend on other, more profitable activities, is an idea as well!

We suggest implementing a gym management software that saves time and money. According to our survey, WodGuru saves you an average of 30 minutes per gym member per month!

Technology is more and more important in the fitness industry. Innovation in your service will show your business as different and better from the competition. 

Some examples? Here you are! Fitness apps, virtual training, smart gyms and more. Check opinions of the fitness business owners who already have tried a gym management software

How can WodGuru help me run a profitable gym business?

WodGuru can help you run a profitable gym business by streamlining your operations and improving member engagement. It offers tools for managing memberships, scheduling classes, and handling payments, which can save you time and reduce administrative work. 

How Much Do Gym Owners Make?

The platform also provides features for tracking attendance, monitoring member progress, and communicating with clients, helping you build stronger relationships and increase member retention. 

Best Gym Management Software

Additionally, WodGuru’s reporting and analytics tools give you insights into your business performance, allowing you to make data-driven decisions to boost profitability.

WodGuru logo

WodGuru is a recommended club management system.

You get an unlimited trial! Register your account and see how WodGuru can help you run your club.

Low-cost PF memberships – key to success

Low-cost memberships are one of the most important parts of Planet Fitness marketing strategy. By offering affordable rates, Planet Fitness makes fitness accessible to a wide audience, including those who might otherwise be deterred by high gym fees. 

Unlike other fitness centers, they don’t only attract a large and diverse membership base but also encourage long-term commitment. As members are more likely to maintain their subscriptions due to the minimal financial burden. 

Unique approach of PF in the fitness industry

Planet Fitness has carved out a unique niche in the fitness industry with its distinctive approach centered on accessibility and inclusivity. 

Their “Judgement Free Zone” philosophy creates a welcoming environment for all fitness levels, particularly for beginners and those who might feel intimidated by traditional gyms. By offering affordable memberships and user-friendly facilities, Planet Fitness demystifies the workout experience, encouraging a broader audience to embrace fitness. 

This combination of low-cost access, non-intimidating spaces, and a supportive community differentiates Planet Fitness from its competitors and has driven its widespread success.

On the other hand, it cannot be said that high quality services and equipment are offered. A large room with a thousand treadmills next to each other does not convince anyone who would like to start or continue their fitness adventure.

Treadmill is one of the most popular machines in Fitness Planet zones

Financial aspects of the PF business model

The financial aspects of Planet Fitness’s business model are anchored in affordability, scalability, and franchise-based expansion. Their low-cost membership fees attract a broad customer base, promoting high enrollment numbers and steady cash flow. 

This model is supported by additional revenue streams such as premium membership upgrades, personal training sessions, and branded merchandise sales.

PF Branding And Marketing

Their marketing campaigns often highlight inclusivity, affordability, and accessibility, targeting individuals who might feel out of place in traditional gyms. 

Planet Fitness uses a mix of humorous and relatable advertisements to connect with potential members, emphasizing that fitness is for everyone, regardless of experience level. 

Additionally, they engage with their audience through social media, community events, and partnerships, reinforcing their brand message and fostering a loyal community. 

This approachable and consistent branding helps distinguish Planet Fitness in a competitive market.

Planet Fitness Target Market 

What marketing specialist from Planet Fitness do is:

  • understanding audiences
  • using statistics
  • not being afraid of combinations of data from different sources

Planet Fitness business plan targets a broad market. There is a particular focus on individuals who are new to fitness or who feel intimidated by traditional gym environments. Their primary customer segments include:

  1. Beginners: Fitness enthusiasts who are new to working out and need a supportive, non-judgmental environment.
  2. Casual Gym-Goers: Individuals who prefer a simple, hassle-free gym experience without the pressure to perform.
  3. Cost-Conscious Consumers: Those looking for an affordable fitness option with flexible membership plans.
  4. Older Adults: Seniors seeking low-impact fitness options in a friendly and accessible setting.
  5. Occasional Exercisers: People who visit the gym sporadically and appreciate the no-frills, low-cost model.

How does Planet Fitness make money: the revenue model

Planet Fitness’s revenue model is diversified, ensuring multiple streams of income:

  1. Membership Fees: The primary revenue source, offering low-cost monthly memberships to attract a large customer base. They have different membership tiers, including the basic membership and the Black Card membership, which offers additional perks for a higher fee.
  2. Franchise Fees: Planet Fitness generates income through franchise fees from new franchisees, as well as ongoing royalty fees based on a percentage of each franchise’s monthly revenue.
  3. In-Club Sales: Revenue from the sale of branded merchandise, drinks, and snacks available at club locations.
  4. Personal Training and Classes: Although limited compared to other gyms, some locations offer personal training and group classes for an additional fee.
  5. Advertising and Partnerships: Income from strategic partnerships and advertising deals, leveraging their large member base for brand collaborations.

Final Thoughts:

  • Affordable Access: Planet Fitness’s low-cost membership fees make fitness accessible to a broad audience, driving high enrollment numbers and steady cash flow.
  • Inclusive Atmosphere: The “Judgement Free Zone®” philosophy fosters a welcoming environment for beginners and seasoned gym-goers alike, distinguishing Planet Fitness from traditional gyms.
  • Franchise-Focused Growth: Operating primarily through a franchise model allows for rapid expansion while maintaining brand consistency and quality across locations.
  • Diversified Revenue Streams: Beyond membership fees, revenue streams include franchise fees, in-club sales, and advertising partnerships, ensuring financial stability and growth.
  • Effective Branding: Aggressive marketing campaigns, celebrity endorsements, and a consistent brand message reinforce Planet Fitness’s position as a fitness industry leader.
  • Gym Management Software: saves time and money. It is highly recommended to implement it if you want to be as effective as Planet Fitness.

FAQs:

1. What type of business structure is Planet Fitness?

Planet Fitness is a franchise chain, with, as of early 2024, 2,575 locations worldwide. This extensive network includes gyms across all 50 U.S. states, the District of Columbia, Puerto Rico, Canada, Panama, Mexico, and Australia. 

2. What is the Planet Fitness slogan?

Planet Fitness’s slogan is “Judgement Free Zone.” This phrase emphasizes their commitment to creating a welcoming and non-intimidating environment for people of all fitness levels.

3. Why do people use Planet Fitness?

Planet Fitness locations are available in the whole country and it offers affordable membership fees. People get encouraged by funny Planet Fitness advertisements and convinced by celebrities who take part in campaigns. 

4. Why is Planet Fitness so famous?

Probably because of its affordability, the idea of Judgement-Free Environment, but also convenience and availability, marketing and branding.

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