Fitness companies, like any business, need to find a sustainable way to generate revenue while serving their customers’ needs. There are various business models in the fitness industry, each with its unique pros and cons.
In this article we present a breakdown of some of the most common business models and ideas. We have already written about Planet Fitness business model – skip there if you wish.
Key Takeaways
- Gym business model is the chosen kind of offer and serving clients. It can be offering individual classes or group training, running a small boutique gym or bigger fitness centers, having an online or on-site fitness business, nutrition counselling, etc.
- Tiered membership models are popular and they are quite profitable, because they match different customer needs - online and offline classes, nutrition coaching together with providing personal trainers, etc.
- One right business model doesn’t exist. Every gym owner must decide on the type according to the circumstances, skills and own ideas.
- You must choose a gym business model differently for group fitness classes, local businesses, huge gyms with 24 hour access, companies in the health and fitness industry or online fitness services.
- Successful gym business models have some features in common, though - they focus on knowing the target audience, meeting customer needs, providing consistent value, and building strong community engagement.
- No matter what kind of business model you choose, there are opportunities in the fitness business market to make your work easier, thanks to fitness management software.
Example: Anytime Fitness Business Model
- 24/7 Access: Members can work out anytime – the model of 24 hours gyms is offering flexibility to the clients.
- Global Network: Membership gives access to all locations worldwide.
- Franchise Model: Most gyms are franchises, allowing fast expansion. Read more about owning a gym franchise.
- Low Overhead: Minimal staff needed due to self-service access.
Pros:
- Flexible hours appeal to busy members.
- Recurring monthly membership provides steady income.
- Easy to scale through franchising.
Cons:
- High competition in the fitness market.
- Success depends on location and local demand.
- Limited services compared to full-service gyms.
17 Fitness Industry Business Models
Each fitness business model has its own set of challenges and advantages. The key is aligning your model with your target market, operational capabilities, and long-term goals.
Many successful fitness companies combine elements of multiple models to diversify their revenue streams and reduce risks. For example, a gym might offer memberships, personal training, and group classes, along with a digital platform or fitness products for added income.
1. Gym Membership Model
This is the classic, traditional fitness business model where customers pay a recurring membership fee to access the gym and its equipment. Due to being well-known it is clearly one of the successful gym business models.
Pros:
- Predictable Revenue: Monthly memberships provide consistent, recurring revenue.
- Scalability: Can expand by adding more locations or increasing membership numbers.
- Customer Loyalty: Members who commit to a regular gym routine tend to stay for the long term.
Cons:
- High Competition: Many gyms offer similar services, which can lead to price wars and a diluted market.
- Underutilization: Many people pay for memberships but don’t use them frequently, which can affect retention and engagement.
- Fixed Costs: Running a physical gym requires significant upfront investment (equipment, real estate, maintenance, etc.) and ongoing operational costs.
2. Personal Training Model
This model focuses on providing one-on-one or group personal training sessions, either in person or online.
Pros:
- High Profit Margins: Personal training services typically have higher profit margins compared to general gym memberships due to premium pricing.
- Personalized Services: Customization and individual attention can lead to high customer satisfaction and retention.
- Flexibility: Can be offered in person, online, or through hybrid models.
Cons:
- Scalability Challenges: Personal training services are inherently limited in terms of scalability because they rely heavily on the trainer’s time.
- Variable Income: Personal trainers can experience income volatility due to changes in client schedules, demand, and seasonality.
- High Staff Turnover: Quality trainers may leave for better opportunities, requiring continuous recruitment and training.
3. Group Fitness Classes Model
This model offers fitness classes such as yoga, spin, Pilates, Zumba, CrossFit, etc., either in-person or virtually. These classes can be included in membership or offered as a pay-per-class model.
Pros:
- Community Feel: Group classes create a sense of community and can drive customer engagement.
- Revenue Diversification: Group classes can generate additional revenue streams alongside regular gym memberships.
- Scalability: One instructor can lead multiple clients simultaneously, making it easier to scale than one-on-one personal training.
Cons:
- Instructor Dependence: Success is dependent on the quality and availability of instructors. Good instructors may demand higher pay, leading to higher operational costs.
- Space and Equipment Requirements: Group classes require sufficient space, equipment, and management to handle class sizes and scheduling.
- Customer Retention: Customers may leave if they don’t enjoy specific classes, instructors, or times offered.
4. Fitness App or Digital Subscription Model
This model involves offering a fitness service via an app or online platform that can include workout videos, training plans, nutrition guides, and community features. Check out our list of the best apps for personal trainers.
Pros:
- Global Reach: Can attract customers from all over the world with minimal overhead costs.
- Scalability: Easy to scale with a large customer base without the need for physical space or significant additional labor.
- Convenience: Customers can access content on-demand, offering high levels of flexibility and appeal.
Cons:
- Customer Retention: Without in-person interaction, it can be difficult to retain customers, especially if they don’t feel connected to the brand or community.
- Tech Development and Maintenance: Continuous investment in app development, updates, and troubleshooting is needed.
- Saturated Market: With so many fitness apps available, competition is fierce, and standing out requires significant investment in marketing and quality content.
5. Boutique Fitness Studio Model
Boutique fitness studios specialize in a specific type of workout, like yoga, barre, pilates, HIIT, CrossFit, or cycling. These studios usually offer a high-end experience with personalized attention.
Pros:
- Niche Focus: Specialized offerings appeal to specific customer groups, allowing the brand to build a loyal community.
- Premium Pricing: Because of the boutique, exclusive experience, businesses can charge higher prices for their services.
- Higher Profit Per Member: Smaller class sizes often result in more personalized service and the ability to charge higher prices.
Cons:
- High Operational Costs: Studio rental, specialized equipment, and high-quality instructors can lead to higher overhead.
- Limited Scale: A small, niche market can limit the number of customers, especially in smaller locations.
- Seasonal Fluctuations: Demand can fluctuate, especially in markets where fitness trends are seasonal.
6. Corporate Wellness Programs
Many fitness companies partner with businesses to offer corporate wellness programs, which can include gym memberships, fitness classes, or on-site personal training to employees.
Pros:
- B2B Revenue: Corporate contracts can lead to larger, more stable income streams, as businesses often pay for multiple memberships or services at once.
- Scalability: Once a corporate partnership is established, it’s easier to scale by partnering with other companies.
- Employer Loyalty: Companies invested in their employees’ health may be willing to offer long-term contracts, ensuring steady business.
Cons:
- Sales Cycle: The B2B sales process can be long and requires relationship-building with HR departments and decision-makers.
- Limited Control: The fitness company may have less control over the experience or engagement level if services are offered in a company-specific setting.
- Market Saturation: Many companies already have existing wellness programs, making it harder to differentiate and attract new clients.
7. Retail or Product Sales Model
Some fitness businesses generate revenue by selling fitness products such as apparel, supplements, equipment, or accessories, either as standalone or complementary to other services.
Pros:
- Diversified Revenue Streams: Adds an additional income source beyond services, especially if you have a strong brand following.
- Brand Loyalty: Offering high-quality or exclusive products can increase brand loyalty.
- High Margins: Physical products, especially if branded, can offer good profit margins.
Cons:
- Inventory Management: Managing inventory, supply chains, and storage can be complex and costly.
- Marketing Costs: You may need to invest heavily in marketing to sell products, especially if the business model isn’t based on a large-scale operation.
- Customer Acquisition: It may be hard to stand out in a crowded market of fitness products unless the products are unique or have a significant brand following.
8. Fitness Retreats or Events Model
This involves organizing fitness-focused retreats or gym events, either locally or internationally. These can range from weekend getaways to multi-day experiences that combine fitness training, wellness, and lifestyle.
Pros:
- High Revenue per Customer: Fitness retreats can charge premium prices for an all-inclusive experience.
- Experiential Appeal: Customers are often drawn to immersive, transformative experiences, leading to strong word-of-mouth marketing.
- Unique Selling Proposition: Fitness retreats can set your brand apart by offering something more unique than the average gym or fitness class.
Cons:
- Seasonality: Retreats can be subject to seasonal demand, and off-peak times might lead to fewer customers.
- Logistical Complexity: Planning retreats requires a lot of coordination (venues, food, travel, trainers) and upfront costs.
- Risk: If a retreat doesn’t sell out, it can lead to significant financial loss.
9. Nutrition-Focused Fitness Model
Fitness companies that deliver healthy meals or meal plans tailored to specific fitness goals, such as weight loss or muscle gain.
Pros:
- Convenience: Customers appreciate the ease of having pre-made, healthy meals delivered.
- Increased Customer Engagement: Ties nutrition directly to fitness goals, offering holistic support.
- Growing Market: Increased awareness of the importance of nutrition in fitness and wellness.
Cons:
- Logistical Challenges: Managing perishable inventory and delivery can be complex.
- High Overhead: Requires significant investment in kitchen operations, meal prep, and packaging.
- Market Limitations: May appeal only to a niche market focused on fitness and health.
10. Sports-Specific Fitness Model
Fitness businesses that focus on training for a specific sport, such as boxing, tennis, or strength training, targeting enthusiasts of that sport.
Yet, no matter which sport you are a specialist at, a dedicated management software can make your work faster and easier. There are martial arts software, dance school software solutions, or even cycling software programs available on the market.
Pros:
- Niche Focus: Attracts a dedicated group of customers who are passionate about a specific sport.
- Higher Retention: Sports-focused training can foster a community, leading to strong client loyalty.
- Expertise: Offers specialized training that differentiates your business from general fitness gyms.
Cons:
- Limited Market: The customer base is smaller, limited to those interested in the specific sport.
- Requires Expertise: Expertise in the sport is needed to build credibility and quality.
- Potential for Seasonality: Some sports have off-seasons, leading to fluctuating demand.
11. Mindfulness and Wellness Fitness Model
A model that focuses on mental health alongside physical fitness, offering services like yoga, meditation, and mindfulness coaching.
Pros:
- Holistic Approach: Attracts individuals looking for overall well-being, not just physical fitness.
- Growing Demand: Increasing awareness and demand for mental wellness in the fitness industry.
- Community Building: Creates a supportive, community-focused environment.
Cons:
- Niche Appeal: May not appeal to those solely interested in physical fitness or high-intensity workouts.
- Requires Specialized Trainers: Skilled yoga instructors, meditation coaches, or wellness experts are needed.
- Limited Revenue Streams: Focus on wellness may limit income diversity compared to more traditional fitness models.
12. Fitness Equipment Rental or Sales Model
Companies that rent out fitness equipment for home use or sell specialized fitness products and gear.
Pros:
- Recurring Revenue: Renting equipment generates consistent, passive income.
- High Profit Margins: Branded or high-quality equipment can offer significant markup.
- Flexible Offerings: Can expand product line to include accessories, apparel, or supplements.
Cons:
- Logistical Costs: Managing inventory, delivery, and maintenance can be costly.
- Storage Needs: Requires space to store equipment, adding operational costs.
- Market Saturation: High competition from online retailers and fitness equipment brands.
13. Fitness Influencer/Content Creator Model
Fitness influencers offer workout programs, challenges, or tutorials through social media platforms like YouTube, Instagram, or personal websites, monetizing through sponsorships, ads, or selling digital products.
Pros:
- Low Startup Costs: Minimal investment needed in physical infrastructure or facilities.
- Massive Reach: Potential to connect with a global audience through social media.
- Flexible Income Streams: Revenue from ads, sponsorships, affiliate marketing, and product sales.
Cons:
- Highly Competitive: The space of fitness influencers is saturated, requiring continuous content creation.
- Income Unpredictability: Income is reliant on audience engagement, which can fluctuate.
- Time-Consuming: Requires a significant amount of time and effort to create content and engage followers.
14. On-Demand or Pay-Per-Class Model
Customers pay for individual classes or access to a variety of fitness experiences without committing to a long-term membership.
Pros:
- Flexibility for Customers: No long-term commitment, ideal for those with unpredictable schedules.
- Attractive for Newcomers: Low barrier to entry, appealing to people hesitant about long-term memberships.
- Higher Revenue Per Class: Potential for higher per-class pricing compared to memberships. Read more about gym pricing strategy.
Cons:
- Unpredictable Revenue: Income is not as stable, depending on customer demand per class.
- Lower Gym Member Retention Rates: Without memberships, clients may not return regularly.
- Operational Complexity: Requires managing class schedules, space, and instructors efficiently.
15. Hybrid Model (Gym + Digital)
This gym business model combines in-person gym or fitness classes with a digital platform for online classes, allowing members to choose between working out at the gym or streaming workouts at home.
Pros:
- Flexibility: Attracts a wide range of customers who prefer either in-person or online options.
- Scalability: Easier to scale as digital content can be delivered globally with minimal overhead.
- Increased Member Engagement: Offers members a variety of ways to stay active and engaged.
Cons:
- High Initial Investment: Requires substantial investment in both physical gym space and digital infrastructure (platforms, cameras, editing, etc.).
- Customer Retention Challenges: Keeping digital-only users engaged may be more difficult without in-person community interaction.
- Operational Complexity: Managing both physical and digital operations can be resource-intensive.
16. Fitness Franchise Model
A franchise system where local operators pay for the right to run a fitness studio under a well-known brand, typically offering a specific type of workout (e.g., HIIT, circuit training, yoga). Read more about gym franchise cost – it’s usually lower than starting a gym brand on your own from scratch.
Pros:
- Proven Business Model: Franchises offer a ready-made business plan and support systems, reducing startup risk.
- Brand Recognition: Customers are more likely to trust a well-known brand, leading to faster customer acquisition.
- Marketing Support: Franchise brands often provide strong marketing, advertising, and promotional materials.
Cons:
- Franchise Fees and Royalties: Ongoing costs can reduce overall profitability.
- Limited Flexibility: Franchise owners must adhere to strict brand guidelines, limiting creativity and customization.
- Initial Investment: Higher startup costs due to franchise fees and setup requirements.
17. Outdoor Fitness or Bootcamp Model
Fitness programs that take place outdoors or in parks, often focusing on high-intensity interval training (HIIT) or boot camp-style workouts.
Pros:
- Low Overhead: No need for a physical gym, reducing rental and equipment costs.
- Unique Experience: Appeals to people who prefer outdoor activities or a change from the typical gym environment.
- Community Engagement: Builds a strong, local community of fitness enthusiasts.
Cons:
- Weather Dependency: Outdoor programs are heavily impacted by weather conditions.
- Limited Control Over Environment: Outdoor settings can present distractions or safety issues.
- Seasonality: Participation may drop during colder months, requiring a shift to indoor alternatives.
How to Choose the Best Gym Business Model for You?
Choosing the right business model for your gym is crucial for long-term results. There are several successful gym business models, but how will you choose the best one for your own fitness idea?
Below we present a step-by-step guide for future gym owners. Here’s a list of steps to help you navigate the decision.
Step 1: Identify Your Target Market
- Who are your potential customers?
- Demographics: Age, income, lifestyle, fitness level.
- Location: Urban, suburban, or rural areas?
- Interests: General fitness, weight loss, bodybuilding, wellness, sports-specific, etc.
Action: Conduct market research (surveys – read more about fitness survey questions, focus groups, competitor analysis) to understand the specific needs and preferences of your target audience.
Step 2: Evaluate Your Budget and Financial Goals
- How much capital do you have?
- Consider initial investment (real estate, equipment, staffing) and ongoing operational costs (utilities, gym insurance, marketing).
- What are your revenue goals?
- Do you want steady, predictable income or a business that generates higher income but requires more work and investment?
Action: Create a detailed financial plan to determine the costs and potential profitability of different models (e.g., memberships, personal training, classes).
Step 3: Decide on the Type of Services You Want to Offer
- Do you want to provide a wide variety of services or specialize in one area?
- General Fitness: Full-service gyms with a mix of cardio, strength, group classes.
- Specialized Fitness: Focus on one type of workout (e.g., yoga, CrossFit, cycling, or boxing).
- Personal Training: Focus on one-on-one or small group training.
Action: Choose a model that aligns with your expertise and the demand in your market. Specialization can help you stand out but may limit your audience. Read our other article: how to make your gym stand out.
Step 4: Choose Between a Traditional Gym or Boutique Studio
- Traditional Gym: A larger facility offering various equipment, classes, and possibly personal training.
- Best for attracting a wide range of fitness enthusiasts.
- Boutique Studio: A smaller, specialized studio with a focus on a specific activity (e.g., yoga, Pilates, HIIT).
- Best for creating a high-end, intimate, and community-driven environment.
Action: Consider the size of your space, your market’s preferences, and your desired brand identity. A traditional gym is broader, but a boutique offers a more exclusive experience.
Step 5: Decide on a Membership or Pay-Per-Class Model
- Gym Membership Model: Monthly or annual memberships provide predictable, recurring revenue.
- Pros: Steady income, higher customer retention.
- Cons: Requires more investment in gym infrastructure and staff.
- Pay-Per-Class Model: Customers pay for individual classes or sessions without long-term commitment.
- Pros: Flexibility for customers, potential for higher revenue per class.
- Cons: Less predictable revenue, harder to build long-term loyalty.
Action: Consider your target market’s commitment levels. Younger, more transient populations may prefer pay-per-class, while more dedicated fitness enthusiasts may prefer a membership.
Step 6: Consider the Option for Digital or Hybrid Models
- Fully Digital Model: Offering online classes or a fitness app for remote access.
- Great for reaching a wider, global audience and scaling quickly with low overhead.
- Hybrid Model: Combining in-person gym services with digital access (e.g., online classes or workouts).
- Best for offering flexibility to members who may want to work out at home occasionally.
Action: Determine whether you want to cater to a local audience, a global audience, or a mix. If you’re interested in digital, consider the tech investments and the ongoing costs of content creation.
Step 7: Analyze the Potential for Scalability
- Do you plan to open multiple locations or keep it small?
- Franchise Model: Partnering with a franchise (e.g., Anytime Fitness, Orangetheory) can help you scale rapidly but requires adherence to franchise rules and royalties.
- Independent Growth: You maintain full control and flexibility, but scaling may be slower and require more effort.
Action: Decide if you want to expand quickly or maintain a single location. Factor in franchise fees, royalties, and your ability to manage multiple sites.
Step 8: Choose Your Business Structure and Ownership Type
- Sole Proprietorship: You own and operate the gym independently.
- Simple to set up but exposes you to personal liability.
- Partnership: Share ownership with one or more people, each contributing capital or skills.
- LLC (Limited Liability Company): Provides liability protection and flexible taxation options.
- Corporation: Best for large-scale businesses with multiple owners or investors.
Action: Consult a lawyer or accountant to choose the best business structure based on your ownership model, liability concerns, and tax preferences.
Step 9: Create a Marketing and Brand Strategy
- How will you market your gym and attract members?
- Traditional Marketing: Flyers, local ads, outdoor signage.
- Digital Marketing: Social media, SEO, influencer marketing, email campaigns.
- Community Engagement: Hosting events, classes, or challenges that engage local members.
Action: Develop a brand identity and marketing strategy that aligns with your business model. Build a strong online presence to attract a broad audience and differentiate your gym from competitors.
Step 10: Analyze Risks and Potential Challenges
- What are the risks involved in each model?
- High overhead costs (traditional gyms or large franchises).
- Seasonal fluctuations (boot camps or outdoor fitness).
- Customer retention (pay-per-class models or digital-only businesses).
Action: Evaluate potential challenges for each model and prepare contingency plans. This could include offering promotional deals, diversifying services, or improving customer service to reduce churn.
Step 11: Introduce Gym Management Software
Gym management software can greatly streamline operations and improve efficiency across different fitness branches.
- Automated Operations: Manage memberships, billing, scheduling, and member engagement with ease, saving time and reducing administrative workload.
- Centralized Data: Track member progress, class attendance, and financial metrics in one place, making it easier to analyze performance and make informed decisions.
- Improved Customer Experience: Offer features like online booking, mobile apps, and personalized member communication to enhance member satisfaction and retention.
- Scalability: Whether you run a small boutique studio or a large gym chain, gym management software can scale with your business, adapting to your growing needs.
Action: Implement gym management software to help automate and optimize key operations, ensuring a smooth, efficient experience for both staff and members. WodGuru is highly recommended due to its reasonable price and friendly and helpful support team.
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Step 12: Test and Adjust Your Business Model
- Pilot and feedback: Consider running a soft launch or offering limited services to test your model and gather feedback.
- Adapt: Be open to making adjustments based on customer feedback, market trends, and financial performance.
Action: Start small, track performance, and be prepared to pivot if necessary. Learning from early feedback will allow you to refine your business model and better meet the needs of your customers.
FAQ
The business model of a gym typically revolves around membership fees (monthly or annual), supplemented by revenue from personal training, classes, retail sales, and sometimes pay-per-class or drop-in fees.
The best business type depends on goals, but fitness franchises and boutique studios are popular. Franchises offer brand recognition and support, while boutique studios cater to niche markets and provide high-value, specialized services.
Common business structures for gyms include sole proprietorship, partnership, and limited liability company (LLC). An LLC is popular because it provides liability protection and flexibility in taxation.
Boutique gyms (specializing in areas like yoga, HIIT, or cycling) can be highly profitable due to premium pricing and high customer retention. Franchise models also generate significant revenue with a proven, scalable business model.
