For a decade from 1998 to 2008, I coached people 1:1, selling my attention for an hour at a time.
I found CrossFit in 2008, and after coaching our very first CrossFit group at Catalyst (for free—facepalm!), I remember saying, “This is all I want to do for the rest of my life.”
A year later, I had two locations. I showed up at 5 a.m. to mop one and coach a tiny “class” of two people at 6. At 7, I coached a group of four or five. Then I rushed to the other location to coach my PT clients until 4 p.m.
All the while, I wondered why I was losing money.
It all comes down to simple math.
Read on: I’m going to show you how to figure out exactly what your groups are paying you.
8 Steps to Calculating the Value of Group Classes
1. Add up the total revenue you receive from all group training each month.
2. Divide that by the number of classes you run at your gym per month. That’s the average value of each class.
3. Now go back to your total group-training revenue. Divide that by the number of people paying for group training. That’s your average revenue per group-training client.
4. Next, divide the number above by average attendance. How many times does the average client attend a group in a month? This will tell you the value of one person attending one group.
5. Finally, pull up your attendance-tracking sheet and look at each group you run. Multiply the average attendance for each group by the average value of a group-training client. That will give you a specific value for each group.
6. Compare the average value for each class (from Step 2) against that of each class on your schedule. Which classes are pulling you up and which are pulling you down?
7. Compare the average value for each class against your personal-training rate. Are there any spots where you’d make more money taking a 1:1 client instead of running a small class?
8. ***Danger*** Compare the average value for each class against what you’d be paid to work at McDonald’s. Maybe skip this step if the answer scares you.
Example
Sarah has 100 clients and grosses $10,000 per month in group revenue.
She runs 40 classes per week, or 172 classes per month (40 x 4.3 weeks per month).
Her average revenue per class is $58.14.
Sarah’s average client pays $100 per month. Her average client attends 15 times.
The average value of a class attendee at Sarah’s gym is $6.67.
That means her average group size is about eight or nine people. (Simply divide Sarah’s revenue per group class by the average value of an attendee.)
If Sarah runs a class for eight people, she makes $53.36 an hour. If the class has nine people, she makes $60.03 per hour.
Sarah charges $65 per hour for personal training, so she needs to get 10 people in a class to earn $66.70 and beat her PT rate.
If fewer than 10 people show up for her class, she’d make more doing a 1:1 session in that time.
If 11 or more people show up for a class, Sarah makes more than $73 per hour.
Keep in mind that our 2022 “State of the Industry” report revealed that average group-class attendance in microgyms is 6.6. Almost no one in the data set is consistently running classes with more than 10 attendees all the time. Building your business on the target of running large classes all day is just not a good idea.
A mentor can help Sarah solve this problem.
Big Questions to Answer
Sarah’s mentor might ask these questions and many more:
1. What’s the best use of Sarah’s time in any hour? For example, should she cancel her poorly attended 10-a.m. class and fill the slot with a high-value PT client? (Almost certainly yes!)
2. How soon can we adjust her group rates to reflect the value of her coaching?
3. How could she acquire more PT clients? (Two-Brain has an exact plan for this.)
4. Could she sell hybrid memberships to increase client value?
5. Could she start using semi-private training to generate more revenue per hour and give clients personalized service?
Our mentors evaluate each situation carefully, then present a step-by-step plan to each gym owner. That plan includes clear tactics and implementation plans, done-for-you assets, guidance, support, and accountability.
In case you’ve determined you need to move or cancel some classes, I’ll tell you how to do that in the next post in this series.
