The power of numbers is huge.
Numbers help us make decisions without guessing. Our “2022 State of the Industry” report had dozens of insights that guided gym owners to make better decisions, make more money and waste less time.
Here are just five examples from a 56-page book packed with data:
1. Nutrition Coaching Isn’t a Revenue Driver for Most
Stats revealed nutrition coaching is popular but doesn’t generate much revenue in most gyms.
While a large percentage of gyms now have nutrition programs, the average gross-revenue bump that a gym receives is only 5 percent. When you subtract the cost of credentials, additional insurance and coach compensation (44 percent of gross) from income, that doesn’t leave much. Some gyms are also paying for an extra app on top of all that.
For me, this was a signal to invest elsewhere. While good nutrition is critical to my clients’ success, I can’t write them meal plans anyway, so we focus on using the “healthy habits” checklists that are available to all Two-Brain gyms.
The other option is to go all in on nutrition coaching and try to double the revenue. But if the average gym is only generating 5 percent of gross revenue through nutrition, there are easier paths for fitness entrepreneurs, such as adding a couple of clients to their existing programs.
Action to take: If you have a nutrition program, run challenges two or three times per year to boost enrollment. If you don’t have a nutrition program, coach your clients on habits and focus on other options first.
Fill out the 2023 survey here: 2023 State of the Industry Survey
2. Kids Programs Can Do More
Only 39 percent of gyms offer kids or youth classes. While the average percentage of gross revenue contributed by youth classes is higher than that kicked in by nutrition services—9 vs. 5 percent—fewer gyms offer youth classes. This is interesting because other fitness-type programs for youth typically cost far more than adult fitness programs, so money can be made serving kids.
For example, the average cost of a gymnastics class for kids is about double the average CrossFit gym’s average revenue per member. The average cost for a cheer gym is triple that. And if your kid went to a parkour gym, they’d pay more than most semi-private gyms charge for a month (which is quite a bit).
Even though most microgyms undercharge for kids training, these programs are still quick to fill, easy to grow and can be a great “intrapreneurial” opportunity for the right coach. If the gyms who do offer kids programs simply charged more, the average percentage of gross revenue figure would go up. And expenses would stay low: The programs don’t usually require any new equipment, tracking apps or other recurring monthly costs to run.
Action to take: If you have a kids program, raise the price by at least 15 percent. If you don’t have one, look first for an amazing coach and then for age-group opportunities among your current clients.
3. Staff Pay Is Still too Low—but There Is Hope
In 2022, the highest-earning staff member in a gym—excluding owners—only made US$28,709, on average. Obviously, this isn’t enough. But there are a few lessons here:
A. Most microgyms still pay above the industry average. While $28,709 isn’t great, it’s actually higher than what staff could make at most chain gyms.
B. One reason staff aren’t making more is because the owner isn’t making more. Gyms need to become more profitable first, and then staff will earn more. Staff pay grows as “the pie” grows.
C. Another reason staff aren’t making more is because the gym owner has too many staff members and the pie is sliced into too many pieces. I’m in this position myself right now: I have a passionate coaching “bench” of people who want part-time work. So while the gym is actually paying a lot in wages, no single staff person is taking the majority of the funds.
Action to take: Increase your gym’s profit by 15 percent. Do this by raising rates or adding high-value services, and keep your staff pay at no more than 44 percent of revenue. As your gross revenue goes up, so does their earnings ceiling. Do not cut out a bigger slice of the same pie for your staff; grow the pie and everyone wins.
4. Gym Owners Are Learning to Be CEOs
In 2022, the average gym owner took home $3,787 in net owner benefit every month. That’s higher than staff members but still not enough: $48,000 or less per year isn’t a survivable wage. Any little unexpected problem—or even just life in a high-rent area—could kill the gym because the owner simply can’t afford to work there anymore.
The bright side is that this number is going up, and owners are making a little more than they would as coaches. This means they’re getting better at being CEOs—they just need to keep getting better. For comparison, the average Two-Brain gym owner took home $4,854 per month—more than $1,000 more per month. That shows gym owners can learn how to earn more.
Action to take: Set up a payment strategy for yourself, like Profit First. Increase profit by increasing average revenue per member or decreasing expenses. Don’t make client headcount your priority—adding more clients adds more revenue but doesn’t always add more profit. And profit is what pays you.
5. Group-Training Fees Are too Low
In 2022, the median price for group training was $160. We used the median here because we didn’t want geographic differences in the data set to pull up the average.
I’ll be blunt: $160 per month for a coaching service is low, and this figure hasn’t increased in at least three years. While Two-Brain gyms are far ahead of the curve here, the first target for the average microgym should be $205.
Action to take: Increase your membership price by dropping your lowest tier, raising rates, moving to biweekly billing, passing credit-card fees along to clients or moving them all to ACH.
Be Part of Our 2023 Report!
The great thing about numbers: You can trust them.
You can actually organize your priorities for 2024 based on the metrics we’ll present in our “State of the Industry” report in mid-November. With hard data in your hands, you’ll be able to prioritize the big things that move the needle, save the small wins for later and avoid the things that look good but don’t really grow your business much.
To get the report and ensure your numbers are included in it, fill out our 2023 State of the Industry Survey.