Most gym owners don’t make enough money.
And many of them will tell you that’s because they don’t have enough clients.
But in reality, they just aren’t charging enough.
Over the years, I’ve seen different gyms charge $300 and $100 for the exact same service. And I’m sure you’ve seen bargain-basement PT rates of $30 and premium rates well over $100 a session.
Here’s what causes pricing errors:
1. Owners copy the rates they see in the area—and often undercut them to try and appeal to more people. (This is a huge mistake. What if the other gyms set their rates without doing any calculations? And do you really want people who are looking for the lowest rates?)
2. Owners project their own budgets onto their clients and think people can’t afford coaching. (Another big mistake. The right clients can afford coaching—and they want it.)
3. Owners guess and come up with a rate that “feels right.” (A massive final mistake. Businesses don’t run on guesses and feelings. They run on spreadsheets.)
These three mistakes are so damaging that they can drive a gym out of business.
I’ve seen it: A gym has great coaches and a fantastic product, a great location and facility, and a solid number of clients. But its rates are so low that the owner is impoverished and the business is on life support.
You have two good options when it comes to setting rates.
1. Look at industry data to see what the best gyms in the world are charging (you can get that data here). When you see the numbers, don’t say, “I can’t charge that.” Ask, “What value can I provide to charge that?”
2. Start with your financial data and work backward on a spreadsheet. Instead of guessing, you are calculating. Read on: I’ll lead you through this process. If you want to watch me manipulate a spreadsheet to help you set your rates, check out this YouTube video—and if you want a gym-specific profit-and-loss statement you can play with, send me a DM.
Expenses First
We need to determine your break-even point.
Make a list of all your monthly expenses at the gym, everything you have to pay before a client walks in the door. Include rent, insurance, utilities, cleaning, affiliation or franchise fees, loan payments, marketing and retention costs, merchant fees, software costs, and so on.
Do not include your pay, staff pay or any extras. This number is the bare minimum required to open the door.
We need to cover these expenses with 50 clients.
In one example I created, I listed $8,300 in monthly expenses for a gym. Divide that by 50 people, and you know you need an average membership price of $167 to break even.
The exact numbers are not important here—I’m not saying every gym should charge $167 per client. That’s just the number a fictional gym with $8,300 of expenses must cover.
What’s important is the Rule of 50: 50 clients to cover your fixed expenses. If you calculate this number, you will know the absolute minimum rate per client to keep the business open.
Target $205 ARM
Now that we know our minimum rate, our target ARM will be $205 per client per month to start. Many Two-Brain gyms crush this number, so it’s just a starting point.
We know that an ARM of $205 can produce six-figure earnings for a gym owner. In fact, you can see five separate plans to do so if you download this guide.
In a gym with $205 ARM, not every client will pay $205 per month. Here’s how the number shakes out:
- Group 1: About 10 percent of your clients want everything you’re selling—training services, habits coaching, supplements, T-shirts and so on. These clients generally pay about 30 percent more than anyone else and boost ARM. These people know you’re delivering great value and almost feel as if they’re underpaying.
- Group 2: About 40 percent of your clients are happy with the services they’re paying for and might want a little more from time to time. They sign up for an occasional event or challenge, for example, and drive ARM up further. These clients think they’re paying about the right rate.
- Group 3: About 40 percent of clients are fairly happy, but they are price sensitive. They are always evaluating value and will consider other offers. They’re not looking to leave, but price is top of mind for them.
- Group 4: About 10 percent of your clients want less. They want to save money and are always on the verge of leaving. As your gym evolves and your marketing improves, you will have fewer of these people, but some are always around.
ARM is pulled up when you serve Group 3 well and offer more to the people in Group 1 and Group 2. You’ll deliver a properly priced core service at an elite level and offer premium options that allow the people who want more to get more.
What can you offer? Here are some obvious high-value options:
- One-on-one on-ramps that set people up for long-term success in the business and expose them to great coaching. On-ramp session prices should reflect PT rates.
- Personal training, which is the shortest path to a person’s goals. (PT is the No. 1 premium service a gym should offer.) In our 2023 “State of the Industry report,” the average rate for a PT session was $75—some gyms charge far more. It’s a mistake to de-value this service.
- Semi-private or small-group training, in which people don’t get one-on-one attention, but they get far more attention than they would in a big group. Rates should be well above group training but slightly below those for one-on-one training.
- Habits coaching, which helps clients eat better, sleep better, manage stress, etc. Rates are highly variable based on the services you provide; one Two-Brain gym charges $175 per month, but I’m presenting that number as an example only. It is not “what you should charge.” You’ll need to run your own numbers based on the details of the program.
- Specialty programs, such as weightlifting, running, gymnastics and so on. Rates for these programs are also variable based on the number of sessions. Just remember that “special things” are worth more than “everyday things.” The link immediately above can give you some help on pricing.
Do you have to offer everything on this list? No. But you must ensure you have some premium services available to the people who want more—start with PT!
Remember, group training is your discount option. It’s not “cheap” or “bad,” but clients do not receive as much personal attention, which is obviously more valuable.
Here’s a simple stack that works very well in gyms:
- One-on-one on-ramp: the entry point for all clients.
- Group training.
- Group training plus some PT sessions (a “hybrid” approach).
- Personal training only.
The Prescriptive Model: Your Key Tool
Whatever options you come up with—a mentor can help you create your service package fast based on your target market and space—you don’t just toss them on a website and tap your foot as you wait for sales.
The Prescriptive Model involves a free consultation in which you find out what a client wants to accomplish and use a simple, clear pricing binder to lay out the best plan to accomplish the goals. (We help clients build A+ pricing binders that convert in the sales office.)
I’ve laid out the exact plan here in great detail, so I’ll just highlight a key feature of the Prescriptive Model:
By telling the client what’s best—creating a value stack—you will raise ARM.
“I want to lose 15 lb. before my wedding.”
“Sure thing. The best way to do that is PT with me three times per week, plus habits coaching.” Then show the person the rate. Some people will sign up right there, and thrice-weekly PT plus habits coaching is a service package worth far more than $1,000 a month.
As I said above, some people will not want all this, so you can adjust the prescription if needed:
- “No problem. Let’s start with PT, and we can add habits coaching later if you want to move faster.”
- “Got it—you can still make progress toward your goal in group classes, and personal attention is always available if you want to increase the speed.”
The point: In a consultation, you can use your service packages to showcase value. This is how Two-Brain gyms reach $205 ARM and then exceed it.
Plug in the Numbers
Head back to your spreadsheet—again, you can just ask me for mine—and look at what a $205 ARM does for your business.
If you can break even at 50 clients, you’re going to do very well with 150 clients who pay an average of $205 per month—and we teach gym owners exactly how to market so they can find and retain 150 clients.
Dare to dream: Push your ARM to $250 with 150 clients. See what happens. Remember that you can serve 150 clients in a relatively small space, so ARM increases have a massive effect on profit. What happens at $300? Many Two-Brain gyms have ARM above this number. Check out the data here:
This is exactly how you price, package and deliver services to build a strong gym. It all starts with the right rates. If you mess your rates up, 200 or 250 clients still won’t solve your financial problems. You’ll just chase “more members” while the business burns.
This plan will produce a stable, profitable gym that delivers great results to high-value clients who stay for years:
1. Use your expenses and your P&L statement to set appropriate rates.
2. Understand that your best clients want more and create premium service options.
3. Target ARM of $205 to start.
4. Use the Prescriptive Model to sell your services.
The plan is simple, but it’s not always easy to implement without help.
If you’re not sure where to start, an expert mentor can give you a step-by-step plan to ensure your gym is strong and successful for decades. To hear more about that, book a free call here.
