Fitness studios that diversify revenue streams are better positioned to increase their long term profitability. Having multiple sources of income for your fitness studio protects your business from industry volatility and unpredictable market changes like the recent pandemic.
As we explore how gyms can increase profitability we’ll look at some of the most popular revenue streams for fitness studios, some of which may stoke your creative juices and expand your fitness business in ways you might not have considered before.
Let’s start with a look at the different types of revenue streams used by businesses in various industries.
At a basic level, there are two types of business revenue: operating revenue and non-operating revenue. Operating revenue is the amount of money earned from the company’s core business operations – like group fitness classes or gym memberships.
Non-operating revenue is money earned from a business’s side activities. Examples include interest revenue from investments or rental income from leasing out classrooms to related businesses such as nutritionists or massage therapists.
Many different revenue accounts are used by businesses in various industries. For the majority of companies, the following are a few common revenue accounts:
For most fitness businesses, revenue comes from either goods and services or rents, so that’s what we’ll focus on as we explore how your gym can increase profitability through revenue diversification.
Of the four revenue primary types of streams, recurring revenue is the most predictable income to a business because, as long as your gym maintains a stable customer base, your cash inflow each month should remain fairly predictable. This is why offering a monthly membership is a good idea.
On the flip side, transaction-based sales such as drop-in classes, daily use passes and shorter term punch cards can fluctuate dramatically and are much harder to predict. For gyms, seasonality is also often a major factor impacting variability in sales of both service-based and transactional revenue. A solid revenue diversification plan can help off-set these known ups and downs throughout the year.
A project-based revenue program such as workshops and special events can be the most volatile because it depends heavily on topic-based interest and customer loyalty, plus the sale is a one-time transaction. That said, a strategic, year-round programming of special events and training can be a huge game changer for some small fitness studios.
For fitness studios, it’s critical to diversify revenue streams so that if your gym experiences a dip in membership or class pass sales you’re not left unable to cover core expenses such as rent and instructor payroll – or your own compensation!
Plus, with a variety of revenue streams your fitness business is protected if one revenue source dries up, like what happened during the COVID-19 pandemic. Gyms that quickly pivoted to offering online classes, private 1:1 training and wellness programs were among those who survived and are now thriving based on their expanded business footprint.
When your gym creates multiple revenue streams you’re also increasing your visibility to an expanded customer base.
Offering on-demand video classes and wellness courses, for example, allows your business to sell to customers outside your local area and to those who prefer to work out in the comfort and privacy of their homes. Partnering with like-minded brands in your community to rent space for workshops, events or complementary services can bring in entirely new groups of people who may also be interested in joining your gym.
Lastly, more revenue streams means more income. Adding new goods and services to your gym gives you the opportunity to boost your fitness business’s overall revenue.
Here are some ways your fitness business can think creatively and begin to add a variety of profitable revenue streams that will increase the value of your fitness brand.
If your gym already offers a standard monthly unlimited membership consider diversifying your program with the follow types of membership tiers:
What specialty class types could you add that would bring in a more diverse clientele? How about fitness classes for athletes (runners, golfers, skiers)? Or wellness add-ons like pre-and post-workout conditioning and stretching or meditation sessions?
Another popular way to diversify classes is by adding live music or dance party themes. Or what about appealing to new moms with back-to-shape postpartum classes? Workouts for the senior set are also popular in many markets. You know your local community and customer base best. The point is to consider groups that you may have overlooked that could become new sources of extra revenue and make your customer base more stable over time.
Add or expand on your live and on-demand video fitness classes. If your gym is already offering a digital membership package for single classes, how about adding wellness programming like a 6 Week Online Bootcamp or Fitness and Nutrition combo class?
Not only will you generate extra revenue from this online content, our customers may boost their motivation and results by logging on regularly and committing to deeper health habits and a consistent workout schedule.
Adding retail to your fitness business can be a lucrative add-on revenue source. One of the smartest ways to boost both your income and your fitness business’s visibility is to offer branded merchandise such as t-shirts, water-bottles and towels with your logo printed on them.
Plus, your customers may appreciate being able to buy their own equipment and props before and after class. There’s always someone who forgot their water or shorts, needs a headband or a mini-towel.
Some gyms also bolstered their income during the pandemic by renting out larger work-out equipment for customers to use at home.
Again, you know your fitness brand and market best. Ask yourself how you can better serve your customers by making fitness equipment readily available while generating a profit for your gym.
Special events are a great way to boost revenue quickly and dramatically increase annual revenue if planned correctly. By regularly offering workshops, special events and instructor trainings your gym not only brands itself as a leader in professional knowledge but because these types of programs are priced at a premium, can earn tens-of-thousands of extra dollars that can make the difference in being in the back versus the red.
Consider bringing in top talent in your fitness niche to lead these events. There are always big-name fitness professionals on tour and looking for spaces to host them. Typically your gym will get a split of their ticket sales, plus the brand visibility and opportunity to draw in customers who might not otherwise have visited your fitness studio.
Teacher trainings net some of the largest revenues and can provide a feeder system for future instructors.
Along the lines of the specially-themed classes, hosting a family-day or friends and family class is a great way to reward loyal customers, bring an energy of fun and inclusion to your fitness studio and draw in referrals. Consider planning a bring-a-friend-for-free or family class once per quarter.
A big post-pandemic trend in gyms is private VIP and small group training. These programs can be especially lucrative to fitness studios because you can charge a premium while delivering a high-value, high-results experience that leaves your customer feeling special and willing to invest in a regular fitness routine.
When creating these programs be sure to roll out the red carpet with white glove services such as a welcome gift (gym bag, branded water bottle, nutritional bars, t-shirt, etc) and 1:1 communication like check in phone calls, emails with coach videos, special access social media groups and more.
Diversify your gym’s revenue by partnering with local nutritionists, massage therapist, physical therapists, chiropractors, acupuncturists, meditation coaches, and others to booth boost your brand’s reach, add value to your fitness business’s service offerings and bring in additional revenue from space your rent or percentages of sales.
Co-branding with other wellness professionals can look like renting unused classroom space, offering mutual discounts on services, or co-hosting workshops and special events or developing a referral program where each business gets a bonus payment.
While it might be tempting to go whole hog after lots of different revenue diversification strategies, resist the urge to do it all at once. Not only could this confuse your existing customers but it might also overwhelm them with too many choices and over-extend your staff and resources.
Instead, try some of your top revenue diversification ideas and launch them with trial offers before fully committing. A pre-sale is a great way to test a new product or service. Let your customers know that a limited number of spots in your new program are available, and if you sell out of the trial you’ll be opening up the full program to everyone at a later date.
Be sure to get regular feedback by surveying customers to find out what they like and don’t like about your new offerings. Be flexible and make changes based on customer reviews.
Don’t get discouraged if a new program fails to perform. By listening to your best customers and trying new things your fitness business will stand out as an innovator and a brand looking to generate community relationships and lasting partnerships with other businesses in your local area.