The Gym Business Model
Gyms operate primarily on recurring membership revenue, making them attractive for predictable cash flow. However, the industry has a 30-50% annual member attrition rate, meaning you need constant member acquisition to maintain revenue.
The global fitness industry is worth $96 billion, with boutique fitness studios growing fastest at 8% annually.
Gym Types & Startup Costs
| Gym Type | Size | Startup Cost | Target Members |
|---|---|---|---|
| Boutique Studio (yoga, CrossFit, spin) | 1,500-3,000 sq ft | $50,000-$200,000 | 150-400 |
| Small Gym | 3,000-8,000 sq ft | $150,000-$400,000 | 400-1,000 |
| Mid-Size Gym | 10,000-25,000 sq ft | $400,000-$1,000,000 | 1,000-3,000 |
| Large Full-Service | 25,000-50,000 sq ft | $1,000,000-$3,000,000 | 3,000-8,000 |
Startup Cost Breakdown (Mid-Size Gym)
| Category | Budget Range |
|---|---|
| Lease Deposit (3-6 months) | $30,000-$100,000 |
| Build-out & Renovation | $100,000-$300,000 |
| Cardio Equipment (20-40 machines) | $100,000-$200,000 |
| Strength Equipment | $80,000-$150,000 |
| Free Weights & Accessories | $30,000-$60,000 |
| Flooring (rubber/turf) | $20,000-$50,000 |
| Locker Room Buildout | $40,000-$80,000 |
| Software & Access Control | $10,000-$25,000 |
| Pre-Opening Marketing | $20,000-$50,000 |
| Working Capital (3-6 months) | $50,000-$150,000 |
| TOTAL | $480,000-$1,165,000 |
Revenue Model
Membership Pricing Tiers
| Tier | Monthly Price | Annual (Prepaid) | % of Members |
|---|---|---|---|
| Basic (Gym Only) | $29-$49 | $299-$499 | 50-60% |
| Standard (+ Classes) | $49-$79 | $499-$799 | 30-35% |
| Premium (+ PT, Amenities) | $99-$199 | $999-$1,999 | 10-15% |
Revenue Streams
| Revenue Source | % of Total Revenue |
|---|---|
| Membership Dues | 70-80% |
| Personal Training | 10-15% |
| Group Classes | 5-8% |
| Retail (supplements, gear) | 2-5% |
| Other (day passes, initiation fees) | 2-5% |
Key Metrics to Track
- Monthly Member Count: Total active members
- Attrition Rate: % members who cancel monthly (target < 4%)
- Average Revenue Per Member (ARPM): Target $50-80/month
- Cost to Acquire Member: Target $50-150
- Member Lifetime Value: ARPM × Average Months (typically 18-24)
- Visits Per Member: Engaged members visit 8-12x/month
Monthly Operating Costs (1,500 member gym)
| Expense | Monthly Cost | % of Revenue |
|---|---|---|
| Rent | $15,000-$30,000 | 15-25% |
| Payroll (staff, trainers) | $25,000-$45,000 | 25-35% |
| Utilities | $3,000-$6,000 | 3-5% |
| Equipment Maintenance/Lease | $2,000-$5,000 | 2-4% |
| Marketing | $3,000-$8,000 | 3-6% |
| Insurance | $1,000-$3,000 | 1-2% |
| Software/Tech | $500-$1,500 | 0.5-1% |
| Cleaning/Supplies | $1,000-$2,500 | 1-2% |
Key Success Factors
- Location & Accessibility: Parking, visibility, near residential/office
- Pre-Sale Campaign: Sell 200-500 founding memberships before opening
- Member Experience: Clean facilities, good equipment, friendly staff
- Retention Focus: Reduce attrition through engagement programs
- Diverse Revenue: PT and classes improve margins significantly
- Technology: Modern app, easy booking, access control