The fitness industry has rebounded strongly post-pandemic, with boutique studios, 24/7 gyms, and hybrid digital-physical models all competing for members. But the economics of a gym are unlike almost any other business — revenue is recurring through memberships, but member attrition is a constant headwind that can quietly drain profitability.
A gym feasibility study evaluates whether your concept can attract enough members, retain them long enough, and generate sufficient revenue per member to cover the substantial fixed costs of operating a fitness facility.
The Membership Economics Problem
Gyms live and die by the membership model. The critical dynamic is the balance between new member acquisition and existing member attrition (cancellations). If your gym signs up 50 new members per month but loses 40, your net growth is only 10 — and it will take years to reach a profitable membership base.
Industry average monthly attrition rates range from 3–6% for traditional gyms and 5–10% for boutique studios. At 5% monthly attrition, you lose roughly 46% of your members annually. Your feasibility study must model this attrition explicitly — a gym that looks viable with a static membership number may be fundamentally unprofitable once realistic churn is factored in.
Core Feasibility Analysis Components
Market and Location
Catchment Area: Most gym members live or work within 10–15 minutes of the facility. Your feasibility study should analyse the population within this radius, filtered by demographics that align with your target market (age, income, fitness orientation). Market Penetration: What percentage of the catchment population are current gym members? In mature markets, gym penetration rates are 15–20%. If 18% of your catchment area already belongs to a gym, your opportunity is either converting the remaining 82% (harder) or winning members from competitors (also hard, plus you need a compelling reason). Competition Mapping: Identify every gym and fitness facility within your catchment area. Assess their positioning, pricing, facilities, and estimated membership. A market with 5 gyms serving 10,000 potential members is very different from a market with 1 gym serving 15,000.Revenue Model
| Revenue Stream | Typical % of Total Revenue |
|---|---|
| Membership fees | 60–75% |
| Personal training | 10–20% |
| Group classes (if separate pricing) | 5–10% |
| Retail (supplements, merchandise) | 2–5% |
| Other (rental, café, childcare) | 3–8% |
CAPEX Requirements
| Category | Budget Gym | Mid-Range | Premium |
|---|---|---|---|
| Equipment (cardio + weights) | $80,000–$150,000 | $150,000–$300,000 | $300,000–$600,000 |
| Fit-out and flooring | $30,000–$60,000 | $60,000–$120,000 | $120,000–$250,000 |
| Technology (access, software) | $10,000–$20,000 | $20,000–$40,000 | $40,000–$80,000 |
| HVAC and ventilation | $15,000–$30,000 | $30,000–$60,000 | $60,000–$100,000 |
| Signage and branding | $5,000–$15,000 | $15,000–$30,000 | $30,000–$60,000 |
| Working capital | $20,000–$40,000 | $40,000–$80,000 | $80,000–$150,000 |
| Total | $160,000–$315,000 | $315,000–$630,000 | $630,000–$1,240,000 |
Sensitivity Analysis
Gym feasibility is highly sensitive to two variables: monthly membership growth rate and monthly attrition rate. A 1% change in either can dramatically affect the timeline to break-even and the ultimate NPV.
Your feasibility study should test: What if attrition is 6% instead of 4%? What if you only acquire 30 new members/month instead of 50? What if you need to discount membership fees by 20% to compete? What if a new competitor opens 2km away in year two?
The Bottom Line
Gym businesses can be highly profitable once they reach critical mass — the fixed costs are largely constant whether you have 500 or 1,200 members. But the path to critical mass requires careful analysis of acquisition channels, attrition management, and adequate capitalisation to survive the ramp-up period.
SimpleFeasibility generates gym and fitness centre feasibility studies with membership economics modelling, attrition analysis, break-even calculations, multi-year NPV/IRR projections, and interactive What-If scenarios. Evaluate Your Gym Concept →Related Articles: