On this episode of The GSD Show, you’ll learn the fundamentals of higher profit for your gym, and how to master them.
The #1 key is to practice the fundamentals so much that over time, you won’t remember what life was like before having them down to a science.
Repetition is the mother of skill—and consistency is the mother of habit.
Let’s dive in…
Innovation Increases Gym Profit (6:50)
There’s a difference between a business owner and an entrepreneur. As a business owner, you took a huge step, a risk, and then it became about the day-to-day.
Entrepreneurs, on the other hand, started there as well, but now look to build something great. They’re tracking and seeking to increase profit over revenue. Which means, they’re willing to innovate.
Understanding Your Avatar
When Toyota debuted the Prius, it was innovative… but it wasn’t cool. It wasn’t popular. Then came Elon Musk with Tesla. Now, every car maker in the world is getting into the EV game.
As a gym owner, it’s good to test new things and see what your members respond to.
You might find out that people go crazy over a t-shirt they get for completing a challenge like Orangetheory did.
Or, maybe you start exploring how to help members with their nutrition by bringing on a Dietician or pre-prepped food partner.
When your members take action, especially with their money, they’re telling you which innovation can boost your profit.
How to Solve Problems as a Gym Owner
There’s always a problem to solve, right?
Gym owners have a lot to worry about. How to pay the lease, employees, fixing broken equipment, etc. How do you solve for that?
The goal is to get you to that Entrepreneur space where you shift your mindset from how to who…
People already solved many of the problems gym owners are going through right now. In fact, we helped the average gym owner grow 89% last year in our Mastermind Program alone.
In other words, find people who solved it. Then, do what they did.
89% Growth: Revenue vs. Profit
When we say we helped gym owners grow 89% last year, that doesn’t mean they got 89% more members, that means they made 89% more money. This isn’t about falling into the vanity trap.
The vanity trap is bragging about revenue. We did $1M last year, only to find out that they lost or spent $1.2M. Wouldn’t it be better to have a company that does $500,000 in revenue with $200,000 in profit than a $1M company that’s in the red $200,000?
Or another example, the same $500,000 in revenue with $200,000 in profit company above versus a profitable $1M company, but the $1M company’s profit is only $20,000. The $500,000 company with a profit of $200,000 is the stronger company.
That’s why it’s important to skip the vanity and keep it real. Profit is key.
If you want to measure your gym’s success, you want to put profit first. Revenue minus Expenses. This is where, when looking to grow, gym owners put more money into marketing.
The Most Common Misconception Gym Owners Make With Marketing (11:53)
Yes, to grow, you want to put money into marketing. However, a lot of gym owners have the misconception that social media ads are marketing. Not quite…
Social media ads are a fraction of what marketing actually is. Yeah, it’ll help you generate leads, but marketing is so much more than leads. Marketing has one job: Increase Revenue.
Want a big picture of what marketing is and how it not only increases revenue, but with the right systems in place, can also increase profit? Check this out.
H2: Pull This Lever to Increase Profit Today (14:57)
The number one lever gym owners can pull to increase profit (in some cases even double or triple profit), is price manipulation. The best part, they can do this today.
Your pricing model alone can take your business from either not profitable or, the average we see, hovering around that 10%, to a healthy 20% or higher.
Let’s take the gym making 10% in profit. If you were to simply increase your prices by 10% today, you would be making 20% in profit tomorrow. Now, let’s assume your product is fantastic and members love it…
At the end of the day, if the value is there, a happy member paying $250 a month is not likely to cancel when you up it to $275 a month.
What If My Members Cancel?
That’s a fair question to ask when it comes to increasing your prices.
The truth is, major companies do this all the time and consumers don’t even flinch.
Our CEO Mike Arce laid this out perfectly in his LinkedIn post talking about Apple TV.
But Let’s Really Set Your Mind at Ease:
Of the 110+ gyms in our program that increased their prices last year (some even doubled their price), there was a less than 3% cancellation rate.
If you double your profit and lose less than 3% of your members, you’re still way ahead of where you were before the price increase.
Consumers are always willing to pay more for a better, more advanced product.
Once you do that, it’s good to have one price point that is a no-brainer for members and prospects. Here’s how to do it:
Example of Innovation and Pricing Increasing Profit (28:16)
People want to get in shape.
But, rarely do people want to do the things required to get in shape.
That’s where the best gyms innovate. How can you fit fitness into something fun or something people want to do, then charge for it?
Life Time Fitness is a great example of this. They doubled their profit in 2022 with two simple changes…
#1: Product Innovation
Instead of having two full-sized basketball courts, they converted one into the hottest recreational sport right now: Pickleball.
That one basketball court turned into three pickleball courts where people can have fun while getting fit.
Life Time simply looked at what the market wanted, innovated, and charged for it. Plus, it created so much demand they were able to create additional pricing just for pickleball.
#2: Market Mastery
The other thing Life Time did was create a membership called The ARORA Club specifically for a senior demographic. Why?
Because this market has the highest retention of any other demo and, they’re looking for community. So, Life Time created it for them… and, you guessed it, charged for it.
This is what makes Rick Mayo’s Alloy Fitness so successful.
Focusing on Profit First
On top of increasing your gym’s profit, how do you actually create a plan and structure around hitting 20% or more consistently?
Learn from the gym owners who are doing it right now in the Mastermind Program at Loud Rumor. This is where the absolute best gyms come to learn and grow. Learn more about it and apply today.