How much does a gym membership cost? We look at business economics behind Gym memberships and how you could save money.
Summer is just around the corner…and that means gyms are going to start filling up! (As long as social distancing doesn’t stop us).
Did you know, it’s estimated by the Australian Bureau of Statistics (ABS) that two thirds (2/3) of Australians are overweight or obese. Despite this, the gym business is booming!
Now, you can’t be blamed for thinking that gym owners would be excited for the upcoming stampede of people charging through their door’s to work on that summer bod… But this not the case.
The big players in the fitness business probably don’t want you to go to the gym. Why? we will explain later.
The gym industry in Australia.
Data shows that the Gym and Fitness industry in Australia has a market size of $3 billion made up of 6,426 businesses. The industry employes 21,865 fitness professionals and has seen growth year over year. Although, 2020 might be a little different after the industry has been heavily hit by Covid-19.
The big players in the gym and fitness industry generally only have a small portion of their portfolio in Australia. These Gyms typically have a “24/7” business model allowing members to work out whenever they want. Here are the larger gym and fitness companies in Australia:
Fitness and Lifestyle Group TopCo Pty Ltd
Operates brands including Fitness first, Goodlife Health clubs, Jetts fitness and arena fitness. Fitness and Lifestyle Group operates through Australia and South East Asia. They have 470 locations in Australia, New Zealand and South-East Asia with over 900,000 members.
Anytime Australia Pty Ltd
Anytime Australia PTY LTD is part of the global fitness chain, Anytime Fitness that operates over 4,000 gyms in 30 counties. Anytime Australia Pty Ltd has a large footprint in the Australian market with over 500 clubs and 500,000 members. As of November 2018, Anytime fitness gym’s in Australia averaged 1,057 members.
F45 Aus Hold Co Pty Ltd:
F45 is arguably one of the fastest-growing fitness franchise in the world. Globally F45 operates 1,760 studios in 47 countries. F45 has a big footprint in Australia with 570 studios. Unlike the other major players, F45 does not operate 24/7.
Lift Brands (Australia) Pty Ltd
Lift Brands (Australia) Pty Ltd is a collection of 5 fitness brands, with their most well-known brand being Snap Fitness 24/7. Snap Fitness is a global brand with nearly 2,500 locations in 26 countries, 210 of these locations are located in Australia.
Fernwood Women’s Health Clubs Pty Ltd
Fernwood Health and Fitness clubs cater to the female market. Although Fernwood only targets female members, they have built up 70 locations throughout every state in Australia with more than 70,000 members. Doing some quick math, each location has about 1,000 members on average.
Gym membership costs
The business model behind most gyms is pretty simple. Gyms make bank on recurring revenue with weekly, fortnightly or monthly “membership fees”. Commonly, A member enters into a contract for a set timeframe (usually a year or so). Locking in that recurring revenue for the business.
Gyms are also a fan of charging a “joining” fee. This fee is usually charged upfront when the member signs a contract. Although joining fees may seem silly to the customer, they are a well thought out marketing tactic.
Think back to some gym advertisements you have seen recently. It’s likely there big special to get you to sign up today is “waiving” the joining fee.
When you compare the gym membership prices of 7 larger 24/7 brand’s in Australia you see that the average joining fee is $106 and the average weekly membership price is $19.40. Doing some more math, the average price of your gym membership for the first year will be $1,114.80. (Average joining fee plus average membership fee).
Why gyms don’t want you to attend
Now, I’m not saying that the larger gyms flat out don’t want you to go and do a workout. I’m just looking at the economics behind a business that aims to be profitable so they can…stay in business.
When you look at the figures above of some of the larger gym’s in Australia, you will see that it is common for each location to have about 1,000 members. But how many go?
If your a member of one of the larger gym’s, even though they may seem busy of a morning or after work, it’s likely that it could be much worse.
Could you image 1,000 people regularly attending your gym 3-5 times per week? Even if they operate 24/7… only a few members lifestyle commitments allow them to work out a 1:00 am.
If every member regularly attended the gym, business expenses would explode! There would be more wear and tear on the equipment, and this means more maintenance and equipment cost. Water and utility expenses would also increase. Even seemingly small costs such as hand soap would explode!
If every member actively attended the gym, at popular times they would have to turn members away. Building codes and fire regulations only allow for so many people in a building at any given time. So where are all these members?
New year gym rush
It’s not just a cute joke that come January 1st the gym is full, and by January 14th it’s empty again.
The “new year, new me crowd” start the year off with all the right intentions and sign up for a 12-month gym membership, but then life gets in the way and suddenly going to the gym turns into a once a month event.
Now, Gyms aren’t to blame for this. Gyms actively promote health and wellness. To be honest, larger 24/7 gyms offer lots of equipment and space for a relatively cheap price. Considering they have to pay rent, maintenance, employee salaries… and tax.
If you’re a regular gym-goer at a large 24/7 gym, you should be happy that this is the business model. All the customers that aren’t using their membership are subsidising your cost. Without them, you would have to pay more.
The smaller players that want your business
Just like any type of business, there are different ways of operating. A recent trend in the gym space is the increase of class type gyms. Think of F45, CrossFit and more recently, Fit Stop.
These gyms don’t typically offer a 24/7 service. Instead, they choose to hold classes throughout the day that are run by personal trainers with set workouts. The customer pays a higher price for this, but get more bang for their buck!
The class model offers a more structured workout program and a sense of community that encourages you to turn up for the next workout with some accountability.
Save money by working out from home
Now, if you’re looking for a more cost-efficient way to get your sweat on, consider working out from home.
A home gym can be a cheap and convenient workout. And you don’t need as much gear as you think. You just need a bit of space in your garage, shed or even a spare bedroom.
You can pick up some great second-hand gym gear on gumtree and Facebook market place. All for the price of a yearly gym membership.
Yes, this does mean that you have the expense upfront, but you were probably locked into a 12-month contract anyway.
You also won’t need to drag yourself out of bed, get in the car and drive to the gym and the crack of dawn..all so you can fight over the popular equipment.
If you find yourself not using your home gym, simply chuck it up for sale, you’ll probably get your money back!
What do you think?
Do you think it’s worth paying for a gym membership? Sure, there are definitely some health and lifestyle benefits (as long as you use it).