Are gyms profitable?

Are gyms profitable? If you’re asking this question, it’s likely you’re thinking about investing in a gym business. Good news! You’re in the right place. Find out whether gyms are profitable businesses right here.

10.2% of the UK population holds a membership with a privately-run gym, health or fitness club. That’s almost 7 million members with memberships amounting to just over £4 billion a year.

Gyms are bringing in significant income from memberships alone. So, with the right approach a gym can be a lucrative business investment.

Looking to open your own fitness club? Considering investing in a fitness business? Or want to boost the profitability of an existing gym business?

We’re here to help with this in-depth look at how profitable gyms are. Find out what impacts profitability, how gyms can become more profitable, and more.

Let’s get stuck in!

Understanding profitability

Before we get stuck into exploring how profitable gyms are, let’s look at what it actually means to be profitable.

There’s a significant difference between profit and profitability:

Profitability metrics

To measure profitability, there are 2 metrics to pay attention to:

Measuring profitability

First you need to work out what your profit is. The approach is different between gross and net profit margin.

1. Calculate gross profit margin

Start by working out gross profit:

Gross profit = revenue – cost of sales expenses only

Then calculate gross profit margin:

Gross profit margin = gross profit x 100

2. Calculate net profit margin

Start by working out net profit:

Net profit = revenue – all expenses

You can calculate net profit pre- or post-taxes. If you’re calculating post-taxes, subtract taxes as part of all other expenses.

Now calculate net profit margin:

Net profit margin = net profit x 100

Together, these metrics can be used to assess how profitable gym businesses are.

How do gyms make money?

Now we’ve covered profitability and the metrics you need to measure it, let’s look at the different ways that gyms make money.

This list is comprehensive, but not complete. There are always new and creative ways to bring in revenue! Use this list to find ways to generate revenue for your business.

Membership fees

Memberships are essential to the vast majority of gyms and fitness clubs. These fees often make up the largest proportion of revenue.

In the UK, there are many different types of memberships offered by gyms. They usually have one thing in common – they attract recurring, predictable revenue into the business.

The 2023 LeisureDB State of the UK Fitness Industry Report revealed the average monthly peak fees for non-contracted memberships at privately owned gyms. Around the country this amount is very different. On average UK gym members pay £44.92 a month.

Membership pricing strategy

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Joining fees

Sometimes called admin fees, a joining fee is often collected when a new prospect signs up for a membership. Typically this will be £10 to £20, for luxury clubs it can be much higher.

These fees are an important source of revenue for many gyms. Why? They’re used to cover:

These fees can also encourage members to stick with a club for longer as they’ve paid this cost to join.

Passes and casual access

The vast majority of gyms and fitness clubs in the UK also offer some form of casual access for gymgoers without a membership package. For example, those who want to visit occasionally, are visiting the area, or don’t want to commit to a full membership.

The most common forms are day passes or casual pay-as-you-go ‘on the door’ access. Some clubs will also offer weekly or monthly passes.

This is a great way to bring in extra revenue. And help some gymgoers make the decision to sign up to a membership package. Plus, pay-as-you-go access and day pass prices can help qualify the cost of a full membership.

Group fitness classes

Classes are often included in the cost of a membership. And they can also be a great way to generate extra revenue:

Personal training

Most gyms will offer personal training in some way. Personal trainers (PTs) help members get more from their membership investment. Training programmes and coaching from PTs support members in reaching their goals.

Exact approaches and business models for personal training do differ. Generally there are 2 ways to work with PTs and generate revenue:

Digital fitness services

Digital fitness services grew rapidly during the COVID-19 pandemic. And while many gymgoers were starting to look for digital solutions from gyms before this time, even more are now.

Digital fitness is a very broad term! So, there are lots of ways that gyms can make money by providing these services.

Examples include:

Food & drink

Many gyms and fitness clubs make extra revenue by selling food and/or drink on site.

That could mean setting up a café with seating for members, so members can sit down and catch up with each other. Or selling food and drink at reception/your shop to takeaway. Alternatively some clubs install vending machines for self-service.

The key is making sure your margins and volumes make the effort of selling food and drink worth it.

Fitness clothing & products

Similarly, another way gyms make money is by selling fitness clothing and products.

Think t-shirts, socks, exercise mats, water bottles, and more. If you’re selling products in-club look for items that members will need for a workout and may have left at home.

Many gym businesses will have branded merchandise for sale. This helps you make extra money. And increases the reach of your brand with members wearing or carrying items outside of your club.

You could even set up an online store to sell and ship your branded merchandise.

Nutritional supplements

Building on this, some gyms sell nutritional supplements for members to buy. For example, protein powder, energy drinks, and greens powders.

These could be available for one-off purchase. Or as packages recommended for individual members. Make sure you source any supplements carefully to choose high quality, effective products.

Events

Some gyms will run paid for events to bring in extra revenue. These could be open to anyone or just for members. And could take place in-club or somewhere else.

Examples of fitness events include:

Other services

Many gyms are finding new ways to make money by introducing new services that address health and wellbeing. That usually means bringing in employees with specialist knowledge, skillsets and qualifications.

Examples of services you could offer include:

Are gyms profitable businesses?

Those were just some of the ways that gym and fitness clubs can make money. Now to the big question…

Are gyms profitable? How profitable gyms are will depend on the exact circumstances of each business. There’s no guarantee of profitability. Generally your profit margins will be somewhere between 10-30%:

Factors that will impact how profitable your gym business will be include:

Type of fitness facility

The type of fitness facility your gym is will impact your potential for profit. Different types of facility need different levels of investment. And pricing models differ to.

Here’s what to keep in mind for common types of fitness businesses:

Budget gyms

If you’re running a budget gym, you’ll need to offer services and equipment at a low price point. So, you attract members looking for affordable access to a good quality workout experience.

Typically budget gyms take a high volume, low margin approach to pricing. Attracting as many members as possible. Usually, this means charging members £25 a month or less.

This business model requires investing in plenty of equipment. Consistent marketing and signing up new members. And making the most of gym automation where you can to keep costs low.

Premium (and super premium) gyms

At the opposite end, if you want to provide a high-end gym experience, you’ll be able to charge a high price point.

Provide a luxury workout environment with the best personal trainers and equipment. Plus, you’ll need to make sure every touchpoint lives up to high expectations. So, you create an exclusive, personalised experience that members are happy to splash out on.

This type of fitness facility means investing in the best of the best equipment, tech, staff, facilities, and more. You’ll need to continuously invest more than other types of facilities.

Margins on memberships need to be higher to remain profitable. And add-on spend can be invaluable in building profitability.

Mid-market gyms

In the middle are mid-market gyms and fitness clubs. With high operating costs justifying higher membership fees, more businesses now fit in this category.

To build a profitable mid-market gym business, you’ll need to offer more and/or superior facilities and services compared to budget gyms. And membership fees should be kept at a moderate price point.

Target members looking to trade up from a budget experience. Providing a higher-quality gym with more attention and advice, plus more facilities and activities. Plus, target members looking to trade down from premium clubs.

Location(s)

Location will impact the profitability of your gym. Why? Location impacts:

Number of locations

The number of locations can impact how profitable gyms are. Those with more than one location, have more possibility of being more profitable.

If your gym business operates multiple clubs, you’ll have the opportunity to enjoy economies of scale. So, you can negotiate better deals with suppliers and partners. Plus, with the right processes and tech you can reduce repetition across locations by sharing resources.

As you invest in gym branding and grow your presence, you’ll enjoy brand recognition. This can help you attract more new members faster.

And you can also give members the benefit of holding a membership with access across multiple locations. This justifies a higher price point.

Business maturity

How long a gym business has been open can impact profitability. If you’ve been open for some time, you’re more likely to have paid off costs incurred in setting up your business. And so, are more likely to have reached profitability.

Operations

If you can run your gym business efficiently in every area, you’ll have better control over how profitable your business is.

Strong processes that avoid waste (including wasted time) will help you maximise results. And make it easier to take action in the right places.

Operational costs can also impact profitability.

If you’re overspending on utilities, staffing, equipment leasing, or anything else, you’ll soon find profitability takes a hit. Likewise, when costs are high due to external factors, you’ll need to make changes to avoid profit margins shrinking.

Revenue

The higher your revenue and the lower your operating costs, the higher your profitability is likely to be.

Recurring revenue from memberships is essential for most gyms and fitness clubs. And if you can find other ways to make money, you’ll grow revenue coming in. And reduce reliance on membership fees alone. This can boost profitability.

Debt

If your gym business has a high level of debt that needs paying off, your profit margins may be affected. Keep debt levels manageable and profitability will come sooner.

9 ways to increase gym profitability

So, there are many factors that can impact on your profitable your gym business is. And there are many ways that you can boost profitability:

1. Review your membership pricing

Profitable gym businesses will regularly review membership pricing. Look at pricing at least annually and consider if you’re charging members correctly based on:

You may decide to increase membership pricing to maintain and/or boost profitability. This can be a delicate matter so a careful approach is essential. Communicate increases well in advance. Highlight the value you deliver and any improvements made.

You may also want to add new membership packages and options to better cater to member demands. Having new options available can help you win and retain members – all increasing profitability.

2. Win more new members

Second up, if you want to increase profitability then attracting more new members to your business can help. Continuously sign up new members each week. And you’ll be better able to grow membership revenue.

Let your members do your marketing

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 3. Increase member retention & value

It can be anywhere from 5-25 times more expensive to win a new member than to keep an existing one. And if you can increase retention rates by 5%, you could see profits increase by as much as 25-95%.

The importance of member retention shouldn’t be underestimated when you’re looking to boost profitability.

Cut attrition (number of members leaving). At the same time increase retention (the amount of time members stay with you).  And you’ll boost member life time value (LTV).

What is life time value (LTV)?

Tip

LTV is an estimate of the average revenue a member will generate for your gym throughout their membership.

Get 11 strategies to increase gym member retention.

4. Expand your core offering

Another way to increase the profitability of your gym business is to find new sources of revenue. That might mean adding new services or products.

For example:

5. Run fitness events and challenges

Similarly, running fitness events and gym challenges can help you boost profitability.

Events can be open to both members and non-members, with or without a fee. And when executed well, events can:

13 fitness event ideas

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Challenges can also bring many benefits that ultimately can positively impact on profitability:

31 challenge ideas

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6. Invest in marketing & partnerships

There are many ways that marketing can help you increase the profitability of your gym business.

Start by building a gym brand that gymgoers trust and that helps you command a higher price too. And then think about your overall marketing strategy.

Build a plan packed with gym marketing campaigns that’ll help you reach your goal of becoming more profitable.

Creating partnerships with local businesses, influencers, and other organisations can help you promote your gym. You’ll reach new members and can even build out your offering with the right partners.

33 gym marketing ideas

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Need some marketing inspiration? Look no further with a comprehensive list of ideas – including examples from gyms throughout the UK.

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7. Make operational improvements

Streamlined, efficient processes across your business will save you time and money. Ultimately boosting your bottom-line!

Start by using the gym reporting software functionality within your gym software. Identify the biggest opportunities for improvement. For example, if you are seeing a high percentage of members cancel early on in their membership, focus on that.

Look at what’s causing the problem and work out if you (and your team) know how to fix it. Make incremental improvements to how you run your business. So you create efficiencies that help you become more profitable.

8. Go unmanned and even extend your opening hours

An operational efficiency that many gyms can benefit from is going unmanned. That means investing in access control tech and software. So you no longer need to have someone checking in members (and can still track visits).

This can let you optimise your staff resource to become more effective. And it can also make it easier to open your club up and offer 24-hour gym access.

It’s likely that you have at least one competitor in your area who offers gymgoers 24/7 access. This can be a major selling point for many members for a wide variety of reasons. So, switching to open 24/7 can help you attract and retain more members.

24/7 access made easy

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Explore the benefits (and challenges) of moving to unmanned and 24/7 access. And find out how to select a 24-hour gym access system.

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9. Mitigate risks regularly

Finally, in a competitive market, it’s essential to keep on top of external and internal risks. Risks that could impact profitability.

A gym SWOT analysis is a simple tool that can help you stay on top of risks to your profitability. Update your SWOT analysis regularly and identify actions to mitigate risks. And that way you’ll lessen the likelihood of profitability being impacted.

The wrap up…

A profitable gym will consistently maintain an attractive profit margin. For most UK gyms, a profit margin of around 10-30% is achievable.

Exactly when your gym business becomes profitable, and the level of profitability, will be determined by many factors. These are inside and outside of your control.

To run a profitable business, regular recurring revenue is usually essential. Plus, find ways to bring in extra revenue to supplement this. And protect your business against attrition to safeguard profitability.

There are many ways to boost profitability:

The right gym management software partner will help you boost profitability across your business. A partner like Xplor Gym. Get in touch to chat with our team and see what we can do for you.

FAQs: Are gyms profitable?

How are gyms profitable?

There are many factors that can make gyms profitable. For example,

How much do gym owners make?

On average, we’ve found that gym owners in the UK make £44,666 a year.

How much does it cost to open a gym?

On average, we’ve found that it costs around £75,000-120,000 to open a gym. And then monthly costs can come to £25,000+.

Are multi-site gyms more profitable than single-site gyms?

Potentially, multi-site gym chains can be more profitable than single-site independent gyms.

Chains benefit from

Do seasonal trends impact gym profitability?

In the UK, generally membership sales peak in January and September.

This aligns to the new year and new school year. Both are times when people tend to refocus their personal goals. And attrition is higher in the second half of the year as habits slip.

If well managed, these trends shouldn’t impact the profitability of your gym business.

How quickly does a new gym business become profitable?

How fast a new gym business becomes profitable will depend on many factors including:

Franchise gyms that benefit from established branding and operational models can reach profitability faster than brand new independents.

What’s the average profit margin for a gym?

Again, profit margins can differ massively by business. Generally, gyms can expect to reach a profit margin between 10-30%.