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Profit Designing – Designing the New Club Model for Maximizing Profits

By: Bruce Carter

Bruce Carter

There are substantial changes evolving with clubs, and this is affecting design significantly. The old standard model was primarily dues-based, where clubs offered everything for one price, and the goal was to get as many members as possible. This model usually involved some variation of cardio, free weights, machines, group exercise, and possibly, spinning. The new model is to get as many members as possible, but equally importantly, is to maximize revenue per member through results-based, tiered memberships and fee-based personal training programs, thereby maximizing the average amount of dues per member. To achieve this goal, a new design model is necessary where a club has the optimal space and programs enabling it to charge extra for a variety of different offerings.

When low-price clubs started to flourish, other competing clubs often tended to lower their price while decreasing what they offered. Low-priced clubs obviously provided something that many people wanted. The average person, knowing that they probably wouldn’t stick with their exercise, became very attracted to a very low price (with a tipping point of around $10), greatly reducing their fear of losing money on something they most likely would not use.

Then, as more low-priced clubs entered the marketplace, thus reducing the number of members for each club, many clubs started to think of how to get more money per member per month. Things started to get added back into clubs but at an added fee. Concurrently, another major change in the industry is continuing to evolve, the demand and growth of group and personal training. Combined with this is the trend of many small boutique and single purpose clubs opening, charging substantially higher amounts for specialized programming.

The lesson learned is, that although there is a significant market for the low-price, value-based gyms, there continues to be a huge market for those who value results-focused gyms, programs and training. This market is growing and will spend extra for specialized training, often substantially more than their basic dues. Wider ranges of fee-based classes have evolved, such as Barre, Pilates, suspension training, hot yoga, spinning, core training with weights, ropes and boot camp to name a few. Even virtual training is growing in clubs, offering more variety, and some clubs provide this as part of the membership, while others charge for it.

As club operators recognize the need to evolve their business model, their physical plant is set up for an outdated model, and this hinders their ability to maximize profitability. Therefore, creating a club to offer a wide range of fee-based programs must be coordinated and followed up with a staff, operations, pricing structure and sales/marketing that can fully utilize the design. If the old way of operations tries to optimize a new state of the art profit design, then much of the space will be underutilized.

As Jamie Fairley, a leading consultant specializing in fee-based programming puts it: “Today’s profit-minded gyms are designed or renovated to mirror their business model, and that evolving business model is reflecting the market’s desire to choose access to facilities and programs that best meet their results expectations. You can recognize these profit-focused gyms immediately because their fee-based program facilities and areas are reflected in their layout and design. These areas are now front and center, whereas traditional gym equipment is now on the peripheral looking in on all the dynamic fun and interactive fun of functional areas.”

The goal with this type of profit designing is to provide different spaces/areas for different offerings with each space having a visually different personality, yet the overall effect is that everything is coordinated together. The space can be a combination of open spaces or different rooms with separate door access. Much of this is based on how you plan to market and price your programs. It should be noted that growing with this trend is technology, which has made tracking who has access to different areas much more efficient.

However, one of the dilemmas of design is always trying to fit more into a space than the space can accommodate, the proverbial trying to fit four quarts into a 3-quart container. So, priorities have to be made with what to include and what to eliminate. Here are some key questions to answer before you design for profit. Much of it has to do with how you will charge for the class and how much space you have available.

  1. 1. Will you have a separate area just for personal training or will it be done where everyone works out? The advantage to have a sectioned off or closed room for it gives the training a specialized image while also minimizing interruptions for the workout. The disadvantage is that it requires more space and apparatus, and unless it is utilized regularly, it will sit empty much of the time.
  2. 2. Will you have a separate room for group exercise classes, such as suspension training, boot camp, kettlebell or different yoga classes? Or, will this be done in an open area available to all to use when a class is not in session? The advantages and disadvantages are similar to personal training spaces.
  3. 3. Will you try to create a flex space for different types of group training to be done in the same room? This can be an excellent solution when space is limited, but it has to be well thought out. Designing for things such as suspension training, as well as Barre classes and different types of group functional training, requires a state-of-the-art experience for each option. Determining what is needed for different offerings, as well as how they all can work together takes detailed planning. For example, planning for well-designed storage options for the different items for different classes is an absolute must.
  4. 4. Are you open to having less of the traditional pin-loaded machines and Olympic free weight options to make room for more fee-based programming space?

It is important to make all fee-based training programs and spaces very visible allowing for optimal exposure and continued “marketing” of programs.

Signage and graphics are a must for communicating the programming and accent lighting, architectural features and eye-catching finishes. Colors will continually “draw” the attention to the areas.

The overall design goal of clubs with a variety of different fee-based programs and areas is excitement and professionalism. These high revenue-producing spaces need to look like they are “worth” what you are charging additional for and not something just “thrown together.”

The good news is that, now more than ever, there is an increasing number of people who are taking their health and wellbeing to a new level of commitment and are willing to pay up to $100 to $200 per month for state-of-the-art programs and spaces. But, to accomplish this, your club needs to look like it is a dynamic state of the art center of self-improvement.

As published on clubinsideronline.com, September 2016.