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If you belong to a gym, you are aware that during the first month of the year, it is stiflingly crowded with sweaty and unfit individuals, all the classes are full, and you are unable to use any of the machines you want.
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You might be more conscious of the similarly peculiar reality that commercial gyms usually appear to have a widely marketed “special” membership deal going on if your connection with the keep-fit industry is more along the lines of passing the gym on your way to the cake shop.
Paying the full freight rack rate for a hotel room is far easier to accomplish than paying the full whack advertised rate at a gym, unless you do the most expensive thing you can do in terms of physical culture and join the gym right after the Christmas holidays.
The “Sweaty January” phenomena is not a hoax or a joke, as we have seen the books of a few gym chains, and it is essentially impossible to run an economically
viable gym without taking it into consideration. Instead, it is a key aspect of the industry’s economics.
Typically, January is the month when 75% of all gym subscriptions are signed up for.
Additionally, the industry’s economics rely heavily on the reality that a sizable portion of January enrollees will only come in three or four times before their membership ends in a flailing flop of weight that isn’t dropped at the end of the year.
Gym memberships have really pushed things to the limit when it comes to this model of making people pay for a lot more of the product than they have any likelihood of using. The founder of Colman’s Mustard once claimed that his fortune was based on the bit of mustard that everyone left behind on their plate.
Starting everything off is the subscription
Many for-profit gyms won’t admit you at all if you pay as you go, no matter how much you beg.
There are many others who do, but unless you visit a facility that is supported by the local government or is otherwise free, you will be required to pay the full January charge plus more as a single visitor.
The owners of gyms do not want anyone to develop the idea that coming to the gym is something you can pick up and put down, and that it is only enjoyable at the beginning of the year, much like a dog is during the Christmas season.
Naturally, many gym owners are ardent believers who sincerely want you to devote to your own physical health and fitness, but regardless of whether they do or don’t, they are still under the same commercial pressure. Renting a life and the main source of that business pressure is rent.
A gym is a high-fixed-cost business, and the reason for this is that gym clients require substantially more space than other high-street retail customers do, have much stricter requirements for the specifications of that space, and typically occupy it for longer periods of time.
Imagine your neighborhood grocery, a small department store, or a clothing store during a time when business is brisk.
Consider a second mental image of your neighborhood gym during a similarly busy time, and let’s compare the two. We can observe that even in a snapshot, doesn’t the retail store have more people per square foot?
When we say this, most people tend to agree that even in the gym owner’s ideal scenario of rows upon rows of people pounding away on identical and closely spaced exercise bikes or treadmills, you just can’t pack them as tightly as consumers.
Those who attend aerobics courses dance from foot to foot and wave their arms more frequently than shop consumers.
Now consider that gym patrons expect to be able to store their belongings while they are on the property and to take a shower afterward, in contrast to patrons of cafes or supermarkets.
Therefore, you must provide some space for a changing room for each customer for every square foot that the gym takes up in your mind’s eye.
Given how disastrously most attempts to break this taboo have failed, it is likely that this too needs to be gender-segregated, which will require even more room.
The actual killer is that most people in the shop will meander in, buy something, and depart in no more than twenty minutes, but the majority of individuals at the gym are likely to stay for at least an hour per visit.
When foot traffic is calculated on an hourly basis, gymnasia are incredibly wasteful in terms of how much room they use.
WHEN STABLE COSTS CONFORM TO STABLE BUDGET
Gyms have very bad foot traffic built into their business models, but they have outstanding conversion rates because, more or less by definition, everyone using the space is paying to do so and making a purchase as a result (revenue = footfall x sales per visit x average ticket size).
But because they are so ineffective at driving client turnover, it is very challenging to implement fixed cost economics because the amount you would need to charge per “sell” would wind up being out of reach for the majority of consumers.
Unless… unless you could get people to pay for the gym services even when they aren’t utilizing them, pushing the purchases per visit considerably higher than 100%.
The result is Sweaty January
Here, people pay in advance but only visit once, twice, or even four times throughout the year.
Then, realistically, people either decide that they have given the gym enough free money or decide that a gym membership is not for them and decide not to renew.
Or the gym owner’s nightmare, they join each January with good intentions and never return through mid-March before their burgeoning waistlines and mounting guilt convince them to enroll for the upcoming Christmas season.
Use it or lose it, the membership, is the story’s main lesson.
Or, if you’re going to have a brief period of good intentions, arrange it for the middle of the summer when gyms are clamoring for new customers and will
lower their fees correspondingly.
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