Bud Gibson interviews Paul Wright about the four revenue streams he pursues in his gym business.
In this podcast (Quicktime ipod compatible, 18MB; Google streaming flash video), Paul Wright and I (Bud) conclude our discussion of Gold's Gym, Ann Arbor's with a review of his revenue streams. There are four: (1) Memberships; (2) personal training; (3) shakes bar; (4) pro shop.
Memberships run $45 for individuals, $70 for couples, and $80 for families of up to 4. With 1,000 members at the highest (individual) rate, that's a revenue stream of $45,000 per month.
Personal training is the second largest stream. A top personal trainer can generate up to $10,000 per month in gross revenue (160 hours by $60 per hour). Gym's typically bill trainers at two times their pay rate, suggesting that top trainers generate net revenues equivalent to 100 individual gym members at Gold's. Even trainers with only half the revenue stream generate the equivalent of 50 individual gym members. By these calculations, with 1,000 members, five trainers could generate 12.5 to 25% of combined revenues, potentially making or breaking club profitability.
We went into less detail on the shakes bar and the pro shop. At the time, the pro shop seemed not to be living up to expectations while the shakes bar was generating "good" revenue. Paul actually runs the shakes bar as a separate franchise and mans it with his desk staff, keeping costs low. The shakes themselves seem pretty simple to create, and at $3 to $4 apiece, I see a lot of people walking out with one after their workout.
Additional Links
- It takes about 100 personal training clients to support an independent training studio. That's 2.5 times what a trainer can do alone in a week.
- Personal training is a tough business that requires discipline and execution to be successful.
