Whilst frequently mis-attributed to Albert Einstein, it has been said that:
“Insanity is doing the same thing over and over again and expecting different results.”
COVID-19 and lockdown has hurt gym and fitness facilities across the world. Many were already struggling in a highly competitive market that fell foul for a desire to “race to the bottom”.
The industry is now to rise from the ashes. The question is, will we rise like the mighty Phoenix, or will it be more of a cough, splutter, crash & burn?
Have we learned the lessons?
Have we done the maths?*
Are we about to make the same mistakes all over again?
Have you done the maths?*
Small boutique gyms have long suffered from the “pile ’em high” business model of the big box gyms. They charge minuscule fees, provide little in the way of personal service, and they are predicated on members not turning up (and it being difficult to cancel). These facilities, in the main, don’t have the capacity for everyone turning up.
Unfortunately the net result is that boutique gyms have, in many cases, been forced into slimmer (and, in some cases, risky) margins. In turn, members typically don’t have the full appreciation for the cost of delivery of a session.
It is absolutely the same in the hospitality industry. Do diners really think a restaurant can deliver 3 courses for £4.99, be paying fair wages and covering their costs?
Right now, gyms have the opportunity to “right size” their fees.
With government restrictions on numbers, many facilities find themselves with more restricted capacity – and yet the overheads remain pretty much the same. Logic therefore dictates that the cost per session needs to rise.
Furthermore, gyms are needing to expend additional monies on PPE, cleaning equipment/materials, and more. The same applies to rising financial transaction costs, born from merchant banks having been burned by high refunds during the COVID pandemic. Whilst it is probably right to absorb some of this cost, it is business sense that a proportion also be passed on and added to session cost.
I have heard many facility owners comment that “members simply will not pay those amounts”. I very much sympathise. An average member likely does not appreciate the cost of delivering a quality service in a boutique environment. However, if you don’t charge the correct amount, you are running a charity – not a business.
If you fail to cover your costs, chances are that you won’t be here in 3-6 months time, and who will that have helped?
Right now we see a number of facilities preparing to re-open at reduced capacity, but with the same pricing model. Some are even offering discounts, desperate to get members back in-the-fold. The urgency is wholly understandable, but I sincerely hope that the members who sign-up at these preferential rates deliver the revenue required to keep the facility afloat longer term.
I am a firm believer that every business owner has the right to run their business as they see fit. I would, however, encourage facility owners (for their own peace of mind) to “do the maths*”, and make sure that the numbers add up and enable you to still be here come Christmas.
* U.S. translation: “math”
The laws of “Supply and Demand”
The principals of supply and demand form a key part in business models across the globe, in pretty much every industry. But, seemingly not in the world of fitness.
The law of demand says that at higher prices, buyers will demand less of an economic good. The law of supply says that at higher prices, sellers will supply more of an economic good. These two laws interact to determine the actual market prices and volume of goods that are traded on a market.
Ask yourself, why does your peak 7pm session (which is always in high demand) cost the same as your 11am session (which is in less demand)?
Could you charge more for your peak sessions, and less for your off-peak sessions to encourage usage, spread your sessions, and maximise your revenue?
Think of any other industry. It won’t be long before you come up with at least one way that they use the laws of supply and demand. In the restaurant industry, it’s off-peak set menus. In the airline industry, it’s varying seat pricing.
This model is rarely seen in boutique training gyms as we stand today. It may be a model worth considering for the future. After all, it is one that is widely accepted by the public in other contexts.
Prepare to pivot or “go swivel”?
Right now, understandably, everyone’s eyes are fixated on the exciting shiny thing that is “re-opening”.
The die-hards are preparing their “we told you it would all be fine” banners, and donning their “fcuk new-normal” caps. But let’s cast our eyes to our friends in America for a moment. Ok, granted their caps have a different slogan, but some states are being forced back into lockdown. And you know what lockdown means? Yes, it’s Zoom time again!
The UK isn’t so different from the US. In fact, in many cases, Britain’s COVID numbers are worse. Leicester is already in extended lockdown, and other cities could follow. The policy seems to be one of local isolation.
At Quoox we have always believed in the hybrid model of in-person and virtual training, and conceived our functionality well before COVID-19 was ever heard of.
The industry has been leaning towards a greater “wellness model” for some time. Arguably, all COVID-19 has done is accelerated this.
By being prepared to pivot, you are protecting your business. Are your Zoom sessions really worth less than your in-person sessions? Granted there is a difference in effectiveness, but that doesn’t necessarily mean your overheads are any less.
For a business to be sound, you need to cover your costs. It’s not rocket surgery. Anything beyond that is profit, and can either go back into the business or can go towards providing a small nest-egg for when the rest of humanity has to work until they die in the workplace.
It’s not for me to say…
At Quoox we are lucky to work with some great facility owners. They have a passion for that they do, and they work incredibly hard to deliver a high quality of service to their members.
These are good people, who are emerging from a tough time.
It is my personal hope that these same people get to see their businesses to not only return to their former glory, but to go beyond. One of common reasons that people switch to Quoox is so that they can do more, and deliver more. We are here to support them in any way we can.
I would urge all of our customers to just take a minute. Review your pricing, do your sums, and satisfy yourself that you are putting yourself on a sound footing.
I would very much like to be in the position to send you all a Christmas card at the end of the year.
Reach out if we can assist you.
Stay safe, and trade soundly,
Chris Windram | Co-Founder
a: Quoox Ltd. | Innovation Centre | Knowledge Gateway | Colchester | CO4 3ZQ | United Kingdom