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How to run a more profitable gym in 2025

Minor changes can skyrocket your take-home pay... 👀

Author

John Franklin
November 22, 2024

It’s that time of year, Gym World.

Two-Brain Business dropped their annual State of the Industry report.

Since 2018, they’ve worked with major gym management software companies like Kilo to gather data from thousands of gym owners and share what the best coaching gyms are doing.

This year, they’ve made it even easier to see where your gym stands across 10 key metrics with a simple rating scale:

  • Red: bottom 25% of gym owners

  • Yellow: meeting the average

  • Green: top 25% of gym owners

We’re breaking it down to show minor tweaks can take your gym from average to good.

FYI: The report includes data for big group, small group, 1:1, and other gyms, but we’re focusing on big group numbers.

Revenue

In 2024, big group gyms averaged $24,946 in revenue a month.

That’s slightly more revenue than small group or 1:1 gyms, but it usually comes with more overhead.

We’ve seen these gyms can boost revenue by:

  • Raising prices. It’s one of the quickest (and easiest) ways to grow your top line. Nick Page charges $199-$239/month and offers premium perks like 3D body scanners.

  • Changing the model. Dan Purington and Eric Chang made CrossFit more profitable with a semi-private training approach.

  • Cutting costs. Daniel Chaffey and Matt Wilbur saved on operating expenses by optimizing small spaces for group training.

Members

The median big group gym had 122 members.

We know gyms with 150 members should be able to take home $100k a year. To get there and close more leads, focus on:

If you have more than 150 members but aren’t earning $100k, your model might be broken.

Pricing

The average price for the most expensive package rose to $177 a month. This number is up from $165 in 2023.

If the average big group gym has 122 members, each paying $177 a month, taking home $100k a year after expenses will be difficult. Big group gyms often have higher overhead, which suggests many are undercharging.

A dataset of big group gyms also revealed that nearly 90% of their revenue comes from large group classes:

And while big group gyms do offer higher-ticket services, these should play a bigger role in their revenue.

Average Revenue per Member (ARM)

ARM measures how much a client pays you each month, including memberships and anything else they purchase.

ARM for big group gyms in 2023 was $167.76. Two-Brain gyms are double the industry average.

ARM is lower than the most expensive package because:

  1. Most gyms sell cheaper packages

  2. Discounting is common

That’s why building a more robust business beyond group training is important. Some of the smartest gym owners on Gym World increase revenue by adding:

Length of Engagement (LEG)

LEG tracks how long the average client stays at your gym.

If you don’t know your LEG, here’s a quick ‘n dirty way to calculate it:

LEG = 1 ÷ monthly churn

Churn = lost clients ÷ total clients at the start of the month

For example, if your gym starts with 100 clients on March 1st and ends with 95 clients on March 31st, you lost 5 clients (not counting any new sign-ups in March). So, your churn = 5 ÷ 100 = 0.05 

That means your LEG = 1 ÷ 0.05 = 20 months

If your LEG is under 14 months, you’ll need to be really good at marketing to stay in business. You’ll constantly have to find new clients to replace the ones who leave.

Our data shows it’s much cheaper (and more profitable) to keep an existing client than to acquire a new one. Two-Brain found that adding just two months to your LEG for every client can add an extra $45,000 in revenue.

So, if you struggle with retention, try:

A tiny reduction in churn can also lead to a huge increase in profitability. If you want to be in the top 25%, keep monthly churn at 4% or less.

Lifetime Value (LTV)

LTV is how much a client pays your business over their lifetime as a member. It’s calculated by multiplying ARM and LEG.

The average LTV for U.S. gyms in 2023 was $1,381.55

Top U.S. gyms have an LTV that’s $300+ higher than the average because they:

  • Charge more

  • Keep clients longer

A long LEG gives you a big marketing edge because it lets you spend more to acquire new customers.

Expenses (Staff & Fixed)

Here’s what we’ve got:

Let’s be real—it’s unrealistic to keep staff expenses under 16%. This low percentage likely means the owner is doing most, if not all, of the coaching. And if they’re coaching everything, they don’t have much staff to pay.

A staff expense target of 16% is unrealistic if you plan to remove yourself from the business. My guess is that if you profiled gym owners who work less than 20 hours a week and make more than $100k per year, staff expenses would be closer to 30%.

The data shows that the average gym owner spends close to 50% of their revenue on fixed expenses. That doesn’t leave a lot of room for staff pay and a healthy profit margin. If you’re in this camp, consider downsizing your space.

Profit

Owner profit is how much you take home each month after covering all business and personal expenses.

Every gym owner should strive to take home at least $100k a year.

Data shows big group gym owners can earn more by:

Your take-home profit should grow every year as your business scales.

Effective Hourly Rate (EHR)

EHR is your monthly profit divided by hours worked.

A high EHR means your business is healthy, and you’re not overworking. Some Two-Brain gym owners hit over $500 an hour.

Your business should give you a decent lifestyle. Good gym owners maximize their EHR by:

Making $6k a month sounds okay, but if you’re working 100 hours a week, is it worth it?

So, how do I level up my gym?

👉 Step 1: Grab a FREE copy of the State of the Industry report here.

👉 Step 2: Compare your numbers with other gyms using the data.

Start by monitoring each category, then focus on improving the areas where you’re falling short. Small adjustments can lead to big improvements in your take-home pay.

👉 Step 3: Consider getting a mentor or checking out free resources in the Gym Owners United Facebook group.

And for an in-depth look at the industry, be sure to watch or listen to our exclusive interview with Two-Brain Business CEO Chris Cooper:

hope this helps,

j

📣 P.S. If this was valuable, share it with a gym owner who’d find it helpful too.