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ECOFIT Blog

Owning a Gym: How to Calculate the Profitability of Your Floor Space

Posted by Dave Johnson on Nov 30, 2016 10:12:57 AM

owning a gym and calculating profitability image two gym owners

 

When you’re running a gym or a health club, counting the revenue that comes in is just the beginning of what is needed to become a profitable business operation. Where the game is won and lost is when you dig deeper. Specifically, into how each square foot of your floor space is contributing to revenue.

The fitness club industry becomes more fragmented and members’ programming options will only become more diverse. Understanding how to cater to those needs can’t be a decision made lightly. You need to dig into the dollars and get a sense of each section of your gym. Here’s the process you need to know.

 

Owning a Gym: Determine How Much Square Footage You Have

The first step to determining the ROI of your floor space is to determine how much floor space you actually have. Sounds easy, right? Well, not so fast. It’s a little more complicated than just taking total revenue and dividing that by the total square footage of your club. Not every square inch of your building’s space is available for usage. You may have a perfect rectangle for a floor plan, but you may not. You may have an enormous column in the middle of your floor space that you have to work around. When taking measure of your usable square footage, be sure to account for space that is non-revenue generating and subtract it from your total square footage.

 

Calculate the Amount of Floor Space Your Equipment Currently Uses

No matter what the layout of your current floor plan, it’s essential to know how much space your current equipment configuration is taking up for you. The best way to do this is to look at a spec sheet for a piece of equipment, then multiply by the number of pieces of equipment you have. This is easiest for equipment that has a square or rectangular base on the ground. But not every piece of equipment is this easy to figure.

You’ll need to approximate for equipment with non rectangular bases. A great way to do this is to put down tape around a specific piece of equipment in a square or square plus triangular shape. This will make it easiest to do some basic math to figure out the square footage each SKU takes up.

 

Determine Your Equipment’s Current Usage Patterns

Next, how often is each piece of equipment being used in your club? This isn’t something to be left to approximation. Fitness equipment tracking devices installed into each piece of equipment on your floor can tell you exactly when each machine is being used, how often and for how long. Better yet, that data is put into an easily-digestible format. You should be making decisions off of charts and graphs that present clear and actionable data. If you’re not, you could be operating at a disadvantage in comparison to other health clubs in your area.

 

What Session Types Do You Currently Offer With What Space?

Next, determine which sections of your club are supporting which types of usage. If there’s a group cycling room in your club, think about how many classes you offer per week, and what additional revenue you charge for attendance. The average revenue derived from those programming-provided, group exercise situations can be examined relative to the square footage they take up to administer.

 

What is the ROI of the Space Used for Each Session Type?

Once you know the square footage of a specific section of your club, and the revenue brought in from the use of that space, you have the basis for a very simple equation. And the answer to a critical question: How much revenue per square foot is each type of club activity really generating? As you’ll see from your calculations, the disparity may surprise you.

 

For more on how to calculate the ROI of your floorspace and how to run a more profitable health club, download our free eBook.

 

[eBook] The ECOFIT Guide to Maximizing Profit of Your Health Club Floor Space

When you're trying to run a profitable health club, every inch matters. That's why understanding how to calculate the profitability of your floor space is essential for today's health and fitness club operator.

  • A step-by-step plan for calculating floor profit
  • How to determine profitability by programming type
  • The secret to making smarter equipment buying decisions


  Download for Free

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