Ranking the most profitable fitness business models

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Blogs | Business | For Fitness Professionals

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February 24, 2024

Summary:

I rated five fitness business models across 12 categories.
Personal Training excels in client progression and retention, but struggles with scaleability.
Gym Memberships offer high scaleability and time freedom, but face challenges in client retention and start-up costs.
Semi-Private Training balances personalisation with community, achieving solid scores in client progression and retention.
Group Fitness classes are popular for their community aspect, yet they have lower personalisation and profit margin.
Online Training leads in financial efficiency and time freedom but lacks in community building and client progression.

Actionable Take-Away: Different business models have different strengths and weaknesses. Choose the model that scores highest in the categories that are most important to you.

One of the great things about the fitness industry, is that fitness professionals have a huge range of ways they can prescribe fitness. From Personal Training to selling gym memberships and everything in between.

Which got me thinking, which one is best? Is there one business model that gives the best financial return, the most positive impact for the fitness professional, and is easiest to operate?

Choosing a winner

To find out, I did a deep dive into the five most common fitness business models to see which would come out on top. I dug into the numbers, basing my reviews off thousands of hours of mentoring hundreds of fitness business owners over the last seven years, along with 18 years of my own experience in the industry.

The five models I reviewed were:

Personal Training
Open Gym memberships
Semi Private
Classes
Online Coaching

I rated each of these five models on a scale of one to ten across 12 different categories.

Personal Training

Let’s kick it off with Personal Training, where you work one-on-one, face-to-face with a client at recurring scheduled times. And this could include allied health professionals like Exercise Physiologists who do one-on-one consultations.

Start-up costs: Once you’re qualified, it costs very little to be a PT. Because you’re only working with one client at a time, equipment costs are low. And if you rent space from a gym, all you need to do is pay the rent, but that’s an ongoing cost, not a star-up cost. If our rating scale here is that 1/10 is high start up costs, and 10/10 is low start up costs, Personal Training is an 8.

Hourly rate: The better you are, the more you can charge relative to the rest of the market, and because you’re providing a more specialised, individualised one-on-one service, you can charge more. But you are limited by the fact that only one person is paying you at a time. Because of that, I give PT a 6/10 for hourly rate.

Scaleability: Being a Personal Trainer is a simple matter of multiplying hourly rate by the number of hours you do. So while this means you have a lot of billable hours, and can earn good money for them, there is a limit on the number of people you can see before you burn-out, bored-out, or simply run out of hours. 4/10 for scaleability.

Profit ratio: With low overheads and operating costs, and a respectable hourly rate, PTs have a high profit ratio, even if total profit is limited by the lack of scaleability. PTs get 9/10 for profitability.

So for finance, that gives Personal Training an average score of 6.75 out of ten.

Client acquisition: Personal Training is a bit more of a niche service. It’s a higher price point which means the market is smaller. And yet, there’s a lot of competition. So because the supply and demand curve isn’t in your favour, this gets a 5/10. It’s hard to get clients, but if you can differentiate yourself in a crowded market, you can push this much closer to ten.

Volume of clients required: We spoke about lack of scaleability for PTs, but the silver lining of this is that you don’t need many clients to be at capacity. Where one means you need a lot of clients, and ten means you don’t need many, Personal Training gets a nine.

Retention: Generally, the more individualised a service, the stronger the relationship will be between the fitness professional and the client. And the stronger that relationship, the higher the retention. I set 97% as the bare minimum month-on-month retention rate for the PTs I mentor, and commonly see 98%+. For this reason, I’ll rate retention as 9/10.

So for operations, that gives Personal Training an average score of 7.7 out of ten.

Client progression: It’s no coincidence that closer relationships meant higher retention, and in turn, higher retention and more individualisation means better results for the client. 9/10.

Culture and community: While the one-on-one personal relationship might be tight, culture and community can be serious lacking in the PT business model. It’s not impossible to build culture, but it’s not easy, and takes deliberate effort. 2/10 for culture and community.

Sense of purpose and enjoyment: The recipe of people who need individualised help, long-term close relationships and clients who are getting results means purpose is high for PTs. I give it an 8/10.

Time freedom: As a PT you’re often a slave to the availabilities of your clients, which often means early starts, late finishes, and dead time in then middle of the day. Even though you get to choose your own hours, there is considerable pressure to choose hours that work for your clients. And if you don’t work, you don’t get paid. Time freedom, 4/10.

Longevity: Let’s talk about how long a PT career can last for. While turn-over in the industry in general might be high, Personal Trainers tend to hang around longer than some of the other business models, so I’ll give it a 7/10.

For impact, that gives Personal Training an average score of six out of ten.

Gym memberships

Let’s go from one extreme to the other, from Personal Training to Gym Memberships. This is where you provide the facility and give your customers access to use it in any way they choose, at any time they choose.

Start-up costs: Costs here are huge. The product you’re providing here is a well equipped and well kept facility, and infrastructure is very expensive. With one being expensive and ten being cheap, a business model reliant on gym memberships get a 2/10 from me.

Hourly rate: Although the initial set-up costs are super high, the ongoing work is minimal, and is often delegated. For that reason, the hourly rate scores a 9/10.

Scaleability: Scaleability is high. Just like hourly rate, once the facility has been set-up, it can service a lot of clients. And because attendance rates are so low (which raises other moral questions), a relatively small facility can have thousands of members. 9/10 for scaleability.

Profit ratio: A large member base drives revenue up, but huge start up costs and high recurring overheads means I can only give profit a 5/10.

So for finance, that gives Gym Memberships an average score of 6.25 out of ten.

Client acquisition: Everyone knows what a gym membership entails, and it’s the fitness business model that the great market segment participates in. So it’s not hard to get clients. 8/10.

Volume of clients required: Although clients may be easy to come by, you need a lot of them to make the business model work. Because of the sheer volume needed, this gets 2/10.

Retention: Being a low-touch business model, turn over is traditionally high. High client requirements and low retention feeds the need for high acquisition. 2/10 for retention.

So for operations, that gives Gym Memberships an average score of 4 out of ten.

Client progression: Aside from occasional 12 week check-ins, gym members are generally left to their own devices. Lack of progressive overload, training variety and consistency means client improvement is generally low. 2/10.

Culture and community: With the exception of people who exercise with a training buddy, gym memberships are often a pretty solitary way to train, meaning the culture and community aspect gets a 2/10.

Sense of purpose and enjoyment: Being the owner of a gym that relies on high numbers of people who pay a small amount and exercise inconsistency isn’t a recipe for high purpose. The money can be good, and (once set up) you don’t have to work a lot to earn that money, but purpose is about more than dollars. 2/10.

Time freedom: High hourly rates, recurring direct debits and a relatively hands-off operation means you get loads of time freedom. 9/10.

Longevity: Assuming your business is financially successful, and you have a steady stream of new clients, it’s rare to get burnt out. Longevity is high, 9/10.

For impact, that gives Gym Memberships an average score of 4.8 out of ten.

Semi-private training

Let’s talk about Semi-Private training. Where you’re working with anywhere from two to ten people, though usually it’s somewhere from six to eight. Traditionally there are pre- set times and people attend the same times every week.

Start-up costs: Unlike being a PT, it’s rate that you can rent space to run semi-private sessions, so you do need your own facility. But the start up costs are lower than a commercial gym membership model, so I’ll give it a 3/10.

Hourly rate: Even though you need to spend the time running the semi private session, you can charge much more than would would for a large class. And while you can’t charge as much per person as a PT, your overall hourly rate is higher. 7/10.

Scaleability: Capped group numbers, a limited number of hours in the day, and high demand for sessions during peak times means this isn’t as infinitely scaleable as gym memberships. The being able to work with more than one person at a time makes semi-private training more scaleable than Personal Training. For those reasons, I give it 5/10.

Profit ratio: Revenue is higher than for PT, but so are overheads, so semi private gets 8/10.

So for finance, that gives Semi Private Training an average score of 5.75 out of ten.

Client acquisition: Semi-Private Training isn’t as niche as Personal Training, but it’s more specialised than Gym Memberships, so I’ll give client acquisition 6/10.

Volume of clients required: You don’t need many people paying a rate that’s above the industry-wide average for all business models to make good money from semi-private training. 8/10.

Retention: While not as high as Personal Training, Semi-Private ranks highly – a combination of semi-individualised care with higher levels of community and culture. The key is to build this culture. 7/10 for retention.

So for operations, that gives Semi-Private Training an average score of 7 out of ten.

Client progression: Individual attention, solid retention, and the training consistency that comes from clients booking in to regular classes means progression is solid. 7/10.

Culture and community: Very strong, and an industry leader. Multiple close personal relationships. 8/10.

Sense of purpose and enjoyment: For the same reason as a high culture score, purpose and enjoyment is above average. 7/10.

Time freedom: You’re pretty tied down here. A lot of people relying on you to consistently be there on time. And not as easy as Personal Training to reschedule. You’re chained to your business. 3/10.

Longevity: Purpose and profit have solid scores, but time freedom drags the longevity score down. Still, a respectable 6/10.

For impact, that gives Semi Private Training an average score of 6.2 out of ten.

Group fitness

Semi private’s older sibling is the group fitness model. Large groups of people, usually with a single instructor. Often they don’t need to book in, and can just rock up at times that are convenient for them.

Start-up costs: While you need a facility, and enough equipment to go round, the facility can be hired, and the equipment can be simple. For those reasons, start up costs get a 6/10 for group fitness, but can be much lower for outdoor bootcamps and much higher if you own a facility.

Hourly rate: More clients that PT or semi-private, but paying less money each. If you’re a group fitness instructor being paid by someone else to run group fitness classes, hourly rate is traditionally very low, but if you’re working for yourself, it can be higher. 6/10.

Scaleability: With very high caps on the number of class participants, a larger range of class times favoured by the demographics who choose group fitness, and potential to outsource the work to staff, this model is quite scaleable if you have enough clients. 7/10.

Profit ratio: For the same reasons scaleability is high, you can bring in a good profit from group fitness, but this can be eaten into by staff costs if you delegate the running of the class. If you run them yourself though, 7/10.

So for finance, that gives the group fitness model an average score of 6.5 out of ten.

Client acquisition: Classes are one of the less intimidating ways for someone to start their exercise journey, and they’ve been around for a long time, so people know what to expect. Because of that, it’s not hard to get class participants. 7/10.

Volume of clients required: With less income per client, you do need a lot of people to make classes financially successful, so I’m giving classes a 3/10 for required volume.

Retention: Better than open gym, but not as high as PT or semi private. As personalisation goes down, so does retention. 5/10.

So for operations, that gives group fitness an average score of five out of ten.

Client progression: The community aspect keeps people coming back, but often people hide in the crowd. This results in the stereotypical class participant who lifts the same weights for years at a time. 5/10.

Culture and community: Not quite as good as semi-private training, but still high. Humans are a social species, so group classes get a 7/10.

Sense of purpose and enjoyment: High energy classes where people bounce off each other are fun, so enjoyment is high. Purpose is a little lower than it would be for business models that foster a more specialised individual relationship, but still, I’ll give this a 7/10.

Time freedom: Unless you’re not running the classes yourself, there’s no wiggle room here. 2/10.

Longevity: If you’re operating your own group fitness business, you can have a long and successful career, but after a while the repetition and lack of purpose and direction can get you down. 6/10.

For impact, that gives group fitness an average score of 5.4 out of ten.

Online training

And finally, online training. We could actually break this down further to online coaching, which contains much higher levels of care than the other form of online training, which is just programming. But for the sake of this analysis, let’s just broadly categories them as ‘online training’.

Start-up costs: Aside from some minor recurring subscriptions, start-up costs are virtually non existent. 9/10.

Hourly rate: This comes down to systems. If your systems are good, particularly around programming and client communication, hourly rate can be very high. 8/10. But a word of warning, in my experience, most people drastically under-systemise programming. It is possible to provide individualised, custom programming, while still leveraging systems.

Scaleability: Again, with good systems, there is virtually no limit on how many people you can service, and the less bespoke the programming, the more you can scale. But beware, the market is saturated, and competition is high, so you need to be different. 9/10.

Profit ratio: Very low overheads, so regardless of revenue, profit ratio will be high. 9/10.

So for finance, that gives online programming an average score of 8.75 out of ten.

Client acquisition: It’s very easy to get your first 5-10 clients (they’re people who already know, like, and trust you), but harder to break into the wider market (because competition is so high). For those reasons, online training gets a 5/10 for client acquisition.

Volume of clients required: If you’re offering a high touch-point individualised online coaching model, you don’t need many people paying you a premium. But if you’re providing more generic, cheaper programming, volume goes up. It’s all a trade off between quality of experience, value, cost and volume. I’ll give online training a 5/10.

Retention: Middle of the road again here. While there’s more accountability than a gym membership model, the fact that there’s a screen between you and your client brings down retention. 5.10.

So for operations, that gives online training an average score of five out of ten.

Client progression: Again, this depends on the degree of personalisation you build into your programming. Solid, without being ground breaking. 5/10.

Culture and community: as much as people try, I’m yet to see a vibrant online community of close personal relationships within the online training space. 2/10.

Sense of purpose and enjoyment: If you’re an optimiser who likes to make everything in their life efficient, you can get high enjoyment out of a highly systemised online business. But if you need human connection and want to get out of your mum’s basement, you might want to look elsewhere. 5/10.

Time freedom: This has got to be the main drawcard of online training. Almost every part of it is done on your terms. It’s asynchronous, which means your time commitment isn’t set. 9/10.

Longevity: If you’re successful in the online programming space, this can be a very long-term profitable venture – as long as you can find a way for this business model to give you a strong sense of purpose. 7/10.

For impact, that gives online training an average score of seven out of ten.

The winner?

So, which of our five business models is best across the board?

Obviously it’s not as simple as picking a winner by adding up the ratings, but who cares, let’s do that anyway.

In 5th place scoring an average of 5/10 is Gym Memberships. In 4th, with 5.6/10 is group classes. The bronze medal, with 6.3/10 is semi private. Our runner up, is online training, with 6.45/10, leaving Personal Training as the winner with an average rating of 6.8/10.

But of course, this all means nothing, because there’s one variable we haven’t looked at… YOU.

It’s impossible to choose an overall winner, because different people favour different things. Maybe you value purpose above all else, or maybe it’s purely a financial decision.

If you have a lot of start up capital, want to hire staff and want a business that gives you freedom to pursue other things in life, Gym Memberships might be the way to go.
If you want to travel the world and pay for a backpacker’s lifestyle for a year, and you already have a trusted client base who know, like, and trust you – online programming might be the way to go.
If you want a community of likeminded individuals who have a good time together and have each other’s backs – go for the group class model.
If you want to distinguish yourself as unique, the best in your field and are looking to build a high-priced offering with scarcity and a waiting list, take a look at Personal Training.
And if you want personalisation, but without losing the human element, semi-private training may be the way to go.

Of course, you can, and should, combine these options and that’s what I’ll be exploring in my next podcast episode, where I put my innovator’s hat on, and see what happens when we combine these business models to create new profitable opportunities that you might not have thought of. Don’t forget to subscribe to The Business of Fitness Podcast so you don’t miss it.

My take-home advice would be to start with a heathy dose of self awareness. Identify what it is you want your business to provide to you, and the life you want your business to help you build. Once you’ve worked those things out, you can choose the best model for you, and build a profitable, purpose-driven career that supports the life you’ve designed for yourself.

	PT	Gym memberships	Semi private	Classes	Online
Start-up costs	8	2	3	6	9
Hourly rate	6	9	7	6	8
Scaleability	4	9	5	7	9
Profit	9	5	8	7	9
Client acquisition	5	8	6	7	5
Volume of clients required	9	2	8	3	5
Retention	9	2	7	5	5
Client progression	9	2	7	5	5
Culture and community	2	2	8	7	2
Sense of purpose and enjoyment	8	2	7	7	5
Time freedom	4	9	3	2	9
Longevity	7	9	6	6	7

Dan Williams

Founder/Director

Dan Williams is the Director of Range of Motion and leads a team of Exercise Physiologists, Sports Scientists, Physiotherapists and Coaches. He has a Bachelor of Science (Exercise and Health Science) and a Postgraduate Bachelor of Exercise Rehabilitation Science from The University of Western Australia, with minors in Biomechanics and Sport Psychology.