The Commercial Gym, Exposed!

TAGS: Personal Training Myth Versus Reality, globo gym, commercial gyms, certified personal trainer, personal trainers, Alexander Cortes

elitefts™ Sunday Edition

In my last installment, I covered some of the myths that surround personal training and the mindset required for success. In this second installment, I had planned on covering education first, but I actually received many requests to discuss job opportunities. In particular, I thought it would be most pertinent to cover the realities of working in a commercial gym and how these gyms operate as well as reveal the darker side of the practices that go on in these gyms but that never get openly discussed.

These gyms account for a large percentage of the average gym member's experience. They're also where most personal trainers get their first paid positions and get their start in the fitness industry.

So that I don't get sued, I won't name any specific companies. As I said before, my intention is to show the realities of this industry, both the good and the bad.

The Commercial Gym

For context, lets answer the question, what is a commercial gym?

A commercial gym is pretty much any large gym chain with many locations. They're often called “Globo gyms.” For the majority of the American public, this is their experience with “fitness.” These gyms can be very large with huge member bases, tens of thousands of square feet and multiple employees. They're generally set up with a vast sea of cardio equipment, a vast array of machines and a more limited amount of free weights and “hardcore” equipment, and they usually have a room or two for classes.

How do these gyms make money? By selling memberships. Lots and lots of memberships. And for reasons that I'll discuss further, commercial gyms do not rely on their members to get “results” of any kind but rather rely on them to not show up. How can this be? Continue reading.

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Understanding the business model

The largest gym that I ever worked at had 16,000 members. Of those, about 2,000 used the gym regularly. The rest never used their membership.

Now, you might think that you’ve heard this before and it is common knowledge that most people don’t use gym memberships. However, most people don't realize that the commercial gym business is reliant upon you not coming. How is this so?

Because they are expensive as hell to build and operate, and the layout of the facility is never intended to handle all the members. It's intended to accommodate only the ones who use the membership, which is about 20 percent of all people who sign up.

How expensive are these clubs, and why do they rely on constant membership sales?

Those treadmills don’t come cheap

Before Globo gyms open, they first scout out a location. Location is crucial for these gyms because they often need a lot of square footage and a lot of foot and vehicle traffic, and they need to be in an easily accessible area with parking. Once a location is found, then come the start-up costs.

These costs consist of:

  • The lease that secures the land/location
  • Construction, renovation, rebuilding, zoning and retrofitting of land and location
  • Associated permits, fees and licenses for the city and state
  • Parking (this can kill a club—I've seen it happen)
  • Selection and hiring of staff
  • Installation of all equipment
  • Miscellaneous costs (printers, desks, etc.)
  • Pre-sale advertising before the grand opening

How much does all that cost? For the bigger Globo gym chains, opening a new club is typically about $1–3 million. For prime real estate in a large metropolitan area, it could potentially be higher than that. For a franchise gym chain, assume at least $500,000 minimum.

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Commercial facilities are all set up in the same fashion—a large amount of cardio equipment, a large amount of machines, free weights and showers. From a training utility perspective, about two-thirds of a commercial gym's equipment is of limited use. Cardiovascular equipment and machines take up about two-thirds of the floor space, and the most useful pieces of equipment (the barbells, weights and plates) are often the smallest section of the gym. From a standpoint of fitting bodies into the floor space though, having 50 pieces of cardio equipment can accommodate more people than investing in more squat racks.

Beyond the cost to open the club, most gyms also have:

  • Showers, which use a lot of water and gas
  • Massive air conditioning systems
  • High electricity usage because many are open 24 hours a day

As such, the utility bills for a large club are well into the tens of thousands of dollars.

For the sake of simplicity, we'll assume that a club cost $5 million to open. So $5,000,000. And it costs $50,000 a month to operate. It has a staff of 50 employees, whose total pay comes out to roughly $150,000 a month. This is a mix of managers on salary, trainers and hourly employees. So that club will need to sell a certain number of monthly memberships to eventually recoup all that money. In addition to that, in any given month, about 5 percent of the members will cancel their memberships, so the club has to sell more memberships to make up for the cancellations.

So using our $5 million club as an example, we'll presume that their monthly membership is $40 a month, per month, in perpetuity. You will be charged this amount forever for as long as you are a member. However, it will be $120 to actually sign up, which includes a first and last month's deposit as well as fees for “gym improvements.” How many memberships do we need to sell just to make back the $5 million?

Basic division gives us: 5,000,000 / 120 = 41,666

But remember that these memberships are monthly. So in reality, a one-year membership, like the one in the example, will give us back $40 X 12 months = $480 plus the additional $80 to join the gym for a grand total of $560.

So 5,000,000/$560 = 8,928 memberships

I know that I'm oversimplifying the math, but 8,000–9,000 members is a fairly accurate number for a larger club that is over 25,000 square feet. And this is to simply demonstrate that a Globo gym needs lots of members to eventually turn a profit.

Now, we know that these gyms are expensive and that they have lots of members who they sign up, but what does this mean for the trainers who work there?

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Pay Structure of Commercial Gyms

At any Globo gym, there will always be minimum requirements in order to work there each month. These requirements consist of selling a certain amount of training sessions (at the clubs where I've worked, $2000 is the minimum) and servicing a minimum number of sessions monthly (usually 40 sessions a month). Where do these numbers come from?

The average rate for personal training is $40–60 a session. The more sessions purchased, the cheaper the rate per session. At higher end clubs, the rate can be well over $100. As such, training sessions can be purchased in bundles or packages (the term differs from company to company) of anywhere from 5–40 sessions. Two thousand dollars equates to exactly 40 sessions on the low end ($50) and only 20 sessions (or fewer even) on the high end ($100). Thus, this could be comprised of one large package of 40 sessions or multiple smaller packages of 5–10 sessions.

Regardless of price point, all the major chains universally take 60–70 percent of the session cost, give or take 5 percent. This means that if a trainer sells $4000 in training in a given month, he will receive only 40 percent of that money on average. Again, give or take 5 percent.

Now, you may be asking, “Why 60 percent? That totally sucks.”

And you would be right. It does suck. But taking into consideration how expensive Globo gyms are to run and the way that training is structured, which is one trainer per client at a time, the club will take as much money as it can. Trainers are largely considered expendable unless they are extremely productive.

Every club has a minimum monthly budget that it must cover through training sales as well as a target to make a profit. Most clubs struggle to reach that target month to month. The personal training department of a Globo gym can have a target sales goal of anywhere from $30,000 to well over $200,000.

But the reality is even a club with an absolute rock star team of trainers who sell $200,000 a month will have trouble reaching their target. Forty percent of the profits will go to the trainers, another 5 percent will go to the manager and the remaining 55 percent will go toward the club's expensive as hell utilities bill. Of that $200,000, only $10,000 might end up being profit and probably less than that. The breakdown varies from club to club, but the profit margins aren't anywhere near what you might expect.

Going back to pay structure, some clubs will try to fool trainers into thinking that their splits are more favorable. They do this by offering commission on packages. So if trainer Bill sells a $1000 package, he might get 10–20 percent of that package. The downside to this is that the club will then take a larger percentage of the session cost, say 70 percent. Regardless of the price point, you are pretty much guaranteed to never receive more than 40 percent of the dollar amount of training sold.

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Your next question is probably, "How much money could I actually make?"

I'm really bad at answering questions directly, but pretty much every large gym chain will have 3–5 levels of trainers. This is usually based on how many certifications a trainer has (i.e. level one equals one certification, level two equals two certifications, etc.). Most companies also have a “master trainer” designation. Generally, this is earned by performing 2000 sessions. When this is achieved, most companies elevate the trainer to the highest income tier.

So the 'per session' price that the trainer can charge is based on his level. A level one trainer can charge $40 and makes approximately $16 off of that. A level two trainer can charge $50 and makes $20. Depending on the location of the club, the price of a session can vary considerably. In New York City, $200 an hour isn't unheard of and charging less than $100 at a major club is very uncommon.

In a market like Los Angeles, the common rate is around $75 dollars and $100 is about the maximum. Charging more than this is difficult because it's heavily dependent on the trainer's perceived value being worth the money. Most commercial gym trainers simply aren't worth that kind of money. Charging $120 dollars is exorbitant.

In regards to levels, some clubs only have three while others have up to five. Additionally, some clubs will pay the trainers based on the number of sessions serviced versus their level. In this case, the club pays each level of trainer a “base” hourly rate. For a level one, this could be slightly above minimum wage. For the higher levels, it might be up into the mid-teens. From there, they classify the trainers into tiers of productivity. A trainer who services 60 sessions a month gets his base pay plus an extra $3. Sixty to eighty sessions is an extra $5, 80–100 sessions is an extra $6 and 100–120 sessions is an extra $7.

Truthfully, this simply allows clubs to reward the most productive trainers and pay unproductive trainers (those less than full-time) much less money. The differences in pay always end up working out the same, that is you're never making more than 40–45 percent of what you sell or service.

Tell Me How Much Money!

It depends on how many sessions you service and how expensive those sessions are. A part-time trainer who has only 2–3 appointments a day can expect to make maybe $1500 a month. A trainer who is full-time with 120 sessions every month could stand to make $3000–4000 a month.

In commercial gyms, 120 sessions a month is considered full-time. This is a trainer who averages 30 appointments a week, which breaks down to 5–6 sessions a day. This type of productivity requires a trainer to have about 15–20 clients on his roster, who all come in with varying degrees of frequency.

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As you might be picking up on, there are only so many sessions that a trainer can do in a day. Going beyond even five sessions can get mentally exhausting. I've seen some trainers who can handle over ten sessions a day, but they tend to quickly burn out. Overall, even if you're charging over $100 an hour, your income can top out fast. You can only work so many hours in a day.

Now, if you can sell a lot of training, you could make more money. I've seen trainers bring in roughly $6000 a month in income because they constantly sell mega packages of 20 or more sessions to clients.

$6000? That’s damn good money!

Remember, you're only ever getting 40 percent of what you're selling. So you might make $6000, but that isn't even half of what you actually sold for the club in a given month. As an example, we'll use a breakdown of a master level trainer who makes $50 an hour. Pretty good, right? That means his sessions are over $120 an hour (using 40 percent as our marker).

To bring in $6000 dollars a month at $50 an hour, that’s 120 sessions. This entirely factors out commission, so we'll say that he does make 10 percent commission on everything he sells. This increases his overall margin on his sales to 45 percent, which is nice. But that means he still has to sell over $12,000 a month in training. At $120 dollars an hour, he has to sell over 100 sessions. This breaks down to about anywhere from 5–10 individual packages of anywhere from 5–20 sessions ranging in price from $500 to over $2000.

Are you hating all this math??

Time for a reality check. You have to know this shit if you want to succeed in this field.

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But I Just Want to Train People

I understand the attitude. I had the same attitude at one point. But the reality is pursuing a passion does not make you any money. You have to treat it like a business.

Most trainers are utterly terrified of trying to sell anything. While that is probably worthy of its own article, the overall message is that you must be business minded and know basic business math if you want to really make a comfortable living at this. Most trainers don't want to know any of this stuff, and they live month to month and are always one lost client away from being broke.

In closing, I'll simply list the pros and cons of working in a commercial gym. In Part III, we'll dig deeper into gaining experience and education and more closely examine the business model.

Pros:

  • Opportunity to train a high volume of clients
  • Exposure to a diverse client base
  • Reliable income (assuming a steady client base)
  • Limited liability (no need for insurance)
  • Lots of training experience in a short period of time
  • Practical experience in what works and what doesn’t

Cons:

  • Unreliable business from month to month for rookies
  • Potential to “drink the corporate Kool-Aid” with certain companies
  • Limited income potential due to hours
  • Limited continuing education
  • Very low level of fitness education in management
  • Questionable relationships with management (can be your best friend or worst enemy)
  • Low morale (trainers are considered expendable—there are always more to be hired)
  • Poor training standards (you'll see some God awful training)

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