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Fitness Subscription Business Models

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Last editedApr 20222 min read

Subscription business models are companies that sell directly to consumers by charging them a recurring fee for their services or products. Recurring charges are generally incurred annually or monthly. From replenishing supplies to accessing services or content, subscription business models are becoming increasingly commonplace. Subscription business models are also the model of choice for many companies in the fitness industry.  

In this post, we’ll look at the benefits and downsides to running a fitness business via a subscription model.

Types of fitness subscription business models

As a fitness business, it’s essential to have a clear business model that’s both flexible and adaptable to changing fitness trends. Fitness businesses have traditionally used a membership business model, providing members with a fixed price to access services and facilities. This provides the business with a predictable and consistent income, while giving members a financial incentive to visit the gym or fitness facility regularly.

The pandemic has seen many companies shifting to a hybrid subscription business model, while others have gone entirely digital, offering on-demand and live streaming classes to generate revenue. With digital fitness subscription business models, there’s no need to worry about social distancing or capacity limits, and members can take the membership with them wherever they go.

Benefits of fitness subscription business models

Predictable income: Unlike a business that has highs and lows in terms of popularity, a subscription-based model means a business can predict income flows on a month-to-month basis. With regular income coming in, it's easier to budget andforecast metrics, including monthly recurring revenue (MRR).

Better customer relationships: With one-off purchases, a company may never hear from customers again. With a subscription business model, there’s time to build up a close relationship with customers and learn their likes and dislikes to feed back into your customer retention strategies. Once customers are signed up, they often stay for the community experience, making it more likely they will be members over the longer term.

Flexibility: Paying monthly at various pricing tiers offers members flexibility that’s adapted to their fitness goals, with the option of including various services to suit their budget. With the lower tiers, you’re providing members with a low entry barrier that can be upscaled over time.

Disadvantages of fitness subscription business models

Requirement for specific technology: Technology-based capabilities include customer relationship management systems, database management, order management and billing systems. Using a provider like GoCardless can help make all aspects of recurring billing more efficient and cost-effective, with the option to take payments via direct debit. Making payment by direct debit also benefits members, since they only have to set up their details once, and payments are then taken automatically from their account every month.

Startup costs: During the initial phase of the business, revenue might not be consistent, and there may be a need to offer free trials and find ways to avoid cancellations.

Vendor lock-in: For customers, paying a membership fee might make them feel locked in to a contract when their interest has waned.

Building a successful fitness subscription business can take time and effort, but the benefits can be significant both for your business and your members. From greater predictability of income to lower retention costs, consumers can benefit from flexible membership plans. To make things work, it’s essential to allocate sufficient resources into implementing and sustaining the system, including investment in technology.

We can help

GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.

Over 70,000 businesses use GoCardless to get paid on time. Learn more about how you can improve payment processing at your business today.

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