in fitness economics and strategy

The Truth Behind Health Club and Gym memberships

It is December 30th, the festivities and holidays are going on and you are having the time of your life feasting on one delicacy after another while spending time with friends and family.

High Calorie Junk foods
As your percentage consumption of high calorie foods hikes,so does your body fat percentage

Then while rummaging your gifts in order to find something amazing , you surprisingly unwrap a weighing machine.You decide to weigh yourselves and BOOM, guess what?

The Truth Behind Gym Memberships
10kgs!! Yes, that is the weight you gained since the last time you measured your weight(I bet most people don’t even remember when they measured it last)

You feel heartbroken and sad and start cursing the One who gifted you the weighing machine.You start watching YouTube fitness motivation videos and decide to join a Health Club. But, then you remember your failed attempts at joining  and how the forces of the universe always seem to work in collective harmony to keep you from joining a Gym. But somehow you muster all your courage and on the self auspicious day of January the 7th, you land up at the front desk of the locally popular health club.

Gym Membership deals Hidden truth
The manager welcomes you, shows interest in your weight gain history and finally hands you the FORM!!

While filling up the seemingly never ending form you come across a section which gives you the option to pick a Subscription and Pricing Gym membership deal.You carefully look at the options provided-

  1. Monthly membership at Rs 1000/month
  2. Quarterly membership at Rs 2500/quarter
  3. Semi annual membership at Rs 4500/term
  4. Annual membership at Rs 8000/year.

You are confused initially and although your mental math (that you are secretly proud of) does initially point you to option 4, yet you still ask for the manager’s advice.The manager then does the same freaking math in a paper in front of you and smilingly mentions how  people have benefited from their schemes.

You are confident now and you go along with the annual gym membership and pay Rs 8000/- upfront. The manager hands you your access card and introduces you to trainer who even before asking your name commands you to hop on the famous(and infamous) Treadmill. You set the speed at 2 km/hr and start thinking how you made the best mathematically correct investment of your life at Rs 8000/- and how you will spend Rs 4000/- lesser than monthly fee paying regular Gym Rat.But is your decision right?

Well economically your decision does seem right but if you are not among the few people who start and continue their fitness journey, you will mostly end up squandering your 8000 bucks .

losing money in gym memberships
You are probably wondering now, how can you possibly be at a loss even after double checking your math!

Well it all has to do with your attendance rate. Remember how you got penalized for missing class attendance at school? In this case your body and your pocket is penalizing without you noticing.

In a brilliant study, Prof. Stefano DellaVigna of Berkeley  and Prof. Ulrike Manmendiar of Standford highlighted the correlation between choosing different health subscription periods and the attendance rates over the year.The results of their finding look something like this.

gym membership options

 

on the Y axis is the attendance rate and the X axis has the month of membership starting from January to December.Let us evaluate the options again considering the above data point and assume That A,B,C,D have chosen option 1,2,3,4 respectively and the behavioral tendencies of A,B,C and D are same as the chart provided, as far as attendance is concerned.

A chose monthly membership and spent 1000*12=12000/- during the entire year.But the monthly decision point of spending money for renewal also constantly motivated him to keep attending the gym.Let us say he makes 20 visits per month and ends up with 12*20=240 visits during the entire year.Therefore his cost per visit  =12000/240=50 Rs

B chose Quarterly membership and spent 2500*4=10000/- during the entire year.His motivation lasts for a month and slowly he decides to slack off thinking he has enough time to catch up to lost sessions.Then as the third month nears closing he hurries to the gym to make up for lost sessions. Let us say he makes 20 visits in the first month , 8 in the 2nd and 18 in the third and he continues the trend for 4 such 3 month quarterly subscriptions, then he ends up with (20+8+18)*4 cycles=184 visits during the entire year.So, his cost per visit =10000/184=54.34 Rs(considering that his behavior is uniform across all cycles).

who chose the semi annual membership  spent 4500*2=9000/- during the entire year.His motivation starts of great but he gradually looses interest and the long term pre payment assurance creates a mental state of leniency which leads to physical slack . Let us say he makes 25 visits in the first month , 10 in the 2nd and 2 in the third, 2 in the 4th, 10 in the 5th and finally back to 20 and he continues the trend for 2 such 6 month subscriptions, then he ends up with (20+10+2+2+10+25)*2 cycles=138 visits during the entire year.So, his cost per visit =9000/138=65.21 Rs(considering that his behavior is uniform across all cycles).

Now you and D chose the annual membership.Paying a huge amount initially was the motivating factor and you turned up daily even befriending the famous GYM RAT.But gradually due to a host of different reasons(we will discuss reasons for not turning up at the gym at a later article) you seem to lack attendance.Somehow the 12000/- stops being a powerful economic incentive and attending the gym becomes a once a month holiday outing for you where you go to catch up on the latest fitness fad(some funny fitness fads coming up in the next article in this category)your attendance chart looks like like a decreasing Arithmetic Progression now as you attend 30,25,20,15,10,5,5,3,2,2 sessions from January to December.So now let us calculate your cost per visit=8000/(30+25+20+15+10+5+5+3+2+1)=69 Rs.

Losing money on Gym memberships
BOOM!! You just lost 19Rs while walking on the Treadmill.

What happened? You must be angry now that we revealed your lack of farsightedness.Be as angry and sad as you want, but you calm down you will realize that you just learned the hidden truth of health club and gym memberships.And you can use this insight to focus your investments in the right direction.Now it is time for some-

common sense fitness advice
We could have named it advice, but the image is cool!! Isn’t it?

If you are new to the fitness ecosystem we advise you not to fall prey to mind bending tactics(next tactic coming up soon) used by experienced gym management.

Please take up a monthly subscription initially. Then start monitoring your progress, also note and evaluate your attendance. Try to be consistent with your workouts(tips coming soon).It takes 4-5 months to see actual results in the form of muscle gain or fat loss.When you start seeing results, it will automatically motivate you to continue and renew your subscriptions and keep making gains.

Once you see your excel sheets and are proud of your attendance and you can keep up the good work for at least 2 years, only then go to a annual subscription model. Because this time you have the knowledge,motivation and experience to keep pushing yourselves till the end.

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7 Comments

  1. SDD 08/06/2016 Reply
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