The Expense Reality
Most gym owners focus on revenue. But a gym making ₹10L/month with ₹8L expenses is less profitable than one making ₹7L with ₹4L expenses.
Major Expense Categories
Fixed Costs (60-70%):
- Rent: 25-35%
- Salaries: 25-30%
- Utilities: 5-8%
- Insurance: 1-2%
- Software/Tech: 2-3%
Variable Costs (30-40%):
- Marketing: 5-10%
- Maintenance: 3-5%
- Consumables: 2-4%
- Commissions: 5-10%
Rent Optimization
Negotiation Tips:
- Long-term lease for lower rate
- Negotiate after proving success
- Include maintenance in rent
- Escalation caps (max 5%/year)
Alternative Structures:
- Revenue share with landlord
- Base rent + percentage
- Step-up rent (lower initially)
Staff Cost Management
Right-Sizing:
- Calculate staff-to-member ratio
- Part-time vs full-time balance
- Multi-skilled staff
Productivity Metrics:
- Revenue per staff member
- Members per trainer
- PT sessions per trainer
Commission Structures:
- Performance-based pay
- Reduces fixed costs
- Aligns incentives
Utility Optimization
Electricity (Biggest Utility):
- LED lighting conversion
- AC optimization (26°C optimal)
- Peak hour management
- Solar panels (long-term)
- Equipment efficiency
Water:
- Low-flow fixtures
- Leak detection
- Member awareness
Equipment Expenses
Buy vs Lease:
- Buy: Higher upfront, no ongoing
- Lease: Lower upfront, ongoing payments
- Consider for expensive cardio
Maintenance is Cheaper than Replacement:
- Preventive maintenance schedule
- AMC with equipment brands
- In-house basic repairs
Used Equipment:
- 50-70% savings possible
- Inspect carefully
- Good for expansion
Marketing Efficiency
Track ROI:
- Cost per lead by channel
- Cost per acquisition
- Lifetime value ratio
Cut Low-Performers:
- Monthly channel review
- Reallocate to winners
- Test before scaling
Free/Low-Cost Options:
- Referrals (best ROI)
- Social media (organic)
- GMB optimization
- Partnerships
Inventory Management
Supplements/Products:
- Just-in-time ordering
- Track sell-through
- Avoid overstocking
- Expiry management
Consumables:
- Bulk buying discounts
- Vendor negotiation
- Monthly audit
Technology Savings
Consolidation:
- One software vs multiple
- Integrated solutions
- Avoid redundancy
Automation:
- Reduces manual work
- Staff time savings
- Fewer errors
Vendor Management
Regular Negotiation:
- Annual rate reviews
- Competitive quotes
- Volume discounts
- Payment term flexibility
Preferred Vendors:
- Build relationships
- Better service
- Priority support
Monthly Expense Review
Dashboard:
- Expense vs revenue
- Category breakdown
- Month-over-month trends
- Variance analysis
Action Items:
- Identify overspends
- Find reduction opportunities
- Implement changes
- Track impact
The 10% Rule
Challenge yourself: Can you reduce each expense category by 10%?
- Often possible without quality impact
- Small savings compound
- Forces creative thinking
Conclusion
Expense management is an ongoing discipline. Review monthly, optimize continuously, and watch profits grow.
WTF Powered includes expense tracking and financial analytics.