One of the most common questions I get asked by Gym owners and the coaches who work for them is “What is a fair split between the gym and the coach?” They want to know what percent the coach should make and what percent the gym should make on a given session.
This question gets asked so often because gym owners and managers want their coaches to be incentivized to work hard and earn a living, and they also have to be cognizant of their own expenses and financial needs to stay solvent. While the coach shows up to work and the rent is paid, the utilities are paid, the gym is cleaned, the weights are there, the heat works, etc., all of these items and many more, including customer acquisition, fall onto the gym owner’s or manager’s plate.
A common theme in the micro gym community is to pay the coach 4/9ths of the cost of a session; I’ve heard it go as high as 100%, but the common settling point seems to be around 44%.
Here is the problem.
Setting a percentage rate for coaches to be paid does not take into consideration how much a coach needs to make to live a fulfilled life. Let’s say you live in America as you read this. How much money does an American in a suburban area within 40 miles of a major city have to make annually to live a financially free life? There is an answer to this question and based on most research it currently sits around $75,000/year. It is important for me to note here, I believe the number is far higher than this, but this is what the “research” has shown.
If we agree that burnout happens when a coach works more than 25 training hours per week, and if we agree that everyone should have two weeks of vacation per year, then we have some easy math to work with, we simply multiply 25 (hours) by 50 (weeks) and we end up with 1,250 (annual hours worked). Divide $75,000 (total income needed to begin to reach financial freedom) by 1,250 and you get 60. $60 is the minimum amount of money a coach can afford to work for if their primary income is going to be from one-on-one coaching. In order to pay a coach $60/hour and pay them 44% of the session rate, the session would have to cost $138 and it’s unlikely your average gym is willing to charge that.
You see, we are looking at this whole thing backwards. We are asking ourselves “What would someone pay for this?” instead of asking ourselves “What does someone need and what do we need to charge them to provide it?”
No gym requires a percentage of anything. 56% of $10 is $5.60; it’s unlikely that any gym would allow a coach to work with clients for $10 as no one would be able to survive. So, here is my suggestion.
If you are a gym owner who is currently paying your coach 44%, or any ridiculous percentage, look at the math. What is the blended average that you are making per session? For the sake of this conversation, let’s say you are charging an average of $70/session, that means you are making $39.20/session and your coach is making $30.80/session. You are happy making $39.20/session because you get the volume of sessions from all of your coaches. You have established that you are happy making $39.20.
You now know that your coach must make $60/session at an absolute minimum. Ask your coach how much money he/she needs to make per session to live a financially fulfilling career. And add that number to your $39.20. THAT is now the cost of a session.
There is absolutely a ceiling to how much a session can cost, but the ceiling is higher than you think. This is especially true in major cities where I work with coaches who routinely charge $150-$200/session and have full schedules.
This usually leads to another question, “What if the gym’s number and the coach’s number combined equal a number that is too high to be able to charge?”. Well, first you have to ask yourself, “Is this true or am I telling myself it’s true because I don’t think I could sell it?” and then you have to acknowledge the truth.
You either need to get better at sales, or you can’t afford to offer this service and you need to devise something more valuable that takes less time to deliver and costs more money.
The Bottom Line: A coach should be paid the same per hour regardless of the percentage that the gym makes, and the amount that the coach should be paid should afford the coach the ability to live a financially fulfilling career.
The Take Home: If you can’t sell sessions for a price high enough to afford your coach and your gym a fulfilling career, you need to improve your sales skills, or you need to choose a new career.