“Are yoga studios profitable?” is the most common question I get from people wanting to become a yoga entrepreneur. They love practicing yoga, or perhaps even teaching yoga, but have never run a business before. And I have seen a lot of misinformation about the profitability of yoga studios online.
So, are yoga studios profitable? Yoga studios are profitable and a viable business option with roughly 6000 yoga studios in the USA alone. The profitability of a yoga studio depends on the following factors:
- Number of students
- Revenue versus expenses split
- Value-based pricing structure
- Space utilization
- Community Engagement
This post is part of a series of guides and articles providing in-depth information about how to start a yoga studio. Head to the main article to find a list of articles and guides covering the topic.
I have provided a yoga studio profit calculator below. You can use this yoga studio profit calculator to forecast and identify how profitable you can make your yoga studio. However, do read the entire article to understand the critical factors that affect yoga studio profitability.
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Yoga Studio Profit Calculator
Enter the details specific to your yoga studio and the yoga studio profit calculator will give you the monthly profit for your yoga studio. Use this yoga studio profit calculator to forecast your revenue and breakeven point to profitability.
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Yoga Studio Profitability
Americans spend $16BN annually on yoga related activities. Participating in the yoga industry represents a significant business opportunity. However, I do see a lot of misinformation about the difficulty of starting and running a yoga studio.
Well, starting and running any business venture is hard. For my analysis, I am primarily focussing on the economics of starting and running a yoga studio and not on the fact that 90% of start-up businesses fail. Based on that fact alone, no one should ever start any business at all.
Before we explore the key characteristics of profitable yoga studios, let us clearly understand the fundamentals of yoga studio profitability.
Becoming a profitable yoga studio is understanding the above equation and making sure your expenses never exceed your revenues. Ideally, you should be making 15% – 30% of profit.
Now that you know the fundamental mathematical equation for profitability, let us explore the key characteristics of successful and profitable yoga studios.
Characteristic #1 of Profitable Yoga Studios: Number Of Students
Intuitively you would know that having more students and more members in your yoga studio is better for profitability. As a yoga studio owner, you have some fixed costs such as rent/mortgage and utilities. Each month you need a certain number of students to attend your classes to cover those fixed costs.
These fixed costs do not scale with the size of your yoga studio. If you move into a studio that is double the size of your current studio, your rent/mortgage will not automatically double. There will be an increase in your fixed costs but not linearly or exponentially.
Due to this, bigger yoga studios, with more number of students, tend to be more profitable. Due to the same reason, if a yoga studio is small and caters to 4-5 students per class, the studio will struggle to reach profitability.
To ensure your yoga studio is profitable, aim to maximize the number of students per class. Do not limit the number of students in your sessions to provide personal attentional as this will hamper your profitability.
Characteristic #2 Of Profitable Yoga Studios: Revenues V/S Expenses Split
Running a profitable yoga studio is all about financial management. You need to have a clear and accurate idea of the amount of money coming into your yoga studio and the amount of money you are spending.
Profitable yoga studios are adept at tracking their revenues and expenses and making sure that that expenses never exceed revenues. As a first step, create a complete list of all your incomings and outgoings and begin tracking them.
Yoga Studio Revenue Sources
Some of your revenue sources for your yoga studio could be:
- Class pack purchases
- Walk-in registrations
- Teacher training courses
- One-off event sales
- Sales of merchandise
- Renting out yoga mats and towels to members
- One on one instruction
Yoga Studio Expenses
Some of your yoga studio expenses could be:
- Yoga teacher commission/pay
- Salaries for owner and fixed staff members
- Utilities and building expenses
- Purchase of materials and equipment (mats, towels)
- Professional certifications and memberships
- Marketing and advertising
- Liability Insurance
- Cleaning and maintenance
- Software and booking system
You can track all your revenues and expenses in an Excel sheet. However, investing in a yoga studio management software will take care of monitoring all your earnings and give you detailed reports that will help you stay on top of your profitability metrics.
Characteristic #3 Of Profitable Yoga Studios: Value-based pricing structure
I have previously written extensively on pricing in the boutique studio industry. How you price your yoga classes will play a significant role in the profitability of your yoga studio.
Value-Based Pricing For Yoga Studios
Value-based pricing is the concept that you are pricing your yoga classes based on the upper limit of what your members are willing to pay. This pricing strategy is the best strategy to maximize your profitability.
The way you arrive at the ideal value-based price is by testing and frequently asking your members directly how much they believe your classes are worth. You can ask your members directly by sending them periodic surveys.
Some ineffective ways to price are cost-based pricing and competitor based pricing.
Cost-Based Pricing For Yoga Studios
In the cost-based pricing approach, you are adding on a profit margin to your total costs/expenses to arrive at the price per class. This approach is ineffective, as you could be pricing too low.
Competitor-Based Pricing For Yoga Studios
In the competitor based pricing approach, you are looking at the prices of similar yoga classes in your location and matching their pricing. This approach is the way most yoga studios price their classes. However, this approach is still ineffective as you do not know the maximum amount your members are willing to pay for your yoga classes.
Another factor to consider, along with the pricing, is whether you favor discounting. Profitable yoga studios do not use flash sales channels like Groupon. Any students you get from such channels will not be loyal and are just looking for the next deal.
Discounting is necessary to attract students to your classes who are on the fence. However, relying on offering deep discounts as a way to acquire new students consistently will lead you down the road of unprofitability.
If your focus is on making your yoga studio profitable, limit the discounts you offer, and only use discounting as a tool to attract high-value students.
Profitable yoga studios always price high, focus on value-based pricing, and offer discounts strategically. By pricing high, you are attracting members who genuinely value your yoga classes. Even though you might be attracting fewer students, the higher price paid per student will move you towards profitability.
Characteristic #4 Of Profitable Yoga Studios: Space Utilization
Intuitively you might be led to believe that a smaller yoga studio is better for profitability because your rent/mortgage and expenses will be lower. However, this is not the case. Larger yoga studios tend to be more profitable because of practical space utilization.
In smaller yoga studios, there is a tendency to limit the number of students per session. The value proposition of most smaller yoga studios is the personal attention offered. Due to this, effectively, each student in a smaller yoga studio has 30 square feet of space.
In a larger yoga studio, even though the size of the facility is much bigger, the number of students per class is also significant. In effect, each student has 5 square feet of space.
This effective space utilization by yoga studios is key to profitability. The reason for this is that you are effectively increasing the number of students per class without increasing your expenses.
If you want your yoga studio to be profitable, focus on utilizing your space better. Try to fill up your existing yoga classes before renting out another room or facility.
Characteristic #5 Of Profitable Yoga Studios: Community Engagement
Profitable yoga studios engage in their community. They often run workshops for the local community or have their yoga teachers engage with the local community. For a yoga studio, unless you have celebrity yoga teachers, most of your students and members will be from the local area.
A common theme in marketing is to first focus on digital marketing channels such as Facebook, Google, and the like. However, these channels are expensive. A simple, cost-effective channel to attract new members is to engage with your local community. Profitable yoga studios understand this concept deeply.
A good example I have seen in the boutique fitness industry is that of Barry’s Bootcamp. Any time a new Barry’s Bootcamp location launches in London, the trainers organize events in the local community to engage the community. An example of an event I have seen is something as simple as giving away prizes to people who can do the most pushups in a local mall.
To be profitable, make sure you are organizing local events and engaging your local community before you embark on more expensive customer acquisition channels such as digital marketing. You will be surprised by the number of walk-in members you get if you effectively engage with your local community.
Yoga studios can be very profitable if you can manage the finances of the studio effectively. Ideally, your class size should be more than ten students per class. You should be offering at least five classes per day and have a sufficiently large yoga studio to accommodate a higher number of students.
You should be staying away from tiny class sizes of 3-4 students. If you do wish to run a small class size, then treat it as personal yoga training rather than group sessions. You should price high based on the value you offer and limit the discounts you offer.
Diligently track your incomings and outgoings. Finally, always make sure your expenses never exceed your revenues. If you follow these instructions, your yoga studio will not only be profitable but will be thriving.
This post is part of a series of posts providing in-depth information on everything you need to know to start a yoga studio. The other posts in this series include:
- How much do yoga studio owners make?
- What is the cost of opening a yoga studio?
- Teach yoga without certification
- Do yoga instructors need insurance?
- How to name a yoga business
- How big should a yoga studio be?
- Best place to open a yoga studio
- Yoga studio decor
- What color to paint a yoga studio
- Best flooring for yoga studios
- Heaters for yoga studios
- Best plants for yoga studios
- Music in yoga class: do’s and don’t
- Candles for yoga studios
- Incense, scents, & essential oils for yoga studios
- How yoga studios pay teachers
- Yoga studio marketing: Ultimate Guide
- Opening a yoga studio in a small town
- How to start a donation-based yoga studio
- Yoga studio grand opening ideas
- Why yoga studios fail
- Yoga studio franchise
- Yoga Studio Scheduling Software
I write abouT establishing and Growing your boutique Fitness/Wellness Business. I promise no spam, i hate spam.
About the author
Naz Ahm is the founder of StudioGrowth and has spent a decade growing start-ups and venture-backed companies. He writes about sales, marketing, and growth, especially in the fitness and wellness industry.
Naz has an MBA from IESE Business School and started his journey in the wellness industry when he set-up an on-demand wellness business. Naz currently resides in London, U.K.