If you are a boutique fitness entrepreneur, you need to understand the boutique fitness studio business model with clarity. The business model of boutique fitness studios is very different from that of traditional gyms and fitness chains.
So, what is the business model of boutique fitness studios? They offer group fitness sessions and charge per class or offer subscription memberships. Boutique fitness studios have a differentiated business model taking advantage of the following:
- Proximity and location
- Selling class packs
- Offering specialized fitness modality
- Meet current fitness trends
In this article, I will cover the specific advantages boutique fitness studios have and how these advantages are part of the business model of boutique fitness studios. I will also discuss the challenges boutique fitness studios face due to their unique business model. Finally, I will cover some ways such studios can overcome those challenges and stay competitive in a market that could be saturated very soon.
Boutique Fitness Studio Business Model
Before we go any further, we should examine what a business model means. A business model refers to the way or the plan a business has to operate and make money. The business model represents the fundamental way in which value exchange happens between the company and its customers.
Perhaps it will help to consider some basic business models:
The franchise business model is when a business takes on the branding and processes of another successful business and works on repeating the success in a different location/geography.
The freemium business model is where the product or services is given away for free. However, some core features are not free, and the business makes its money from the sales of the priced features. For example, consider the game Fortnite, it is free to play. However, the company makes money by selling digital goods to those who wish to purchase.
The subscription business model is the model where the end-user pays a fixed amount every week or every month. For example, traditional gym memberships where a user pays monthly membership fees is an example of the subscription business model.
The above examples should give you an idea of what a business model means. Now, let us explore the specific business model of boutique fitness studios and why this model has become so successful.
Boutique Fitness Studios
The rise of boutique fitness studios can be attributed partially to the differentiated business model of boutique studios as compared to traditional gyms.
The most significant innovation in the fitness industry happened a couple of decades ago with the mass introduction of the “monthly membership” model. With the introduction of this model, gyms and fitness centers saw rapid growth and profitability.
However, more recently, we have seen the rise of boutique fitness studios. Offering group fitness classes characterizes boutique fitness studios. Such sessions focus on specific fitness modalities such as HIIT, Yoga, Pilates, Barre, etc.
Additionally, boutique fitness studios sell individual sessions or class packs. This way of selling fitness classes has been a significant shift away from the monthly membership models of traditional gyms.
Selling individual sessions has played a significant role in the rise of boutique fitness studios as clients are willing to spend on single classes rather than be tied down by monthly or yearly memberships.
Another significant success factor for boutique fitness studios is the location. Boutique fitness studios are famous because they solve the problem of the “last mile.”
You can find a boutique fitness studio close to you, irrespective of where you are. Contrast this to high street gyms which are present far away from each other, and you often need to drive or take public transport to go to the gym.
To summarize, the boutique fitness studio business model is characterized by selling individual class sessions, group training, and located nearby within neighborhoods.
Let us now explore the key factors that make the business model of boutique fitness studios successful.
Proximity And Location Of Boutique Fitness Studios
One key factor that has helped the rise of the boutique fitness studios is the low cost of setting up a boutique fitness studio as compared to the cost of setting up a traditional gym or fitness center.
The barrier to entry of starting a boutique fitness studio is small. To start, all you will need to do is rent a studio space, hire a class instructor, and some equipment.
This low barrier to entry has resulted in boutique fitness studios sprouting up in local neighborhoods. Due to this, boutique fitness studios are present in places where you will never find traditional big-box chain gyms. Setting up a big gym is expensive, and due to this, they are primarily found in high traffic locations and not in every block.
Such proximity of boutique fitness studios has coincided well with the trend among consumers to save time and their preference for convenience. It is more convenient to go to a boutique fitness studio next door than to drive 15 minutes to get to a traditional gym.
If you are a fitness entrepreneur and are interested in starting a boutique fitness studio, then pay close attention to the location you choose. The site should be within the community you wish to serve. I have written an article explicitly detailing the process of selecting a spot for your studio. You might find it helpful.
Selling Individual Fitness Classes (Unbundling) at Boutique Fitness Studios
The beauty of boutique fitness studios is that, as a consumer, you can buy passes to individual group fitness sessions. This change in the way people pay for fitness has opened up fitness training to a new segment of consumers and meets the current trend of convenience.
For decades people were used to paying monthly and yearly membership fees. This membership model tied them down to specific gyms and facilities. With the growth of boutique fitness studios comes the ability to pick and choose regularly.
You can view this trend as the “unbundling” of fitness services. Gyms and fitness centers were selling the complete fitness package, with everything included for a fixed monthly or yearly fee. However, consumers demand in the fitness industry is moving towards the pay-per-use model.
Boutique fitness studios are selling specific fitness classes and experiences, and the consumer is free to buy individual sessions and class packs. This pay-per-use model dramatically increases initial sales as people do not have to worry about being tied down to a specific facility or studio for months and years.
Specialized Fitness Modality
Another critical factor of the boutique studio business model is the fact that boutique fitness studios tend to specialize in specific fitness modalities. For example, you will find boutique fitness studios that only specialize in HIIT, Pilates, Barre, Dance, Yoga, etc.
Consumers prefer to go to boutique fitness studios that specialize in the fitness modality of their choice. Unlike full-cycle gyms that offer everything, boutique fitness studios are specialists.
As a fitness entrepreneur, you should understand that choosing a specialization is a vital part of the boutique fitness studio business model.
You must brand your fitness studio based on a specialty and aim to excel in that specialization. For example, Soul Cycle excels at spin, Barry’s Bootcamp excels at HIIT sessions that burn over 1000 calories in a single session.
Meeting Current Consumer Fitness Trends
The rise of the boutique fitness studio industry coincided perfectly with the changing needs and demands of consumers. Fitness consumers are primarily looking for convenience and specialization. You can see this trend play out in the recent rise of online platforms to deliver fitness classes.
Boutique fitness studios served the emerging demands and rode the trend of convenience and specialization. Now people did not have to travel far to go to a gym. They did not have to pay for all the services and could only pay for what they used (class packs).
Convenience, flexibility, and specialization is part of the business model of boutique fitness studios. As a fitness entrepreneur exploring the boutique fitness studio model, one of the biggest mistakes you can make is to re-invent the wheel. I have often seen boutique fitness studios introducing “membership only” models to mimic traditional gyms. By doing this, you are completely ignoring the key factors that make the boutique fitness studio business model successful.
Understand that proximity, flexibility, convenience, and consumer trends are what will make your boutique fitness studio successful. Adapt to these requirements. These requirements of the business model do pose significant challenges, which we will explore shortly. I will also explore how you can overcome those challenges and keep up with the times.
Challenges Of The Boutique Fitness Studio Business Model
The factors that led to the rapid growth of boutique fitness studios are today responsible for the challenges the industry faces. The key challenges faced by boutique fitness studios are:
- Lack of recurring stream of revenue
- Trend among customers to move from one fitness fad to the next
- Industry saturation
In this section, I will explore the challenges in detail. Perhaps you have encountered these challenges in your boutique fitness studio business.
No Recurring Revenue In Boutique Fitness Studios
One of the primary ways customers buy sessions in boutique fitness studios is by purchasing class packs. The purchase of monthly or yearly unlimited memberships is rare and uncommon.
One factor that made the traditional gym and fitness industry lucrative was the introduction of memberships. The memberships meant that the gym would receive it’s fees whether the customer used the facilities or not. Having recurring revenues made the revenue predictable, and traditional gyms grew and scaled.
However, boutique fitness studios provide multiple options for purchase, such as individual sessions, class packs, and memberships. Customers tend to not opt for full memberships because of the trend among consumers where they go to multiple boutique fitness studios.
Gone are the days where a person would be a member of a single fitness facility. With the advent of services like ClassPass, consumers are getting used to the pay-per-use model.
This change in behavior has caused significant challenges for the boutique fitness studios who are in a cycle of attracting new customers every day. Class packs help as they ensure repeat customers, but are not as effective as full monthly or yearly memberships.
Consumers Go To Multiple Fitness Facilities
The biggest winners in the rise of boutique fitness studios are the consumers. Today in a city like London, there are several boutique fitness studios in every neighborhood offering different variations of modalities.
Consumers can choose from boutique fitness classes focussed on boxing, rowing, cycling, HIIT, among others. Due to this wide variety of concepts available, consumers want to go to multiple boutique fitness studios. As a result of this, there is limited loyalty.
Boutique fitness studios that have focussed on building a brand are the ones that are successful in this environment. As a fitness entrepreneur, it is essential to understand that your boutique fitness studio will be one among many that a consumer will visit in any given month.
Boutique Fitness Studio Industry Saturation
One of the reasons for the success of boutique fitness studios is proximity. Having fitness studios that are easily accessible and located in local neighborhoods was the competitive edge with which traditional chain gyms could not compete. Big chain gyms did not have the capital to open a gym in every community.
However, this proximity is slowly becoming a challenge. In cities like London and New York, you can find independent boutique fitness studios very close to each other. Although this is great for the consumer, it means that this high concentration and saturation of fitness studios further leads to a lack of loyalty.
A consumer can go to one boutique fitness studio and then never return. There is a real danger of competition and saturation being so high that consumers continue to move from one boutique fitness fad to the next.
Boutique Fitness Studios – Overcoming Business Model Challenges
The boutique fitness studio business model has inherent advantages and challenges. I have discussed both the benefits and the challenges. In this section, I will identify ways by which a fitness entrepreneur can overcome the inherent difficulties in the business model of boutique fitness studios.
The primary ways by which a fitness entrepreneur can overcome the challenges faced by boutique fitness studios are by:
- Building a strong marketing machine
- Focussing on brand building
- Creating a community
Marketing For Boutique Fitness Studios
As a boutique fitness studio entrepreneur, you will find that acquiring new customers is where you will spend most of your time. The business model of boutique fitness studios does not encourage loyalty and recurring revenue. Due to this, you must design marketing efforts to improve customer loyalty and increase recurring revenue.
Build a customer referral engine to generate word of mouth marketing. You can do this by offering simple incentives to existing customers if they invite their friends and family to visit your studios. You must have experienced first hand the powerful customer referral engine of apps like Uber. Similarly, you can build a customer referral engine directly into your fitness studio booking system.
Upsells and Order Bumps are potent ways for boutique fitness studios to increase revenues. Class packs are the primary means by which boutique fitness studios sell sessions. By upselling to a higher quantity class pack, you can not only increase revenue but also encourage loyalty.
Similarly, by selling or renting items that a client will need during the fitness session, for example, a bottle of water or a yoga mat, you can increase revenues. You can sell these items at the same moment a client is purchasing class packs in your online booking software. It is known as an order bump.
Discounts and loyalty cards can be strong motivators for your customers to return to your boutique fitness studio. However, be careful to use discounts sparingly and only when necessary to force a purchase decision. You should be able to track visits your customers make and offer loyalty discounts to encourage use.
Doing such things when monthly or yearly memberships is the norm is not necessary. However, when class packs are the primary way people purchase sessions, then discounts and loyalty cards play a significant role in repeat usage.
Your class booking software should ideally provide everything I mention, from customer referrals to upsells to discounts. We built StudioGrowth, the simple class management software, to help solve the critical challenges faced by the boutique studio industry.
I established StudioGrowth because of the issues I faced using bulky and expensive online booking software systems. If you are looking for a simple yet powerful online booking and class management software, then give us a try.
Brand Building For Boutique Fitness Studios
In places like London and New York, where boutique fitness studios are reaching a point of saturation, the only fitness studios that are performing well are the ones that focus on rand building.
I have written an in-depth article on how to build a fitness brand. Read that article as I provide a step by step process for you to develop your fitness brand.
Without a brand, your boutique fitness studio is in danger of becoming a commodity. By building a brand, you are automatically building brand loyalty.
Building A Community For Your Boutique Fitness Studio
A simple way to increase loyalty and recurring revenues is to build a community around your boutique fitness studio. I have seen a local boutique fitness studios in London collaborate with local businesses and conduct events regularly at their premises. For example, most recently, they held a session for new mothers hosted by a well-known baby coach.
You can use Instagram and Facebook to build your community online, but don’t ignore offline events. They play a significant role in not only helping your members connect but also increase your walk-in bookings.
To conclude, boutique fitness studios have a unique business model that propelled them to rise so rapidly. However, there are inherent challenges that any boutique fitness studio will face. If you are aware of these challenges and follow steps to mitigate them, then you will have no problem running a successful boutique fitness studio.
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.