Your break-even number, in three steps
1. Add up your fixed costs for a month: the ones you pay whether you have 50 members or 500. Rent, wages for staff and trainers on wages, insurance, software, utilities, equipment finance.
2. Work out what each member is worth a month: your average membership fee, minus the costs that come with each member, such as payment fees or towels.
3. Divide the first by the second, and round up. That is how many paying members cover the bills. Add the profit you want to the fixed costs and divide again to get your target.
A worked example
An invented studio, to show the arithmetic:
| Each month | Amount |
|---|---|
| Rent | $5,000 |
| Wages | $7,500 |
| Insurance, software, power and equipment finance | $3,500 |
| Fixed costs | $16,000 |
| Average membership fee | $120 a member |
| Less payment fees and other costs per member | $6 a member |
| Each member is worth | $114 |
| Break-even | $16,000 ÷ $114 = 140.4, so 141 members |
| For $5,000 a month profit | $21,000 ÷ $114 = 184.2, so 185 members |
So this studio covers its bills at 141 members and makes about $5,000 a month at 185. Every member above that adds $114 a month to profit; every member below it costs the same.
Churn moves the target every month
Break-even is a level you have to keep, not one you reach once. If you lose 5 in every 100 members a month, a gym with 185 members needs about 9 new sign-ups a month just to stay at 185. At 3 in 100 it needs between 5 and 6. Track sign-ups and cancellations together, because a good sales month can hide a cancellations problem.
Check your costs against the ATO
At 185 members the example studio turns over $266,400 a year. In the ATO’s range for health and fitness centres turning over $175,000 to $600,000, its rent is 22.5% of turnover (range 15 to 23%), wages 33.8% (22 to 35%), and total expenses 77.1% (69 to 83%): all inside. If your rent or wages sit above the range, your break-even number will be higher than it needs to be.
Health and fitness centres
ATO source| Turnover | $65k to $175k | $175k to $600k | Over $600k |
|---|---|---|---|
| Total expenseskey benchmark | 40 to 64% | 69 to 83% | 72 to 85% |
| Labour | 21 to 36% | 22 to 35% | 19 to 33% |
| Rent | 14 to 23% | 15 to 23% | 13 to 19% |
| Motor vehicle | 4 to 6% | 2 to 3% | 1% |
Sports and physical recreation instruction
ATO source| Turnover | $50k to $150k | $150k to $600k | Over $600k |
|---|---|---|---|
| Total expenseskey benchmark | 36 to 58% | 56 to 75% | 71 to 85% |
| Rent | 11 to 20% | 9 to 18% | 7 to 13% |
| Motor vehicle | 5 to 8% | 2 to 4% | 1 to 2% |
ATO small business benchmarks, 2023-24. Personal trainers and coaches fall under sports and physical recreation instruction.