How does a gym make money?
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The Secret: Which members make budget gyms the most money?
People who pay but rarely come. Low-price gyms sell far more memberships than they have room for, because many members overestimate how often they'll go. Research found monthly members paid more per visit than a pay-per-visit pass would cost. Source: DellaVigna & Malmendier, 'Paying Not to Go to the Gym', AER 2006
Why They Stay: Why do non-attenders keep paying?
Optimism: next month I'll go. Members keep buying an identity, not visits. The same study found people stay enrolled for months after their last visit before cancelling. Source: DellaVigna & Malmendier, AER 2006
Why They Leave: What usually happens before a gym member finally cancels?
They keep paying for months after they've stopped going. A classic study of US gyms found members typically kept paying for a couple of months after their last visit before they cancelled. Gyms earn from those quiet months. Source: DellaVigna & Malmendier – Paying Not to Go to the Gym (AER, 2006)