In short, $19,510 per month at the lower end. Here's the breakdown:
Mortgage or Lease Payments: $750
Maintenance and Repairs of Equipment: $2100
Insurance: $1000
Utilities (24hr Gym): $5000
Employee Wages: $5150
Marketing and Advertising: $700
Legal and Professional: $3000
HVAC Maintenance: $85
Phone and Internet Services: $75
Cleaning Supplies: $150
Miscellaneous Expenses: $1500
Total: $19,510
Click on an expense to view its details.
Breakdown of Gym Running Costs
When starting out, costs associated with running a gym can be divided into two categories, one-time costs and ongoing costs. One-time costs include gym equipment, location, licenses etc. We have covered them in detail in our previous blog, How much does it cost to start a new gym?
But recurring costs are ongoing costs that we have covered in detail below:
Mortgage or Lease Payments
Whether you purchased your facility or rented the area, you’ll need to pay a monthly expense known as a lease payment or mortgage. The cost of the mortgage will depend on various factors such as the area where your facility is located and the size of your gym. A mortgage is paid at the start of the month but can be extended to the 15th of that month, but no later than 15 days. Let's suppose your gym costs you $200,000 and the interest rate is 1.2% for 30 years which will make your loan amount to be $140,000 if your down payment is $60,000. Your monthly payment would be $746.61 and the sum of the total payments made in 30 years will be $268,778.
Maintenance and Repairs of Equipment
Gym equipment is constantly used at the gym, especially if you are running a boxing or MMA gym, and takes quite a lot of beating. Being a gym owner, you must ensure that you are frequently maintaining your equipment. Maintenance can cost you anywhere from $25,000 - $30,000 annually.
It is necessary to buy quality equipment from a reputable manufacturer of gym gear like RDX Sports, to bring down maintenance costs as much as possible.
Insurance
The insurance amount will be paid annually and needs to be kept up to date. You need to include this cost in your budget. Being a gym owner, in case of any mishap, you can claim as much as possible, based on your contract. Let’s suppose your insurance requires you to pay $12,000 annually for insuring your facility. This amount will be fixed but will be considered as a recurring cost.
Utilities
Gyms, smaller or larger require a lot of electricity. If your gym is open 24 hours a day then it will require more electricity than a gym that is open for 12 hours. It will cost you about $5,000 - $6,000 monthly and $60,000 - $72,000 annually if your gym is open 24 hours a day. Other than electricity, water and gas will also be required at your gym.
Employee Wages
Your employees will earn varying salaries depending on the roles and skills they have. The experience level of the employees will also affect their salaries. You need to make sure that you have a payroll for your initial few months before opening as it takes time to make a profit from a newly established business. The average salary of a gym trainer can be anywhere from $25,000 - $80,000 per year. Whereas, the receptionist can cost $20,000 - $50,000 per year at a gym and the cleaning or maintenance staff can cost up to $16,000 - $45,000 per year.
Marketing and Advertising
The gym owner decides whether they want to make their marketing efforts an ongoing cost or not. But it’s better to keep promoting or advertising your gym and any ongoing offers. The amount of investment you will make depends on your business model and how much you want to market your business. The types of mediums you’ll use will also impact your costs and it is up to you if you want to pay these costs annually or monthly. Marketing and advertising can cost anywhere from $8,000 - $20,000 annually.
Legal and Professional Fees
Every business requires some sort of legal service. For this, businesses typically hire consultancy firms, who for a specific amount take care of the legal issues. Depending on the experience, a consultancy firm can charge anywhere from $70 - $200 per hour. Let's suppose you require your legal consultants for 30 hours every month and they charge $100 per hour for their services. This will make the monthly cost $3,000 and annual cost $36,000.
HVAC Maintenance
HVAC is the heating and air conditioning system installed in your gym. It is important that you regularly inspect your heating and air conditioning systems so that you do not have any major issues with your overall operations. You can schedule an overall inspection once every month. The average cost for routine maintenance can be up to $1,000 annually.
Phone and Internet Service
Providing internet services at your gym has become a very common practice as everyone has a smartphone and requires internet. The cost of phone and internet services depends on the internet provider you choose. Internet services can cost you anywhere from $75 - $100 per month, which makes the annual cost $900 - $1,200 per year.
Cleaning Supplies
Gyms are a place where people sweat so having proper sanitization and cleanliness is essential. Some of the cleaning supplies you would require are mops, vacuums, wipes, toilet paper, bleach, dust clothes, all-purpose cleaner, glass cleaner etc. Your cleaning supplies can vary from $150 - $200 if you have a smaller-sized gym, costing $2,400 annually. For a larger establishment, $8,000 annual cost should be kept in mind.
Miscellaneous Expenses
Even if you have a well-sorted-out budget for your ongoing expenses you can never be sure about any problem or expenses that may arise. So, keeping some amount aside for miscellaneous expenses is necessary. A good approach is to keep $1,500 per month in your budget for miscellaneous expenses.
Conclusion
The costs you will incur will depend on the size of your gym and how much you are willing to reinvest. These expenses will ideally be covered by the profit you are making after your gym is open and running but it is important to have a few months budget already set aside for the initial months.
The best customer service is making sure your gym is properly operating as a clean and functional gym will make your members want to visit again and again.
