How to Calculate the ROI of your Gym Management Software

April 23, 2018

Gym management software is a cloud-based program designed specifically for fitness centers to optimize gym management by relieving administrative tasks and increasing member engagement. It’s imperative to understand what gym software is, what it does and why it is important to utilize the software that best fits your business’s needs. It is also necessary to calculate the costs associated with the software, and what ROI (Return on Investment) to expect from your software. Gym owners can anticipate anywhere from 5-25% of term and month to month contracts going past due. Using a gym management software to improve collections is a great way to see collection rates increase. Software features that can improve collections include payment reminders and past due alerts at member check-in.  It can take approximately 3-5 months to see a financial return on gym management software which is why it is important to understand how to calculate the ROI.

Costs Prior to Gym Management Software

Knowing what you are spending before implementing gym management software is the first step to calculating ROI. You need a number to compare costs so you will need to know previous as well as current expenses. You should be tracking metrics such as revenue per member, membership usage, average membership length and member retention rates.

Are you having to bankroll additional staff or acquire additional software packages to complete the tasks that should be automated? Member check-in, employee clock-in and member and financial reporting shouldn’t be manual tasks. A robust gym management software will have these features automated to reduce manual labor tasks. Features and services like email automation, payment processing and electronic agreements are items that, when created or performed manually, take hours to complete. With gym management software, these tasks will take less time to complete and eliminate human error; resulting in additional time to spend on more important things like engaging with your members.

Analyzing Bottom Line Growth After Gym Management Software

Revenue growth can be attributed to your gym management software, over time. You can expect to see this growth through:

It’s important to understand, for the expenditure to be valuable, that the facilities revenue growth should be greater than the cost of your gym management software. This number will be noticeable by increased number of members, fewer late payments, and a reduction in spending in some areas due to features that are automated. To calculate ROI, first determine your lifetime value of a member (LTV.) This would be the total amount of money earned from that member during their membership. Then take the average cost of monthly membership dues multiplied by the average membership length to determine your LTV. Ex. Monthly membership $20 x 12 mos average membership length = $240 lifetime value of a member. Next to determine ROI of an investment (software, marketing campaign, new equipment) is a simple formula:

ROI = (gain from investment – cost of investment) / cost of investment


Improve Member Satisfaction and Engagement For Growth

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Creating a positive member experience will mean more revenue for your facility. Happy members are willing to stick around longer and will be more apt to engage and spend more time and money at your facility. It’s important to know if your members are satisfied and a great way to do this is through surveys. Research shows, the majority of fitness clubs have a churn rate of 30-50%. After you implement gym management software, survey your members to see if they notice any differences in their member experience and how your gym operates day-to-day. Possible questions to include in your survey:

  • Is it easier to purchase and schedule group classes and personal training sessions?
  • Is the check-in process quick and simple?
  • Do you find it painless to access and update your personal account information?
  • Is there enough equipment? Is it clean? Is it well maintained?

Questions such as these can help you determine if your club running more efficiently and if your members are feeling noticed, more engaged and satisfied. It costs about 10x more to gain a new member than to retain an existing one. This is why member satisfaction and engagement is crucial. It’s possible your revenue may not be growing yet, but if you notice member satisfaction and engagement is higher, you know you are heading in the right direction.

Calculating the ROI of your gym management software isn’t strictly noting revenue growth. A number of factors determine ROI, which include member engagement and cost reduction. If you haven’t invested in gym management software, now is the time. ABC Financial is the leading software and payment processing provider industry. Want to take a look at what gym management software can do for your gym? Schedule a demo of our software, DataTrak, below.