Planet Economics

Being at Penn State, we are surrounded by everything we need—and it's in a very close proximity to us. Just the other day I was thinking how lucky we are to have the all these nice, shiny facilities, including the gyms. And then I thought about the fact that Penn State students have to pay for the gym and this got me thinking. I wondered if a Penn State campus gym needs money when there are thousand of students already paying thousands in tuition, then how does a gym that charges $10 per month stay open?

When you don't skip the gym. Photo

After only a few minutes of research I came up with an interesting article explaining how these "cheap" gyms, like Planet Fitness, really don't want you to go to the gym. What these gyms really want is for people to keep paying the monthly fee, while not actually going to the gym. If you're not convinced by this claim, understand that the average Planet Fitness has around 6,000 members, but the facilities can only accommodate around 300 at a time. If the gym is taking on this many people, it is clear that they expect many people not to go. 

This reminds me of when I first started going to the gym and how I went on a inconsistent basis. I actually didn't go for a few months after I signed up. For the gym, this was ideal. They did not have to provide me with any services, while I continued to pay money. Additionally, the low cost of the membership, $10, made me think I wasn't wasting too much money. But after realizing how the gym was basically cold-heartedly stealing my money, I decided to change my course of action. Perhaps I'm just cheap, though. 

I remember when I first started. Photo 

And since this is an economics blog, there has to be some sort of actual economic speak included right? Right. Well, this per month payment plan is a lucrative model used by almost every gym. According to Entrepreneur.com, "the consistency in revenue allows subscription-based companies to easily calculate the lifetime value of a customer, manage inventory, and offer simple pricing." In this way, Planet Fitness is able to draw people in with an easily-digestible rate of $10 per month. 

This upsets me because after I decided to leave Planet Fitness and I joined another gym, I continued to pay their membership fee for a few months. Why? Because I was lazy and didn't feel like going going to deactivate my account. And $10 isn't so bad right? WRONG. Don't fall into this fallacy. If you have a gym membership, then use it!