Guides
Fitness studio startup costs, line by line, with the funding routes
Fitness studio startup costs broken into line items with illustrative figures, plus what each funding route does to your monthly break-even.
What to take away
- Fitness studio startup costs are two bills, not onethe money you spend before the first class, and the money that leaves every month whether anyone shows up or not.
- The recurring bill is the one that closes studios. It runs through all 168 hours of the week; revenue arrives in the 15 or 20 that people want to train.
- Every figure below is illustrative and labeled as such. Rent, fit-out and instructor pay swing by an order of magnitude between markets, so local quotes beat any published range.
- Funding choice is a break-even decision. A loan adds a fixed repayment to the monthly load for its whole term; savings do not.
- Prepaid memberships are class credit you owe, not money you raised. Spending them on fit-out is borrowing from your own members.
The two bills, and which one kills
The two bills
Line items
- One-time outlay
- Fit-out, flooring, mirrors, sound, equipment, deposits, permits, formation
- Recurring fixed
- Rent, utilities, insurance, software, loan repayment
- Recurring variable
- Instructor pay per class, cleaning supplies, card processing
When it hits
- One-time outlay
- Before revenue exists
- Recurring fixed
- Every month, in full, at any attendance
- Recurring variable
- Moves with classes taught and members served
What it does to risk
- One-time outlay
- Sets how much you must raise and how long you can be wrong
- Recurring fixed
- Sets the floor you clear before anything is profit
- Recurring variable
- Smaller than most owners assume
Instructor pay lands in the wrong row constantly. A class that sells four spots or fourteen pays the same, so that cost is fixed against attendance and variable only against the number of classes on the timetable.
Three Cost Types Compared
One-time outlay
- Examples
- Fit-out, equipment
- When it hits
- Before revenue
- Risk effect
- Sets raise size
Recurring fixed
- Examples
- Rent, insurance
- When it hits
- Every month
- Risk effect
- Sets profit floor
Recurring variable
- Examples
- Instructor pay
- When it hits
- Per class served
- Risk effect
- Smaller than assumed
The one-time outlay, line by line
Figures below are illustrative for a 2,500 to 3,500 sq ft studio in a mid-size US metro. Replace each line with a local quote before you sign anything.
The one-time outlay
| Line | What it is | Illustrative figure |
|---|---|---|
| Deposit and advance rent | First and last month plus security, often 2 to 3 months of rent | $8,000 to $15,000 |
| Fit-out | Flooring, mirrors, sound, lighting and build-out | $30,000 to $90,000 |
| Equipment | Racks, benches, cardio, free weights and mats. Rogue and REP Fitness sell new racks and bumpers; used commercial cardio from a liquidator costs 40 to 60 percent less | $25,000 to $70,000 new; roughly 40 to 60% less used |
| Permits and formation | LLC filing, business license, sign permit, occupancy certificate, health permit if applicable. Delaware charges $110 to form an LLC; California charges $70 plus an annual minimum franchise tax | $1,500 to $5,000 |
| Professional fees | Attorney for the lease, CPA for setup | $1,500 to $4,000 |
| Software setup | Mindbody, Zen Planner or Glofox onboarding, card terminal, POS | $500 to $2,000 |
| Branding and launch | Signage, website, photography, opening marketing | $3,000 to $10,000 |
| Working capital | Fixed monthly load times the months before attendance stabilizes | 3 to 6 months of R |
Working capital is the line owners skip. They raise enough for the outlay lines above, open, and discover that month two rent has to come from somewhere.
Three to six months of the recurring load is the usual starting point for that line.
Settle the floor plan before pricing equipment, because layout drives most of that number. The room-by-room version is in the equipment and setup guide, and the opening-day station list is in the new owner's equipment checklist.
The monthly load, and the attendances it demands
Let R be total recurring fixed cost for a month. Let A be the average contribution one attendance brings after the variable cost of serving it. Attendances needed to stand still is R divided by A. Divide by 4.3 for a weekly figure.
A typical month for a 3,000 sq ft studio bills like this. Rent runs $6,000 to $12,000. Utilities land at $600 to $1,200. Insurance through a carrier such as Hiscox or Next Insurance costs $150 to $400.
Software adds $200 to $500 a month. Mindbody's published tiers start near $139 and climb past $500 for multi-site accounts, while Zen Planner runs about $99 to $199. Card processing takes roughly 2.6 to 2.9 percent of revenue through Square or Stripe.
Attendances Needed to Stand Still
- $18,000Monthly recurring fixed cost (R)
- $22Contribution per attendance (A)
- 818Attendances needed per month
- 190Attendances needed per week
Run a version with R at $18,000 and A at $22. That works out to 818 attendances a month, about 190 a week.
If your room holds 24 and you run 40 classes a week, sellable capacity is 960. You need 20 percent of it filled from day one.
Raise A to $30 by selling memberships instead of drop-ins and the requirement falls to 600 a month.
Compare the required figure against sellable capacity. If it eats most of the ceiling, the plan assumes near-full peak classes from the first week.
Equipment finance, a term loan or a build-out loan each raise R. Run the arithmetic again with the repayment included before you sign. The full margin model sits in break-even points and profit margins.
Funding routes, and what each does to the arithmetic
Funding routes
Typical cost
- Savings
- Interest-free; opportunity cost only
- Bank term loan
- 7 to 12 percent over 3 to 7 years
- SBA 7(a)
- Prime plus about 2 to 3 points
- SBA 504
- Fixed 20-year debenture rate
- Equipment finance
- 6 to 12 percent, term matched to the asset
- SBA microloan or CDFI
- Typically 8 to 13 percent, up to 6 years
- Investor
- Equity, 10 to 30 percent of the business
- Prepaid memberships
- You owe the classes
Effect on monthly fixed load
- Savings
- None
- Bank term loan
- Adds a fixed repayment
- SBA 7(a)
- Adds repayment; a longer term lowers it
- SBA 504
- Adds repayment at the lowest monthly cost per dollar
- Equipment finance
- Adds repayment tied to one asset
- SBA microloan or CDFI
- Small repayment
- Investor
- None
- Prepaid memberships
- None in cash; adds delivery cost
Fits
- Savings
- Owners holding 6 to 12 months of R in cash
- Bank term loan
- Equipment, fit-out, working capital
- SBA 7(a)
- Raises above $50,000 with mixed uses
- SBA 504
- Buying the building or a major build-out
- Equipment finance
- Racks, cardio, sound systems
- SBA microloan or CDFI
- Gaps under $50,000
- Investor
- Owners who want the downside shared
- Prepaid memberships
- Not funding
- Savings raise working capital without touching R. The downside is undiluted: the business failing is you failing.
- A bank or credit union term loan adds cash and a fixed repayment to R for the life of the loan, in every month including the quiet ones. Rates typically run 7 to 12 percent over 3 to 7 years.
- SBA 7(a) loans run longer terms than most bank loans. Rates are variable, typically the prime rate plus 2 to 3 points above $50,000, with up to 10 years on working capital and 25 on real estate.
- SBA 504 loans fund owner-occupied real estate and heavy equipment on 20-year fixed terms. Both programs require a personal guarantee, and the SBA's business guide lists what lenders expect.
- SBA microloans run $500 to $50,000 through nonprofit intermediaries, with an average loan near $13,000. Accion Opportunity Fund lends from about $5,000, and Kiva US crowdfunds up to $15,000 at 0 percent interest.
- Equipment finance keeps the outlay off the one-time total and ties repayment to a specific asset. Rates typically run 6 to 12 percent, so read the clause covering early termination.
- An investor changes ownership instead of R. It is the only route that shares the downside, and the usual ask is 10 to 30 percent of the business.
- Prepaid memberships and founding-member offers are not funding. They are revenue for classes you have not delivered, and the obligation stays whether the cash does.
Record-keeping from day one
You cannot answer either question above without records that separate fixed from variable. You also need a running figure for how much of the bank balance is prepaid class credit you still owe.
The IRS overview of starting a business covers federal registration and record-keeping. QuickBooks Online Simple Start runs about $30 a month, and a part-time bookkeeper for a studio typically costs $200 to $500 a month.
How prepayments and equipment are treated for tax is a question for a CPA or enrolled agent who knows your situation. Ask before the first year closes, not after.
Before you spend anything
Settle format and room size first, because they drive most of the fit-out and equipment numbers. That sequence is in the startup and market guide.
The stage-by-stage version, with the gate that must close at each point, is in the order the opening actually happens in.
Put the written version in the plan a lender or partner will test.
The Bureau of Labor Statistics profile of fitness trainers and instructors puts median pay in the mid $40,000s a year. Group class rates in most US markets run $25 to $60 per class.
Pay in your market is a local question, and W-2 versus 1099 classification is set by the IRS and your state labor board, not by this article.
Common questions
Why are these figures illustrative?
Rent, fit-out and pay vary by an order of magnitude between markets, so one national range would be wrong for most readers. The line items travel; the numbers do not. Get three local quotes for fit-out and equipment, a real rent figure, and substitute them.
How much working capital is enough?
Cover the recurring fixed load for as long as attendance plausibly takes to stabilize, plus reaction time if it does not. Owners often set one or two months and find the answer was longer.
The test: at what month of poor attendance would you have to close, and are you comfortable with that date?
Is secondhand equipment a false economy?
Sometimes. It lowers the one-time outlay and raises maintenance and replacement risk. Compare cost per usable class-hour over the time you expect to keep the equipment, including the classes you cannot run when it is out of service.
Does a loan repayment belong with rent?
Yes. It arrives every month regardless of attendance. Putting it anywhere else in the model hides that it has permanently raised the number of people who must walk through the door each week.
