Tune in to this episode to learn more about the 20% golden rule and the magic formula to apply in calculating personal trainer salary. Your payment structure and other benefits you offer your trainers will depend on your fitness business model. The small group personal training model offers the best opportunity to pay your trainers decent wages and other benefits such as retirement and paid time off. In addition, Rick and Matt discuss the different ways you can incentivize your coaches without affecting your margins
The subject of personal trainer pay and compensation in the fitness industry is an issue that always create strong opinions. Many gym owners want to determine personal trainer pay without compromising their business but need to attract good talent.
Why You Can’t Afford Personal Trainer Pay Based Only On Billable Hours
Many personal training business owners which only provide a one-on-one training model wonder how much should you pay personal trainers. Rick describes how you should calculate personal trainer salary. Many owners think you should give a flat percentage. For example, a business owner with one personal trainer is paying that trainer 60% of the billable hours that they work. Rick describes the problem with 60%, especially if the trainer is an employee and you’re offering any benefits. As an employee receiving a salary, include payroll taxes and other costs associated with benefits. So if you are paying 60%, that does not leave you enough margin on the back end. You would have to do such high volume to make that formula work, and it’s just not going to work.
Rick suggests a golden rule formula that you don’t pay out over 20% of the billable revenue to the individual personal trainer servicing that revenue. So in the example, the owner’s business model where you charge $40 for a half-hour session ($80 for an hour). If a trainer gets 60% that would be what $50 an hour for the trainer. Now, if you follow the golden rule of 20%, that would mean $8 a session, or $16 an hour. Now that owner is probably saying, “I’m going to attract any good talent for $16 an hour.” For high-level coaches, and I would probably agree with that. I would say yes, you’re right. Then it begs the question, how in the world if you’re running that business model, do you get to 20% where you can actually make money right? Because 20% is just the expense of servicing the revenue from to the coaches to the trainers. As a business owner you have overhead and other expenses that come into the mix: if you have a manager (extra salary), you’ve got rent, electricity, marketing expenses, and more monthly expenses that impact your profit.
So when you look at the one-on-one personal training business, you really have to drive high volume. You could run a tiered system where you pay people based on how much they make, but it’s an expensive model. Rick has experience with the one-on-one training model for over 10 years. You have many people coming and going with a coach for every person shows up in the gym. The margins are not great, so you have to do high volume and charge more. The reason to raise your rates is so that all of that money can go towards the bottom line and maybe create more overall payroll. But if you’re just going to run a percentage, raising your rates will not move the needle for you much at all.
Why the Alloy Small Group Personal Training Model Works for Personal Trainers
So Rick suggests change your business model from the one-on-one training to small group personal training, which is the Alloy Personal Training Franchise model. Let’s do the math. Alloy group training for a person is $30 a session which is equivalent to an $80 per hour one-on- one training session. Okay, $30 an hour versus 80 is easy to sell. There is a tiered trainer pay that goes along with how many people are in the session. If our session is full, we run a max of six clients per session, which would be $180. an hour for easy math, right? So we could afford the20% payout 20% to the trainer of $36 an hour if the session was full. We have personal training coaches on shifts, so it’s not just get paid for what you service, the trainer is on a shift. Working the formula the personal trainer would make $70,000 a year. Few personal trainers out there are making steady $70,000 a year.
Not only are trainers making that kind of money, but the club is still keeping its percentage less than 20%. So that means we can now afford to offer benefits, tax deferred retirement, health benefit, paid time off, like an actual career, something you could stick with forever. That is why the Alloy retention rate of personal training coaches is so long. So the small group training model makes it less expensive for the customer, easier to pay coaches, and keep your margins healthy.
Alloy has two business models providing we have two models to build a small group personal training business with a low barrier to entry and good margins on the backend.
Key Takeaways
- The magic formula you should use to calculate trainer compensation (03:10)
- Why the small group training model is the easiest to pay coaches (06:01)
- How we pay our coaches at our gym (06:46)
- How the two Alloy Franchise models overall payroll to revenue margins look like (08:21)
- Why performance-based pay is good for your fitness business (12:23)
- The problem with gym owners focusing only on topline revenue and not the margins (15:06)
- Why you have to pay coaches if they are doing sales (16:40)
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Mentioned in this episode
Alloy Personal Training Franchise