Great post, I knew almost none of the information in the article and learned a great deal, but the concepts are so adjacent to your writing on options/trading that it was easily digestible
Take the archetypal consumer who signs up (often in January), attends for a while and then trails off but doesn't cancel until months/years later.
They are underpaying initially because they are using the facilities and then overpaying across the tail end when they're no longer using the facilities.
Depending on how aggressively a gym has priced the threshold for the model breaking can be as low as ~30% weekly active users.
Innovations in gym business models have all been about exploiting these dynamics.
- 24/7 opening hours spread out the attendance allowing gyms to onboard more non-attending members
- CrossFit exists basically to justify the cost when most customers actually attend
Great post, I knew almost none of the information in the article and learned a great deal, but the concepts are so adjacent to your writing on options/trading that it was easily digestible
Wow. This is eye opening! Didn't realize that gyms and insurance have a very similar business model!!
Gyms seem more like the inverse of the model.
Take the archetypal consumer who signs up (often in January), attends for a while and then trails off but doesn't cancel until months/years later.
They are underpaying initially because they are using the facilities and then overpaying across the tail end when they're no longer using the facilities.
Depending on how aggressively a gym has priced the threshold for the model breaking can be as low as ~30% weekly active users.
Innovations in gym business models have all been about exploiting these dynamics.
- 24/7 opening hours spread out the attendance allowing gyms to onboard more non-attending members
- CrossFit exists basically to justify the cost when most customers actually attend
(Disclosure; former gym owner)
You are right! I was thinking purely of the cancelation part. But they are underpaying in the beginning and overpaying later - the opposite.
Exactly