A Gym Where It Costs You to Skip a Workout

A lot of people who join gyms or health clubs find it very easy to stop going. Gym-Pact, a new program in Boston, aims to change that. “Gym-Pact offers what [co-founder Yifan] Zhang calls motivational fees: customers agree to pay more if they miss their scheduled workouts, literally buying into a financial penalty if they don’t stick to their fitness plans,” explains Susan Johnston of The Boston Globe. “The concept arose from Zhang’s behavioral economics class at Harvard, where professor Sendhil Mullainathan taught that people are more motivated by immediate consequences than by future possibilities.” Gym-Pact launched a small pilot program last fall at Bally Total Fitness in Boston, and expanded its program at two Planet Fitness gyms in Boston in 2011. Currently, participants are fined $25 if they fail to follow the schedule in any given week, but Gym-Pact’s founders are still refining their model. “Zhang and [Geoff] Oberhofer plan to tweak the fee structure to allow it to be customized to a customer’s goals. Future iterations may include a combination of discounted gym memberships and smaller penalties that apply daily rather than weekly.” (HT: Marginal Revolution) [%comments]


Ian Kemmish

Surely just good old "enlightened self-interest"?

Such a pricing policy is naturally going to deter people who don't reckon they are going to be able or willing to attend all the sessions they book (at least, until every gym jumps on the bandwagon). So the gym gets fewer casual customers, and if they get the pricing level right, more committed, loyal customers than their competitors. Any business likes that.

Like any other retained consultant, it's against a gym's interest to actually solve the customer's problem too well, because if they do they'll run out of customers. They just have to look as if they're trying.

Ian Kemmish

Sorry to post twice, but maybe what you really want is a gym that gets paid like a hedge fund: they get an agreed performance fee every time your weight/blood pressure/whatever falls to a new low. If your weight increases they don't get paid until it dips once more below the previous low.

tim

I'm curious what the incentive for a gym to do this?

More people using the gym doesn't necessarily mean that the gym makes more money as a certain percentage pays and never shows up. Which reduces wear and tear on the facility.

nemo

@tim

I have a second-hand anecdote from a manager of a gym chain that says they make a great deal of their money the first month of the year when all the new years resolutions are made. Shortly thereafter, membership counts decay to approximately standard levels.

Cyril Morong

Who decides what a "scheduled workout" is? Do you have to do a certain number of reps? Work at a certain number of stations? Who monitors you to make sure you do all that?

Yifan Zhang

Hi Cyril,
I'm one of the co-founders of Gym-Pact and wanted to send out some answers! Our members decide where they want to work out, and a "scheduled workout" is any 30 minute period that they spend in a fitness partner facility. We have a simple attendance system at each partner facility. We don't specify or monitor workouts directly but rather monitor attendance. Most members find the hardest part to be just getting out the door and into the gym!

Cheers,
Yifan

di

Well, there go all the parents (because they have to stay home with Junior who is throwing up), caregivers (because Granny needs extra help one day) and anyone with a job that schedules meetings or travel on short notice (middle aged, mid or upper level professionals). Sounds like a way to attract only a certain type of crowd, young people without a lot of commitments.

Yifan Zhang

Hi Di,
I'm one of the co-founders of Gym-Pact and I want to thank you and everyone else on this comment chain for your feedback. It's really great for us to be able to hear what concerns you all have as well as what you like about our program. We actually hope to make it a flexible enough program for everyone. With a minimum commitment of just one day a week, we hope to make exercise a priority along with family, work and all the other things we fill our schedules with daily!

Please feel free to continue the dialog with us via Twitter (@gympact, @yifanz) or Facebook!

All the best,
Yifan

Becky

Cyril -

If a person goes to this gym and says that they want to work out 3 times a week (Monday, Wednesday, and Friday, for example), then they've signed up for scheduled workouts, especially if they've signed up with a personal trainer.

KevinM

Would it work better to let people "work off" part of the charge? That is, could the gym charge, say, $500 for a one-year membership, but refund $10 each month if you work out some prearranged number of times?
True, this is economically equivalent to a $380 gym membership with a $10/month "fine" for noncompliance, but it has the advantage of being structured as an incentive. When you're trying to get yourself to work out, a financial incentive might work better psychologically for some people. There's the initial resistance to paying the higher price, to be sure, but most people can steel themselves once and commit themselves to stick to a regime. It's the ongoing discipline to stick with it that's hard. This is a way of lashing yourself to the mast.

Cyril Morong

Becky

Thanks. That sounds expensive if one person has to monitor each customer's workout. What if the trainer says you did not work hard enough or do enough? Who decides if it was a real workout?

JennyB

This is just a publicity gimmick - gyms don't benefit most from customers that show up every day, they benefit most from customers who sign up to an expensive year-long contract and then stop going around the end of January. And it already costs customers much more, per visit, if they don't go as often as they intend to. Plus, as a year-round gym-goer, I really hate the surge that happens in January because I can't get in any classes / on any running machines - every year I consider leaving my gym at this time and only stay because I assume most people will taper off soon. So while the concept seems cool (to economists), I doubt it will have any effect on a) the profitability of the gyms or b) the ftness of the customers.

JustinB

This is a very clever method to keep people at the gym. It will make it more difficult to leave than to continue going. It may not work around the country because many people cannot afford to have fees charged if they cannot make it to the gym.

Rick

My old corporation had a gym on site. 10 bucks a month deducted straight from payroll. Catch was if you went 120 times that year (3 times/week for 40 weeks) you got ALL your money back. How is that for incentive?

MeToo

People's comments are good, but possibly off-target: the product is different here: the product is an exercise activity with motivational incentive.

The customers will be people who earnestly want some external motivation to exercise, and are willing to pay for the incentivization.

It fits more with the model of a secured loan: you lose your collateral if you fail to behave a certain way that is not in itself motivational enough.

Jim

Gyms with popular classes that operate at capacity have established policies that have similar motivation effects on the customers -- though the gym's motivation for the pricing strategy is quite different: http://selfexclusion.blogspot.com/2010/04/paying-twice-not-to-got-to-gym.html

Stephanie

I think this would work really well for me. I hate wasting money, and sometimes avoid going to the gym. But I'm pretty sure I'd go to the gym if I knew it would cost me not to. And I am always happy going to the gym after the fact. Just another good way to get me to go.

hal

Redundant.

If the membership is already paid then every missed workout raises the unit cost of each attended.

Perhaps there are some people who simply don't understand the economics and need the traffic cop at the speed trap to moderate their behavior.

bill katovsky

Allow me to shed light on the economic issue of gym memberships, which i researched for my latest book, "Return to Fitness" that just came out. You want to pay as you go (per visit), as one recent economic study discovered.

To keep their revenue pipeline flowing, health clubs typically offer three membership options:

1. Initiation fee, monthly contract, and a monthly fee that's automatically debited from your credit card or bank account
2. Initiation fee and annual contract paid in full or spread out over time
3. Pay-per-visit, often in the form of a multi-visit pass

But here's the financial kicker: Even if you've stopped going to the gym though you signed up month-to-month or annually, your membership dues will most likely continue to appear on your monthly credit card statement.

The best health-club membership option for many is pay-per-visit. That's the conclusion drawn from a three-year study of fitness clubs conducted by University of California at Berkeley's economics professor Stefano Della Vigna. After studying the records of nearly 8,000 gym memberships in the Boston area, the academic data cruncher discovered that "gym users on monthly plans pay 70 percent more than those pay-as-you-go plans based on usage."

Vigna published his findings in the American Economic Review (June, 2006)-hardly the kind of sweat-stained periodical one finds stashed in the reading bin by the stationary bikes. Since consumer behavior is not always based on rational decision-making, new gym members often fail to take into account declining interest in working out.

"Gym members who choose a contract with a flat monthly fee of over $70 attend on average 4.3 times per month," explained Vigna. "They pay a price per expected visit of more than $17, even though they could pay $10 per visit using a 10-visit pass. On average, these users forgo savings of $600 during their membership."

The study produced another interesting set of results that reflect consumer habits. "Members who choose a monthly contract are 17 percent more likely to stay enrolled beyond one year than users committing for a year. This is surprising because monthly members pay higher fees for the option to cancel each month."

Seeking to explain this statistical anomaly, Vigna theorized that "over-confidence about future self-control" is the reason. In other words, those signing up for an annual membership might have set unrealistic fitness goals for themselves, and when they fail to reach these benchmarks, they become less motivated and more likely to quit than month-to-month users.

Vigna found that monthly users are reluctant to quit even if they stop working out. On average, just over two entire months elapse between the last club visit and contract termination for monthly members. Which means a monthly user can expect to lose two hundred dollars or more before finally deciding to throw in the membership towel.

Bill Katovsky
http://zero-drop.com

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KevinC

Reminds me of an alarm clock I saw recently. Don't remember if it was an actual item for sale or just a design/idea. When you hit the snooze button, you would donate a small amount of money to a cause you didn't like.

BG

I think it's a great idea. Some people need some more motivation and losing money when they skip workouts will definately help motivate them more. And it's not a mandatory policy, it's just an option that is there if the customer wants it, and it really doesn't cost the gym anything extra to profice, so it's a really good idea.

alex

In my opinion i think that going to the gym is very helpful to people. If you don't go to the gym then your loosing money so it motivates people to go more often to the gym. then gym honestly is not a bad thing to do yeah it has to take time to get used to going but if you keep going then you'll get into it. by not going your going to loose money more then giving then it. going to the gym can save your life or help your weight. you can become a member of the gym you like or want to go to so that way you don't skip any gym time. the gym is a very good motivation skill to attend. loosing money can be a bad thing to do so just go to the gym so you don't loose money. other ideas if you don't wanna go to the gym then call them and tell them you don't want to go or the reason why your not going. its better to tell them not to go at all. they will raise how much it is every time you miss a workout.

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