DEFINING "NORMAL" MARGINS FOR THE RETAIL SIDE OF YOUR GYM
For years, I never had the answer to a really important question: “What do other gyms sell shirts for?”… There seem to be two camps: The “I sell shirts because it is ‘free advertising’” camp and the “I sell shirts to make a profit” camp. Regardless of how you view and handle apparel, in this post, I am going to define “what is normal” and give my best suggestion for selling apparel at your gym with some basic math.
After running an data analysis of every invoice for fitness clients since 2014, an important trend and insight is clear: there is no reason why you can’t hit 80-100% margins on every single apparel order.
I have three scenarios for you:
Let’s say you’re just starting out and your order is 25-49 shirts: If you are selling apparel at your gym, at a minimum, you should hit 30% margins on your apparel. Again, this is the starting point. What kind of order would hit 30% margins? Say you order the minimum order (24) and the shirts are priced at $15.99 each, you sell the shirt for $25… $9 profit per shirt… This gives you a 36% margin. The profit from this job may not seem like a ton but if you’re just starting out, you are have a positive cash flow and that is 99% of the battle.
The standard order for any box is in the 50-75 quantity range. At this stage, you should be in the 50-70% margin range, possibly even hitting the 90% range in some cases.
The “sweet spot” happens around the 75-150 quantity range. This is where your margins will open up to about 100% possibly even more. You should expect to make a profit in the thousands of dollars.
The high volume visitor/drop-in gym. We work with some of the highest volume drop in gyms in the world. They are constantly ordering 150, 300, and 500 shirts…per month….and they sell out. This is where 150% and sometimes even 200% margins are doable. Before ordering 150 shirts, be sure to ask yourself “Will I really sell all of these or will I sell half and then sit on half for the next three years”…
I summarize this article in this handy reference chart below. If you’re unsure why you’re not turning a profit on your sales, shoot me an e-mail: Send Mail.