Profit center can be an added advantage for any venture that intends to enhance its profitability. A profit center is a division or branch of an existing firm that is accounted for on a standalone basis for the computation of profits. It generates its own results and revenues. The centers are managed by managers that enjoy a decision making authority over the products, their prices, and the operating costs. Since profits centers function as a way of differentiating between profit-generating activities, profit centers can be an effective tool for offering ancillary products and services. After the sale of the primary product or service, firms can make additional profits by selling ancillary products and services. Despite generating additional profits, these ancillary products further support the sale of primary products and services (Baker, Sciglimpaglia, & Saghafi, 2010). The additional services or products can be offered in a branded form or generic form. A physical fitness venture can extraordinarily benefit from offering ancillary products and services that compliment its main fitness services. Such add-on services can be delivered through a profit center dedicated to generating additional income for the main venture.
Operating a Profit Center in the Fitness Industry
According to Club Solutions Magazine (2018), profit centers in fitness clubs can bet the owner’s best friend or worst enemy. Operating a profit center or multiple profit centers can be very productive and profitable for a fitness club or health club. The key to such success is proper planning. With proper planning, a profit center may become the distinctions between being ordinary or exceptional. Profit centers help enhance a clubs diversity and as a result, protect the clubs bottom-line. For a fitness club, pursuing profit centers can increase the level of subscriptions and the membership base. It can also increase the amount each patron spends at the club.
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Establishing profit centers can enable a fitness club to deal with the common tendency in the fitness industry whereby most clubs only focus on lowering the cost of membership to attract membership (Goldman, 2012). Such centers also differentiate one club from the next one. The can enable to club to shape lifetime habits of its members and improve the value of the membership for their members and at the same time enhance the result such the members draw from their membership. These kinds of benefits keep members coming back (Goldman, 2012).
To run a profit center, it is necessary for a fitness club to engage highly motivated and qualified management and sales teams which can drive success. Engaging such teams is necessary because profit centers are not part of the core business and should, therefore, have their separate team. Having their team ensures that their operation does not interfere with the operation of the core business. However, the entire organization staff must have an understanding of what the profit center is all about. This way, they will all have the ability to pitch the new offering to the clubs members.
The mother company can support the profit center through initiatives such as coupons for the purchase of the additional services. For instance, the parent firm can offer eve new members a 15% off coupon for the purchase of additional service provided by the service center. Instead of selling only membership to potential clients, it is also wise to market individual products to the clients. The individual products and services can also be marketed to the existing members. The clubs can further drive sales by motivating the staff to make a sale by offering them commissions.
It is usually important that existing members and the potential new members see the value to the profit center before they can use them. The marketing initiatives should aim at providing adequate information to the members, old and new, to enable the make choices on which service or they can use from the profit centers.
The Ancillary Services to Offer at the Profit Center
Profit centers for fitness clubs can offer a variety of ancillary services as well as goods. Before settling on the ancillary services and products to offer, it is crucial for the club owner or management to first decide on the purposes of the center. It is also necessary, to establish whether there is demand for products and services that will be sold through the profit centers. This is why market research is necessary to find out what the market wants. After finding out the market wants, what the profit center offers in return should be topnotch. The service that will be provided by the profit center will include massage, juice bars and merchandising.
Massage
The popularity of massages is undeniable, and it is thus unwise for a fitness club not to offer massages. To pursue this venture, rather than opting for traditional massage approaches which demand for a significant amount of space and additional personnel, the club can focus on using dry water message systems. These systems can be beneficial to both members and owners of fairness clubs. They are not messy and do not require additional personnel. Since the systems deliver massage through water jets over a membrane, the users do not get wet and can even remain clothed throughout the massage (AMI aqua massage, n.d.). The systems deliver professional massage results similar to traditional massages thus rejuvenating the user's bodies at a lower cost.
Juice bars
Juice bars can be helpful in helping the club member attain their nutrition goals. Nutritious smoothies and shakes can be effective cooldown beverages that the member can take after their workouts (Eisberg, 2016). Nutrition plays a huge role in fitness, and it unwise for a fitness club not to offer nutritious products that can help club member attain the fitness objectives. Member can also take the nutritious smoothies to boost their energy rather than taking highly processed energy drinks. It is possible to pull offer a juice bar profit center without incurring additional costs.
Merchandising
Merchandising is a way of providing members with a piece of souvenir the makes them emotionally connect to the fitness club (Lanoir, 2017). The merchandise can also enhance the value the lifetime members associate with the club. Merchandise should be placed by the exit and entrance, especially in the areas were members eyes frequently wonder to as they enter or exit the club/premises. The merchandise will include shorts, shirts, sweatpants, workout bags, shoes, vitamins, jackets nutrition supplements and other products that are popular. Other may be non-fitness related products such as phone batteries and earphones.
Marketing
As noted earlier, marketing is critical to the selling of these ancillary products and services. The primary approach to marketing will involve directly marketing to the existing members of the club’s staff. The member of staff will be armed will be armed with information regarding the products, and with thus be able to market them to members as they interact with them. The members will get commission depending on the volume of sales they manage to make. Advertisements through mass media, print media, and social media will also be used to make the sales. For products such as juices and smoothers, and merchandise, the best marketing will be displaying them in around the entrance and the exit, to ensure the member notice them as they come in and as they leave. A price discrimination model base on subscription and discounts for the first people to use the ancillary products will be used to attract potential clients to the profit center and turn them to loyal customers. Coupons will also be used to entice new and existing member to try out or consistently use the ancillary service offer at the profit centers. It is expected that these activities will result in large volumes of sales that will enable the profit center to earn 20% returns by the sixth month.
References
AMI aqua massage. (n.d.). Retrieved from www.aquamassage.com/
Baker, W. E., Sciglimpaglia, D., & Saghafi, M. (2010). Branding of post‐purchase ancillary products and services: An application in the mobile communications industry. European Journal of Marketing, 44 (5), 547-566, https://doi.org/10.1108/03090561011032261
Club Solutions Magazine. (2008, November 10). Multiple Profit Centers – What Every Club Owner Should Know. Club Solutions Magazine . Retrieved from https://clubsolutionsmagazine.com/2008/11/multiple-profit-centers-what-every-club-owner-should-know/
Eisberg, A. (2016, August 10). Increase revenue & retain members with a juice bar. Accuro . Retrieved from https://blog.accurofit.com/increase-revenue-retain-members-with-a-juice-bar
Goldman, S. (2012, February 1). Health Clubs Count on Ancillary Revenue More Than You Think. Club Industry . Retrieve from https://www.clubindustry.com/profits/health-clubs-count-ancillary-revenue-more-you-think
Lanoir, T. (2017). 5 Reasons to Sell Gym Merchandise in Your Club. Virtuagym. Retrieved from https://virtuagym.com/blog/business-growth/reasons-selling-gym-merchandise/
