How To Make 7-figures As A Studio Owner


I started my morning like every other morning, peppermint tea in hand, casually scrolling through Facebook, when something caught my eye and jarred my heart:

Right underneath it was a post from a seasoned instructor:

And, then just below that the polar opposite opinion….

Three, likely talented instructors and trainers….

Three very different (and in my mind very false) opinions.

Since 2006, I’ve built my studios into a multi-7 figure, multi-state studio group that I sold in 2016 for multiple 7 figures. Yup, that makes me a 7 figure studio owner.

And, I’ve worked with over 40 studios that fall in the 7 figure range, nearly 10 of which are in one metropolitan area alone (and no, not NYC!)

These posts got the gears in my head turning, how many studio owners out there haven’t even begun to realize the profit and revenue potential in their studios?

And, when I got this question towards the end of last year, I decided that it was time to shed a little light on the inner workings of a 7-figure studio.

Are there any examples of people actually running 7-figure studios? I’m curious exactly what the monthly math looks like to hit that $83,000/month revenue. We run a pretty healthy 6-figure gym, and I’d like to take the next step to learn from folks who have actually done over a million in a studio. Thank you!  – Josh Guerrieri

Well, I can do you one better than examples, Josh.
I can give you the blueprint they used to get there.

BUT FIRST, LET’S TAKE A LOOK UNDER THE HOOD OF 4 REAL, LIFE FITNESS STUDIOS THAT ARE HITTING 7-FIGURES

Disclaimer:  Numbers go up and down every month, we’ve used averages here so you get a sense of the overall trend.

Studio #1:  The Small Town Studio Conglomerate

1:1 (Personal Training, Private Yoga and Rehabilitative Training)
Average Client Rate: $240 – 480/month, with an average of 100 clients a month.
→ $24,000 – $48,000/month
ANNUAL TOTAL:  $288,000 – $576,000/year

Small Group Training

Personal Training
Average Client Rate: $119-$139/month with an average of 150 a month.
→ $17,850 – $19,350/month
ANNUAL TOTAL: $214,200 – $232,200/year

Athletic Training
Average Client Rate: $129/month with an average of 120 clients a month.
→  $15,480/month
ANNUAL TOTAL: $185,760

Group Training

This varied from studio to studio. Some of our studios brought in $350 PER Zumba class and we held 3-4 a week {that’s 50 clients per class with a waitlist at $7 discounted}. On average, each studio made around $5000/month.
→   $5,000/month
ANNUAL TOTAL: $60,000/year

Lagniappe:

Three challenges a year sold at $99-$399
Nutrition Program from $10-$500
Upsells to Existing SGT Clients $99
→  $499/month
ANNUAL TOTAL:$20,000/year

GRAND MONTHLY TOTAL: $89,480
TOTAL ANNUAL REVENUE: $1,073,760

WHAT’S WORKING?

30%+ Profit Margins.
Even if each individual studio didn’t hit 7 figures, it was very profitable thanks to low rents, well-negotiated compensation plans that geared towards hiring fewer people on salary (opting instead for many independent contractors), and a strong corporate infrastructure that let the owner spend little time working. In the end, the studio group sold for multiple 7-figures.

Studio #2:  The “Everyone Knows My Brand” Yoga Studio

Teacher Training and Intensive Workshops
ANNUAL TOTAL: $400,000

Memberships
ANNUAL TOTAL: $150,000 and growing

Drop-Ins and Short Term Packages
ANNUAL TOTAL: $400,000

Niche Programming
ANNUAL TOTAL: $200,000

GRAND MONTHLY TOTAL: $95,833
TOTAL ANNUAL REVENUE: $1,150,000

WHAT’S WORKING? (AND WHAT ISN’T?)

While this studio had phenomenal numbers (and the press to back them up), they weren’t very profitable.  At only 8% profit margins that were taking in just over 100K a year.

We spent a lot of time looking at each individual service and it was clear that the most profitable services were their niche programming and teacher training workshops which accounted for only 15-20% of their expenses.

This was largely because the owners had focused most of their time on these two areas while relying on someone else to run the traditional studio side of their business.  With limited oversight processes and systems, the studio side had a very low conversion rate.

Once they realized this, the studio owners made plans to the traditional studio portion of their business to someone who could focus on it, while they ran their highly profitable non-traditional studio business.

A million dollar revenue is a vanity number, if you aren’t actually taking home a decent amount of money. This is a key why your business model is so crucial.

Studio #3: The Wellness Center Model with a Yoga Focus

This is a soon to be million dollar yoga and wellness center that’s currently in the roughly $800,000 range.  

While, it’s primarily a yoga studio, they’ve gathered a large variety of holistic practitioners under its wings, thereby significantly increasing their profits:

Group Training
 $25,000/month (We’re working on getting the conversion rate up so that the studio hits $45k/month)
ANNUAL TOTAL: $300,000/year

Teacher Training
→ $10,000/month
ANNUAL TOTAL: $120,000/year

Practitioners
→ $25,000/month
ANNUAL TOTAL: $300,000/year

WHAT’S WORKING?

It’s your one-stop studio, a vertical model that gives clients everything they need for their well-being under one roof. The challenge is to get a client, and if that’s done well, the client’s value can be increased as work with them across the studio’s different offerings. The more services your clients take part in, the higher your Average Client Monthly Value.

When we started working with this studio, their conversion rate was nothing to write home about. Once we tackled that, we worked on building recurring revenue for practitioners by creating upsells for new clients to give them access to the studio’s acupuncturists, mental health counselors, masseuses, chiropractors, and spa therapists. Then, we increased the studios reach by creating Google ads to market every service.

Now, the studio is just about to hit a million dollars. We’re also working on renegotiating compensation plans to bring their profit margins up to a very firm 30%.

Studio #4:  The Big City Studio Conglomerate

This group of 4 studios (one of which is seasonal) is growing from $2.5 million to $4-$5 million dollars.

1:1
Prices for private sessions ranged from $80-$150/session.

Group Classes
Prices for group classes ranged from $25-$40/session.

WHAT’S WORKING? (AND WHAT ISN’T?)

These studios had very low conversion rate onto long term packages, largely because those packages didn’t exist.

By increasing the number of studio visits per client (which is currently hovering just over once for the biggest reformer studio) and bringing private clients onto a regular membership, we’re looking at a growth plan.

They’ve been able to pump their profit margins up by hiring full-time employees.  For many people this seems like the most terrifying leap they can make, until you realize that if you have a full client load and bring on an instructor in the $40,000-70,000 a year range, you’ll be paying an averaged out hourly rate $20-35/hour.   This is far below what many instructors are asking for with individual hourly sessions. Great stability and higher profit margins? Sign me up.

Now we know what a 7 Figure Studio and beyond can look like. Yes, to take home 7 Figures, you’re likely going to have a studio bringing in 2.5-3.5 million dollars a year, which as we’ve seen is not just doable, but within reach if the right business model is put into place and you achieve a 30% profit margin, which is ideal in a service based business.   
But what if taking home 7 figures isn’t your end all and be all? What if you want to take home (as in literal paycheck) 6 or multiple 6 figures? What if you want to do it while working as little as possible?
Then, ask yourself two big questions:
  1. What do you want to make each year?
  2. And, how much do you want to work on a weekly basis?

When I’ve made my own business plans, I’ve always started with what I wanted my workload to be.  

And, I don’t want to put a lot of hours into my week.  I pick up my kiddos from school, spend a good chunk of my summer travelling and have to prepare to be a single parent at any given point should my husband deploy.  

So my plan looks like 10-15 hours a week of “smart” work and as much money as I can earn from that.  

*Timeout*  This style of business plan has infuriated some of our friends.  That I could be so much farther IF I would put in more hours. That I could have grown my business so much more IF I would just work a little harder.  But, you know, that’s not right for me and mutliple 7 figures later, I’d say it’s worked out okay.

So let’s look at a few studios that are nailing work-life balance while still making some serious profit.
Studio #5: The 6-Figure in Revenue, 6 Figure in Profit Studio

An in home Pilates studio client of ours just sent her numbers and when I saw these key metrics I jumped with joy:

  • 2694 visits (Up 32% from 2017)
  • 363 Privates (down 6 % from last year)

But, her annual revenue and profit margins make me even happier.  You see this was an in home studio that had been charging rates as though IN HOME was a discount code.  Her prices were significantly less than the regional rate.

After switching up her prices, opening more slots in classes and removing privates from her schedule, and  putting in appropriate sales systems, her annual revenue looked like this:

Annual Revenue 2018 → $97,173
Annual Revenue 2017 → $77,550

Reflecting on all of this, here’s what she had to say:

“Looking back, I am now able to bring in and screen my leads much better to have an ideal client that matches my mission. And convert them at a better ratio 70%…not too bad.”

The end result: That’s less work, with over 25% more in revenue for six figure salary, all while working from your basement.

Since it’s an in-house studio, there are nearly no associated costs. Hello 6 figure paycheck  on a limited work week.

Studio #6: The In-Home Studio Poised for Growth

Here’s another in-house studio that’s killing it. A client in Texas came to make a solid six-figures (while only working 20 hours a week with clients) in her in-home studio.

What’s really interesting about her story is that it busts one of the biggest myths in the Pilates and Yoga worlds.

And that’s

Experience = Paycheck

Going back to that Facebook comment we talked about. According to it, you could only make 7-figures if you charged $100/hour, and you could only charge $100 if you had years of experiences AND magically consistent clients.  

Well, our client in Texas charged her clients an average of $110/hour in spite of only being a few years out of training and only worked 4 days a week for a total of 22 hours all while her kiddos were happily at school.

And if we run those numbers, that’s just over $9,600/month.  Yup, $110 an hour, 6 figure salary and consistent clients all a few years out of a certification.  

ANNUAL INCOME on ONE INSTRUCTOR → $115,000 a year

By converting her garage into a studio with a separate entrance, she created a private space. Her business ran on word of mouth, which led to a waitlist, but she’d thought ahead and found a teacher ready to go for evening sessions.  

Evening sessions were her most requested times, but one she’d never been willing to spend much time teaching in.  After all she knew her goal… only teach when kids were in school.

So she added a new teacher from 5-8 PM, a total of 3 hours.

Her rate ($110/hour) minus her teachers’  payrate ($45/hour) give her a profit of $65/hour.

This brings her total revenue for part-time work to a comfortable $12,800 a month of take-home profit.

ANNUAL TAKE HOME INCOME with TWO PART-TIME  INSTRUCTORS → $153,600 a year

Studio #7:  The $110k Problem

When I met this studio’s owner they appeared to have it all.  Multiple 6 figures. A highly respected teacher training program.  Double digit staff members. Hundreds of clients. All kinds of goodness with a 6% profit margin.  

Apart from teacher training, the studio offered group sessions and privates in yoga and Pilates. While we saw huge growth potential with privates and group training, financial breakdown showed the teacher training (which required a tremendous amount of work) was bringing in almost no profit.

Enormous work = Low or no profit = Red flag

While it might seem scary to axe an offering that makes you $110,000 a year, it helps to put it in perspective with your profit margins.

What’s the point of making $110k, if your take home is only an extra $900/month for 30 hours work a month?

The answer is nada, zilch, no point at all.

In we went and restructured everything, working on back-end expenses, adding high-ticket premium offers, and setting out to hit a 30% profit goal.

Within a matter of months, the studio grew significantly (as in 3 times the Average Client Monthly Value) and three years in she hit a 46% profit margin, had doubled her revenue and was working 2 days a week,  all while enjoying her weekends home thanks to the elimination of her teacher training.  

ANNUAL TAKE HOME INCOME → Over $180,000

Ready to finally take home 6+ Figures Or hit 7 Figures a year in revenue? Here’s our steps to making this a reality:
STEP 1: BUILD MULTIPLE INCOME STREAMS

If you can’t measure it, you can’t improve it.

7-figure business owners know their numbers and are constantly trying to improve them.

Stay away from vanity metrics and zero in on the ones that matter:

Your Retention Rate and Conversion Rate.

Your Retention Rate (for this purpose) is a 13 month Rolling Retention Rate.

And, your Conversion Rate is the conversion from an introductory package onto a 12-month membership.

Here’s what the numbers for 7-figure studios look like:

  • Retention rates of 85% and above for 1:1 privates with the majority being on 12-month agreements.  
  • Retention Rates of 60% and above for group clients.
  • Conversion Rates of 45% plus for Group Clients and 60% plus for private clients.  

Now take a moment to look at your own numbers and see how they hold up.

STEP 3: IDENTIFY MOST LUCRATIVE INCOME STREAMS AND PRIORITIZE THEM IN MARKETING AND SALES

Once you’ve diversified your income streams, take a moment to identify the streams that are getting you the maximum ROI and concentrate your resources there.

Too many studios have long term, 1:1 private clients (often grandfathered on lower rates) taking up prime real estate on the roster when in reality they end up canceling or rescheduling half the time.

That’s not a recipe for long term success. Instead, evaluate areas of your business that can be optimized and focus on them.

For example, by placing those private clients onto recurring revenue packages and ensuring your prime real estate is always full, you can see upwards of a 40% in crease in revenue (yes, that’s exactly happened to one of our clients, a well-known teacher trainer whose busy clients cancelled more than they came).  

Or, if you realize that your Small Group Training has a 60% profit margin, then it might be time to shift your marketing to fill that offering.

STEP 4:  MAXIMIZE YOUR PROFIT MARGIN 

Your profit margin is THE most important factor in determining your business’s success. It’s simply what’s left to pay YOU after all of your expenses.  

Remember, a 7-figure studio doesn’t guarantee a 6-figure income.  You need to regularly review your expenses and run clear financials before committing to new offerings, employee compensation plans and leases.   (We’ll be looking at a few ways to earn what you actually want to over the next few weeks, so keep your eyes peeled!)

The studios we looked at today all had margins between 8% and 47%. That means if the studio made one million dollars, then their take-home amount was between $80,000 to $470,000. That’s a BIG difference all based on how you negotiate and review your expenses.  

Does a 7-figure studio feel more within reach now? What strategies have you implemented in your business so far to help you grow your revenue and maximize your profit margin?

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