The main purpose of starting a business is to make money. When we are talking about opening a gym, the main source of income is going to come from the cost of a membership per person. However, it is always important to generate MORE money and in the fitness industry, there are plenty of opportunities.
Today, we are going to discuss how you can increase your profitability through the sales of supplements.
Pricing & Selling Supplements
A simple way to increase the sales in your club is to offer supplements. To receive the best prices on your inventory find a vendor that can get you the best deals. The trick to successfully profiting off of supplement sales is to have a motivated sales team and make your profit margin realistic (for you and for the members).
The cold hard truth is that your sales team has no reason to care about sales of supplements. You, as the owner, will profit but they get nothing. Motivate your team to care about supplement sales. Consider paying them 10% commission for every supplement they sell (we will break this down for you in a minute). Set your prices however you would like, but keep in mind potential “discounts”. If you want to offer your members 20% off of supplements, be sure to mark your initial prices higher. Also, account for any commission you will be paying to your sales team.
Let’s say you purchased 8 jugs of protein powder from a vendor for $144. This equates to an individual price of $18 per jug. You want to earn back your initial investment, plus earn a profit of AT LEAST 40% on each protein jug.
$18 x 1.4 = $25.20 bottom line price per jug, to produce a 100% return and 40% profit.
However, to actually earn a 40% profit on your initial investment, you need to price each jug of protein at $35. Sound confusing? We can explain. Remember earlier we mentioned the importance of pricing your inventory to account for discounts and commission. Well…
20% off for members means that they will only pay $28.00 ($35 x 0.8 = $28).
10% commission paid to salesperson means you will pay $2.80 per jug sold. ($28 – $2.80 = $25.20).
This is just one of the many ways you can capitalize on your current business and generate more money. If you do not want to pay commission to employees for supplement sales, think of other creative ways to motivate them to WANT to sell. And remember to be mindful when you are pricing your inventory.