Member Lifetime Value for Fitness Businesses

Most fitness owners run their business on monthly revenue, the number on this month's dashboard. But a membership business is not a monthly business, it is a relationship business, and the relationship has a value that stretches across years. Member lifetime value is the metric that captures that, and once an owner internalizes it, almost every other decision, what to spend on acquisition, how hard to fight churn, whether to discount, gets clearer. It is the closest thing a gym has to a true north number.

The Formula and Why Tenure Dominates It

The simplest lifetime value formula is average monthly revenue per member multiplied by average tenure, where tenure is one divided by your monthly churn rate. A member paying $60 a month who stays an average of 20 months is worth $1,200 in dues before any add-on spend. A boutique member at $150 a month who stays 18 months is worth roughly $2,700. The formula is simple, but its behavior is not: because tenure is the inverse of churn, small changes in churn swing lifetime value sharply.

That sensitivity is the whole insight. Cutting monthly churn from 5 percent to 4 percent raises average tenure from 20 months to 25, a 25 percent jump in lifetime value from a single point of retention. IHRSA's well-known finding that improving retention by five points can rival doubling acquisition is just this arithmetic playing out. A retention rate calculator turns your churn number into average tenure and lifetime value automatically, which is the fastest way to see why the strongest operators guard retention before they chase joins, the deeper logic of which lives in member retention economics.

Add-Ons Are Lifetime-Value Multipliers

The second lever on lifetime value is average monthly revenue, and the cleanest way to raise it is add-on services. IHRSA data shows the healthiest fitness businesses generate 30 to 40 percent of revenue from secondary services like personal training, nutrition coaching, and retail. A member who buys training on top of dues can be worth two to three times a dues-only member, and crucially they tend to retain longer because they have more reasons to stay. Add-ons raise the revenue side of the formula without touching acquisition cost, which is why they compound value so efficiently. The mechanics of building that secondary revenue are the subject of ancillary and retail revenue.

The membership structure a member chooses also shapes their lifetime value. Mindbody data shows unlimited members attend more and retain longer than per-class buyers, so their lifetime value is markedly higher even at similar monthly spend, while a class-pack buyer whose pack expires unused often ends the relationship with no renewal. Steering committed prospects toward unlimited plans is therefore a lifetime-value strategy, not just an acquisition tactic, which connects directly to how you design your membership pricing models.

Blended Lifetime Value Hides the Members Who Actually Pay

The single LTV number on a dashboard is a blended average, and averages lie when the underlying population is mixed. A studio whose members split between dedicated unlimited regulars worth several thousand dollars and a long tail of trial-driven joins who churn inside two months will show a moderate blended LTV that describes neither group. The more useful practice is cohort lifetime value: group members by how they joined, the month they joined, or the plan they bought, and compute LTV for each group separately. Mindbody's operational data on attendance and retention differences by plan is exactly the kind of segmentation that turns a vague average into an actionable one.

Cohort analysis surfaces problems the blend conceals. If January joins from a discounted resolution promotion show half the LTV of organic spring joins, the promotion may be buying revenue that never materializes. If members from one referral source retain twice as long as another, you have found where to spend. The discipline is to stop asking what the average member is worth and start asking which members are worth the most and how you get more of them, a question the blended number can never answer.

Payback Period: The Number That Governs How Fast You Can Grow

Lifetime value tells you whether a member is profitable eventually; payback period tells you how long your cash is underwater first, and for a self-funded studio the second number often matters more. Payback period is acquisition cost divided by the monthly gross margin a member contributes. A member acquired for $120 who contributes $45 of monthly margin pays back in under three months; one acquired for $300 against the same margin takes nearly seven. SaaS and subscription operators widely treat a payback period under twelve months as healthy, and a fitness membership, with its low marginal cost to serve, should beat that comfortably.

The reason payback constrains growth is cash. Every new member acquired before the previous cohort has paid back deepens the cash hole, so a studio with strong LTV but a long payback can still run out of money while growing, the classic profitable-but-broke trap. This is why payback reads alongside acquisition cost: a channel can produce members with excellent lifetime value and still be unaffordable if it takes ten months to recover the spend. The full treatment of that spend side lives in member acquisition cost, and the two numbers are only meaningful together.

What a Discount Really Costs Over a Lifetime

The most expensive habit in fitness pricing is the reflexive discount, and lifetime value is the tool that exposes its true cost. A studio that shaves $15 off a $60 monthly membership to win a join is not giving up $15; it is giving up $15 every month for the member's entire tenure. At an average 20-month tenure, that single discount decision costs $300 of revenue over the relationship, far more than the one-time intro discount it felt like at the desk. Worse, members acquired on price tend to leave on price, so the discounted member often also retains worse, compounding the loss.

This reframes the entire discounting conversation. The question is never whether a discount wins this month's join; it is whether the lifetime margin sacrificed is worth the marginal member, and whether that member would have joined anyway at full price. IHRSA commentary on boutique positioning consistently favors competing on experience and results over price precisely because price-led acquisition erodes both margin and retention at once. A one-time intro offer with a defined end and a full-price renewal protects lifetime value; a permanent standing discount quietly bleeds it for years.

How Lifetime Value Shifted in 2025 and 2026

Two recent shifts are worth folding into any LTV estimate. First, hybrid and digital add-ons have given operators a new way to lift the revenue side of the formula: Mindbody's industry commentary points to app-based and on-demand offerings becoming a durable revenue layer rather than a fading pandemic experiment, and a member who pays for both in-person and digital access carries a higher monthly revenue and, because they engage on more days, often a longer tenure. The mechanics of building that secondary layer sit in ancillary and retail revenue.

Second, cost pressure has squeezed the margin side. IHRSA and IBISWorld both note rising labor and occupancy costs across the fitness sector in recent years, which means the gross margin per dollar of membership revenue has tightened for many operators. A lower margin lengthens payback and lowers the true lifetime profit behind a given revenue figure, so an owner recomputing LTV in 2026 should use current margins, not the ones that held three years ago. The headline revenue per member can be flat while the lifetime profit behind it has quietly fallen, which is exactly why the metric is worth revisiting rather than carrying forward unchanged.

Using Lifetime Value to Run the Business

Lifetime value is most powerful as a budgeting tool. Once you know a member is worth a given amount over their tenure, you can spend confidently to acquire them while holding to a healthy ratio. The standard subscription health check is an LTV to CAC ratio of at least 3 to 1, so a member worth $1,200 justifies up to $400 in acquisition cost. That single ratio converts marketing from a gamble into a calculated investment with a known return, which is exactly the discipline laid out in member acquisition cost.

Lifetime value also reframes discounting. An owner who knows a member returns $1,200 stops fighting over the first month's price and starts protecting the next twenty months of the relationship. Owners who want to quantify their numbers and capture members in one motion can stand up a structured lead generation and benchmarking setup for wellness businesses, turning lifetime value from a back-of-envelope estimate into a measured line they can defend to a partner or a lender.