Today I want to help you understand an interesting metric known as the “Average Revenue Per Member”, or ARM for short. This is a very important metric because you really want to see it trending UPWARD as your business grows. We talk more about it in my book Profit First For Microgyms, but today, I am going to give you a short overview…
As it says in the name, “ARM” tracks the Average Revenue per Member.
It is an easy enough metric to calculate, you just take your total income and divide it by your total members. Now, one thing to keep in mind, that as easy as that sounds, it can be a little tricky when it comes to defining what exactly a member is.
At our gym for example, I only want to count people who are paying for Personal Training Sessions, at least 12 times a month, and unlimited. Any of your clients that are going less times a month, or only attending the occasional class, I would not count as you cannot count on their revenue to remain consistent. If I really want to have a true and accurate ARM metric, I would subtract any of these inconsistent members from my income. But this is the more complicated method of calculating and not required, maybe even a bit overkill.
I just want to help make you aware of this method, in case you wanted to go really deep into the numbers! Just remember, that you don’t want to get too complicated otherwise this metric will just become another chore and it will make you more reluctant to track it.
So keep it simple and go with the standard option of just total income divided by members and there you have it!
Check out my tip videos below better understand how to start tracking your gyms ARM!
Check out our other videos for information on the Profit First system and other great tax tips for microgym owner.
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