Why Do Gyms Push Annual Memberships?

How gyms profit from people who overestimate how often they will exercise, based on a famous study of gym attendance.

Gyms eagerly sell annual or monthly memberships, often at a discount compared with paying per visit. Why do they prefer these deals?

The famous study

In 2006, economists Stefano DellaVigna and Ulrike Malmendier published a study titled Paying Not to Go to the Gym. They examined thousands of members at U.S. health clubs and found:

Members on monthly contracts paid about 70 dollars a month on average.
They visited just over four times a month, on average.
So they paid about 17 dollars per visit.
Yet the gyms offered a pay-per-visit option costing just 10 dollars.
Many members would have saved money by paying per visit.

Members also tended to keep paying for months after they stopped going, before cancelling.

Why people choose memberships

Overconfidence: when signing up, people overestimate how often they will go.
Present bias: people plan to exercise in the future, but when the day comes, they prefer to relax.
Commitment hope: some people hope a membership will motivate them.

Why gyms like it

Predictable revenue from memberships.
Many members rarely come, so gyms can sell more memberships than their space could handle if everyone came at once.
January, after new year resolutions, is often a peak sign-up month, followed by falling attendance.

Similar patterns

Subscriptions that people forget to cancel.
Unlimited plans for services used less than expected.
Online courses bought but never finished.

A smarter approach

Track your actual use for a few weeks with a pay-per-visit or short-term plan before committing.
Calculate cost per visit.
Set reminders to review memberships.

The new year resolution

A student buys an annual gym membership for 12,000 rupees in January, planning to go five times a week. By March, she goes once a week. Her cost per visit rises to over 200 rupees, while a pay-per-visit option would have cost 150. A trial month would have revealed her real habits.

Thinking the cheapest per-visit plan is always the membership

Memberships only save money if you actually use them often. Most people overestimate their future use.

Key takeaways

A famous study found gym members paid about 17 dollars per visit when a 10 dollar per-visit option existed.
Overconfidence and present bias lead people to overbuy memberships.
Gyms benefit from predictable revenue and low usage.
Test your real usage before committing to long plans.