Why 1% of Payment Volume Is the Future of Gym Software Pricing

The economics of running an independent gym are brutal. Most American fitness facilities generate less than $1 million in annual revenue, with median operators running on 10–15% profit margins.¹² Against this backdrop, traditional gym software pricing looks like a structural mismatch: flat monthly fees that consume the same dollar amount whether the gym has a record month or barely covers rent.

Gymsense launched with a different approach—1% of payment volume, no monthly minimums, no feature tiers. This isn't simply a cheaper alternative to Mindbody, Glofox, or Zen Planner. It represents a fundamentally different economic relationship between software vendor and gym operator, one where incentives align rather than conflict.

The Fixed-Cost Problem

According to IHRSA, 69% of U.S. health clubs generate under $1 million annually.¹ The typical independent gym—CrossFit boxes, boutique studios, martial arts schools—operates with thin margins and volatile cash flow. A $20,000/month gym (roughly 100–150 members at $150/month) faces roughly this monthly cost structure:

• Rent and utilities: $6,000–$8,000
• Equipment and maintenance: $1,000–$2,000
• Insurance and permits: $500–$1,000
• Staff/coaching payroll: $8,000–$12,000

That leaves $2,000–$4,000 for the owner. Legacy gym software platforms extract their cut before a single member walks through the door:

Add standard card processing (2.9% + $0.30 per transaction through Stripe or similar), plus the platform's own markup, and a $20,000/month gym pays $700–$1,200 monthly for software and billing infrastructure. That's 3.5–6% of gross revenue before accounting for administrative time.

Under a 1% model, that same gym pays $200 monthly. The savings—$500–$1,000 per month, $6,000–$12,000 annually—represent a meaningful cushion for operators running on thin margins.

How SaaS Pricing Evolved (And Stopped Making Sense)

Flat-rate subscription pricing emerged in the 2000s when software delivery carried real marginal costs. On-premise servers, desktop installations, and dedicated support staff scaled with customer count. Vendors built tiered pricing to capture value from larger customers who genuinely cost more to serve.

Three developments broke this model:

• Cloud infrastructure commoditized server costs. AWS, Google Cloud, and Azure reduced marginal compute and storage costs to near-zero. A gym with 100 members generates almost identical database load to one with 1,000 members—the cost difference is negligible.
• Payment infrastructure unbundled. Stripe, Square, and Adyen democratized card processing, removing the primary justification for high platform fees. Software vendors no longer needed to build billing from scratch or negotiate merchant accounts.
• Mobile delivery eliminated overhead. Cloud-native, mobile-first software requires no on-premise hardware, no desktop installations, no IT support. The cost to serve a customer dropped 80–90% over the past decade. Subscription prices didn't follow.

Legacy vendors like Mindbody (founded 2001) and Zen Planner (founded 2006) built pricing models when these constraints were real. Their current pricing reflects business models optimized for high average revenue per user (ARPU), not operator success. When a gym's revenue drops 30% in a slow month, the vendor collects the same $500 fee. The operator absorbs the pain alone.

The Volume-Based Alternative

A 1% of payment volume model creates three structural advantages over flat-rate pricing:

• Lower barrier to entry. A gym with 20 members pays $20 monthly, not $300. Operators can test software, validate their business model, and scale without contract renegotiations or artificial seat limits.
• No growth penalty. Traditional tiers punish success—cross a member threshold, pay more, regardless of whether those new members are profitable. Volume-based pricing removes artificial constraints on expansion.
• Proportional cost burden. In a down month, software costs decrease with revenue. This matters because legacy software fees have outsized impact when cash flow tightens. A $700 fixed fee consumes 3.5% of revenue in a strong month but 7% or more in a weak one. Percentage-based pricing maintains consistent proportional burden regardless of performance.

The model also eliminates feature-gating. Most tiered platforms lock advanced reporting, API access, and multi-location support behind "Pro" or "Enterprise" tiers. Small gyms either pay for unused capacity or operate with deliberately limited functionality. A percentage-based approach includes full feature access because vendor upside comes from usage growth, not tier upgrades.

The Stripe Parallel

Stripe Connect demonstrates aligned incentives in payment infrastructure. Rather than charging platforms a flat monthly fee to embed payments, Stripe takes a percentage of transaction volume. The platforms embedding Stripe (including Gymsense) add their margin on top. Everyone succeeds when volume succeeds.

Gymsense extends this logic across the full software stack: check-in systems, billing, guest pass flows, product catalogs, staff management—all priced as a percentage of the economic activity they enable. This works because cloud infrastructure made delivery costs variable rather than fixed.

Why Incumbents Can't Adapt

Established vendors face three structural barriers to volume-based pricing:

• Cannibalization risk. Matching the 1% model would require slashing revenue from existing high-ARPU customers. Public and private-equity-backed companies have quarterly targets and investor expectations that make this transition economically impossible.
• Cost structure mismatch. Sales-led acquisition, enterprise support teams, and legacy infrastructure carry fixed costs that require predictable subscription revenue. Variable pricing requires variable cost structures.
• Feature bloat defense. Competitors have responded by adding modules, integrations, and complexity to justify subscription premiums. Most independent gyms use 20% of available features. The strategy increases implementation friction without solving core operational needs.

PushPress offers a "Free" tier for very small gyms, but this functions as a loss-leader designed to upgrade customers to paid plans. The underlying incentive remains moving customers up the pricing ladder, not growing with them organically.

What Gym Owners Should Evaluate

The relevant question isn't "what does this cost monthly?" It's "what percentage of my revenue does this extract, and does that align with value created?"

Specific evaluation criteria:

• What happens to my bill if revenue drops 30% next month?
• Am I paying for features bundled into tiers that I don't use?
• Does the vendor benefit when I grow, or only when I upgrade my plan?
• What percentage of gross revenue will software consume at current scale? At 2x scale?

A $20,000/month gym paying $700 for software plus platform processing markups ($1,100+ total) spends 5.5%+ of revenue on infrastructure. The same gym on a 1% model with standard Stripe processing spends roughly 3.5–4% total. The difference—$500–$800 monthly, $6,000–$9,600 annually—covers equipment upgrades, part-time coaching, or simply provides buffer against bad quarters.

The Structural Shift

Gym software exists to enable revenue generation, not to extract fixed rents. The shift from fixed-cost to variable-cost software mirrors broader cloud economics: AWS Lambda charges per execution, Snowflake per query, Twilio per message. Fixed monthly subscriptions were artifacts of pre-cloud delivery constraints. Their persistence in gym software represents market inefficiency, not sustainable value.

Independent gyms constitute 69% of the market. They operate on margins that can't absorb $700–$1,000 monthly software costs without real operational impact. Volume-based pricing aligns vendor success with operator success—the vendor earns more only when the gym earns more first.

This alignment isn't theoretical. It's the difference between a gym surviving a slow season and closing its doors. Between hiring a coach and running understaffed. Between upgrading equipment and making do with broken machines.

The vendors who recognize this will capture the next generation of independent operators. Those defending flat-rate models will retreat upmarket, serving ever-smaller slices of high-revenue chains while wondering why "churn" and "price sensitivity" plague their customer base.

Frequently Asked Questions

Is 1% pricing actually sustainable for software vendors?

Yes, when cost structures match the model. Cloud infrastructure carries near-zero marginal costs per customer. The key is efficient customer acquisition and retention through product value rather than contract lock-in. Stripe, AWS, and modern SaaS companies demonstrate this scales to billions in revenue.

Won't I pay more with Gymsense's 1% pricing if my gym gets very large?

At enterprise scale (>$300,000/month revenue), yes—a $500,000/month gym would pay $5,000 monthly at 1%. However, most independent gyms never reach this scale, and enterprise pricing for large chains operates under different market dynamics. The 1% model optimizes for the 69% of U.S. gyms doing under $1 million annually.

How do payment processing fees work with Gymsense's 1% model?

The 1% goes to Gymsense as the software fee. You pay standard payment processing separately—typically 2.9% + $0.30 per transaction for card payments through Stripe. Gymsense uses Stripe Connect, which offers competitive processing rates. Total combined fees typically run 3.5–4% of transaction volume, significantly less than legacy platforms charging monthly subscriptions plus their own platform processing markups.

What features are included in Gymsense's 1% pricing?

Everything. Unlike tiered models that gate advanced features behind "Pro" or "Enterprise" plans, volume-based pricing includes the full feature set: QR check-in, billing, guest passes, product catalogs, staff management, reporting, and API access. The vendor's incentive is to maximize product value to drive usage growth.

Can I switch from a flat-rate platform to Gymsense's volume-based pricing?

Yes, and migration is typically straightforward. Gymsense offers import tools for member data, and because there's no upfront contract or implementation fee, the risk of trying a new system is minimal. Most migrations complete within a few days.