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The Freakonomics of Gym Membership in India

by Globetrooper Todd | 13 Responses
Freakonomics Indian Gym Membership

Part of my love for travel is seeing how the world really works. If there’s one thing I learned quickly in this regard, it’s that prosperity back home is based on anything BUT better ways of living.

Even simple tasks like joining a gym can polarise what we know. In India, one of the cheapest countries on Earth, the cost of gym membership exceeds most advanced countries. You’ll be surprised to know it has nothing to do with fleecing foreigners and everything to do with one of the Seven Deadly Sins.

Pollution You Can Cut

Lauren and I prefer to train in the great outdoors. We find training indoors to be an exercise in utter futility. How crazy has the world become that we spend hours running on a machine that goes nowhere while staring at a wall? It really blows my mind, but that’s another topic for another day.

Given lauren’s looming 1000-mile trek across the Gobi, and air pollution in Bangalore you could cut with a knife, we opted to train in a gym. Who knew it would become our largest expense by far.

Bad Tourist

“4,000 per month”, said the lady at Gold’s gym in Bangalore. I quickly converted the currency in my head. “That’s about $80!”. Lauren and I were shocked. This is a country where samosas costs as little as 8 cents, which means I could buy 1,000 samosas for a month’s membership.

The lady returned with our forms and like a bad tourist I said, “Excuse me, that’s more expensive than almost anywhere on Earth; this is India.” She smirked with as much politeness as she could muster.

“Yes, but in India, a gym is a luxury, and our members actually visit.”

A Product of Prosperity

Huh? Our members actually visit… what does that even mean?

Then it dawned on me. Many people back home have gym memberships, but rarely, if ever, visit. If everyone with a membership actually visited, gyms would be way over capacity and management would either need to rescind memberships, increase prices, expand facilities, or drop service levels.

So in effect, the prices we get in the West rely heavily on one of the Seven Deadly Sins: Sloth. Sounds crazy on the surface, but I guess slothfulness is a product of prosperity.

In India, when most people fork out that sort of money, they tend to take it more seriously and actually use the service they’ve paid for.

Comparing Countries

I’m going to get myself into some trouble here, but what the heck. Considering the economics of gyms and my latest soundbite (slothfulness is a product of prosperity), what do these numbers suggest?

  • Average gym membership in India = $80
  • Average gym membership in Australia = $50
  • Average gym membership in Canada = $45
  • Average gym membership in US = $35

Don’t let the numbers of the developed countries fool you. The difference between Australia, Canada and the US is mostly to do with higher costs, not so much level of slothfulness. India’s numbers are also deceiving, but in the opposite direction.

Worse Than It Looks

In India, labour, equipment and land is much cheaper. So given cost of living comparisons, an Indian gym membership should be about $10/month. But because it’s $80, that suggests gyms in India need to account for up to 8 times less membership waste. Less waste sounds good right? Wrong, if you’re in the Indian gym business.

This means:

  • Their facilities must be 8 times larger to support the same member base
  • Operating margins would be 8 times lower if they charged the equivalent amount
  • Basically everything is multiplied by 8 in the wrong direction

So there you have it, all else equal, Indian gym memberships are so expensive because Indians tend to use the services they pay for. Bizarre concept, isn’t it?

Not Just Gyms

A recent study in the UK found the following:

The average adult in the UK spends £1,213 a year on a combination of gym memberships that go unused, health foods that they throw away, and clothes they buy and never wear.

That number comes close to the GDP per capita of India. Yikes!

Posted in Featured, India | July 3rd, 2011

13 Responses to The Freakonomics of Gym Membership in India

  1. Hi Todd,

    You’re rocking it with these “intellectual” articles (like the one about travelling on equity), they’re like brain candy because in the last seven months of travel the analytical side of my brain hasn’t been stimulated much.

    Anyway, back to the topic of things costing more because people actually use them. Another example I can think of is insurance, where the premium cost would go way up if everyone were to “use” the insurance (i.e. makes a claim). I believe that’s why something like disability insurance costs more than life insurance even though the payout per life insurance is much higher, because disability is more likely to happen than death (for a young person, anyway).

    - Lily

    • Hey Lily, many thanks for the support. I like writing these posts (travel on equity is one of my faves), but sometimes I’m not so sure about the audience. So it’s great to hear you’re liking them too.

      Good point about insurance. Travel insurance is probably even more expensive than disability. I guess because people claim for stomach bugs and camera gear.

      I’ve been meaning to ask, are you going back home for good after the year is up? What’s the plan?

  2. Todd I think a lot of it comes down to macro economics. Your putting the numbers out and there right but it might also have to do with the facts of this:
    1) The gyms were nice, yes? Esp for India, they could be considered over the top, which means that new equipment set is a lot more money to import exc exc.
    2) Because of the nice equipment and smaller numbers of members who pay, they have to charge more to stay open. Yeah labor is cheap, insurance I’m sure in India is nothing compared to say the USA but it’s still a numbers game at that point.

    If I have a gym that has a 1,000 members per-month (regardless if they show up or not) I can charge as little as $40 per-person and afford to keep the standards the same. If say you only have 200 members per-month, then you’ll have to raise the costs to $80 to keep it going bc you have less capital coming in. On top of that, nothing in Bangalore is cheap for the most part and yes a gym is a luxury in India.

    Colombia can costs the same depending on what gym you go to. It kind of blew my mind (and yes Colombians love to work out, esp the ladies) bc costs of living there is much cheaper then Western countries.

    wait, it’s late, maybe i’m the one not making any sense! lol :)

    • Hey Troy, yeah your 2) is the point I was trying to make. They have to charge more because they can support smaller numbers with more people using their memberships. But like you also suggested, it’s just pure speculation on my part. :)

  3. Todd, you bring up a very valid point in this article about the incongruousness of travel at times. In South Korea, golf is considered a luxury sport – only for the rich. In fact, certain memberships at exclusive clubs have to be purchased at a price similar to a mortgage – they increase in value over years.

  4. Hey Todd,

    A couple of points…. real estate in metro’s and bangalore is quite expensive, much more expensive than some of the developed countries and I dont think there are too many regional gym equipment manufacturers, most of them I think are imported… so that justifies things a little

  5. Great article, and interesting too! I was planning on jogging outside and doing yoga videos on my laptop for a lot of my travels, but I can see where one wouldn’t want to jog in the middle of a polluted city. Though when I’m home (US) I pay close to $150 for my gym, because it includes tennis, so I guess I wouldn’t balk too much at $80. ;)

  6. I always get confused whether the prices you quote on the site are AUD or USD?

    • Hi Keith, I know it’s not very scientific, but since AUD, USD and CAD are relatively similar, I just use the universal $.

  7. Precisely the reason why Indians need to embrace Yoga!!…no need for a gym, no need for even a yoga studio unless you crave some company, and no need for performance apparel and training shoes! And it is so much more beneficial for the body and mind. When will India wake up to its obvious treasures!! People in the US are gobbling up yoga like there’s no tomorrow, and Indians are aping the western ways. Sad indeed!

  8. Hmmm.. looks like you hit the costliest gym in the town and “averaged” that price. Come again and I can take you to gyms with similar facilities for half the price. So that means the utility (only workout, nothing else) gym would be around 500 rupees per month.

  9. While I was browsing on how to open a gym business, I came across this 1 year old article of yours. I agree with Umesh. There are a lot of gym in india with all the best workout equipments. Well… you may not find spa or jacuzzi for say… but yeah these gyms charge as much as from $10 – $20. I myself pay around $15 per month. Ofcourse, there are certains gyms that charge hefty amount just because they have wide range of equipments, huge area, and not to mention a big “brand” name.

  10. As Umesh said, Gold’s is one of the costliest gym in India at present..

    In fact after reading several articles written by you, I think that most of the problems you faced in India (internet, renting, gym membership fee) could have been avoided with some research.

    However, it takes around a month or two to get used to a place and tackle the underlying problems. So, all I can say is welcome aboard. :)

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