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Don’t Know Your Per-Student Value? Learn How to Calculate It!

Seems like there are numbers that you need to know for everything that involves making your gym better – and they are all important. But one number that you may have never figured out could really help you in making business decisions – especially when you’re trying to figure out if you’re investing the right amounts in the right things to get the returns that you want.

In marketing, it is critical to know how your per-student value! How much is each new student worth once they sign up to take class? How much do they pay you over the entire course of their time with you?

Once you have this information, you can figure out how much you should reasonably invest (in marketing and advertising) to acquire this new student.

Before you start to calculate, you need to know how much it costs you to acquire a new lead that comes in to take a class or inquire about your gym.

This info will allow you to calculate your lead costs:
“X dollars in advertising can generate X number of leads”

And new student registration conversion:
“X% of the leads that call or walk in become new students”

And the new student average lifetime value:
“For every new student I sign up I can expect to make X dollars of revenue over their life as a client”

The scenario you want to make sure never exists is the one where you’re paying more in advertising than you’re capturing in revenue over time. If your calculations reveal this scenario, change they methods you’re using to market and advertise.

Your goal should be to pay for the cost of your leads as quickly as possible. In fact, the best possible scenario is that you have your cost per lead and cost per acquisition low enough that it is paid off with the new student’s first payment to you.

And then – of course – the rest (minus any other costs) is profit!

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