A current spike of gym-going activity got me thinking about how expensive each visit really has been: If one calculated the total fees that my wife and I have paid for our dual-membership, and divided that by the actual number of visits, I suspect the number would be somewhat scary, and certainly nothing like what we original envisioned.

We've been dutifully paying a monthly fee to the local GoodLife Fitness Club for about six years now. We do this to maintain our super-A+++++ memberships, despite the fact that during this period we've gone intervals of over a year without having used our membership once (the lead-up and follow-up of having a child, and then another, really isn't conducive to that sort of thing). Yet amazingly we keep on paying.

And we're not alone. Of the people I know with gym memberships, all tend towards occasional spurts of highly-visible gym activity (e.g. just before summer), followed by extended periods of non-usage. Eventually something spurs them into action again (e.g. a particular milestone in their life -- like rolling over a decade marker -- or some other unavoidable sign like an expanding midsection) and again they frequent the gym for a month or so, and then it slides again. Repeat.

I don't have the numbers, but I suspect that the entire fitness industry relies upon this behaviour -- They know that at any time only a very small percentage of their active membership roster will take advantage of the facilities, so they can grossly oversell the facilities. For instance a gym might have facilities for 600 users a day, but they can easily maintain a paying membership of tens of thousands without any need for additional equipment or space.

So how do they get us? It's simple.

• Sign-up/Initiative Fees - When we signed up we had the option of paying a marginal sign-up fee with a high monthly fee, or a larger sign-up fee (something like $400) with a vastly reduced monthly fee. Of course we paid the larger initiation fee, as the difference between the two was made up in something like six months of membership payments. Who could choose otherwise? It simply made good financial sense.
  
  Now that we've made that "investment", however, we have a motivation to maintain our membership lest we have to pay it again. Taking advantage of human idealism, they know that most will think something along the lines of "Well next month I'll be able to go a lot more...so I'll just keep paying it lest I have to pay $400 just for cancelling it prematurely". It is a brilliant tactic to avoid cancellations.
  
  Many fitness clubs don't have the draw to earn such a large upfront payment, so instead their sign-up/initiation fee is more theoretical: They're always having giveaways and scratch-card contests where you save 95% off the initiation fee. The purpose is the same, however, given that users will convince themselves not to cancel given the "value" of the waived $500 fee (that they "won", just like 99.9% of the other members) they have in their current membership.
  
  
• The Psychological Challenge of Cancelling - These sorts of memberships never give you a simple website to go to, or an automated phone-number to call. Instead it's usually something along the lines of "Come on in and fill out the membership cancellation form". Not only is that a bit of a hassle, but psychologically one has to present oneself to basically admit defeat: "Here I am. I'm lazy, and I just can't cut it or make the commitment like a responsible person. Where's that cancellation form?"
  
  
• The Frailty of Human Motivation - Gyms know that a lot of people are idealists about human motivation, thinking that the easy part (e.g. getting a gym membership, or buying a bunch of cans of paint, or setting a New Year's resolution) makes it more likely that they'll do the hard part (for instance actually going to the gym regularly, spending a weekend painting, or laying off ice-cream like they promised themselves). Once they've been snared into the gym membership trick, people delude themselves into believing that having a gym membership makes it more likely that they'll actually follow-through by going to the gym regularly, despite all historical precedent. It's a powerful force in keeping people paying a toll to feel that they've partly accomplished that task.
  

In there, somewhere, is a lesson. Whether it's a lesson on how to take advantage of people, or a lesson in saving yourself money, is up to the reader.

If you're in the process of considering a gym membership, for instance, check if your local facilities have day-rates (remarkably few do because they know it would undermine their operation), and if you find a good one then commit yourself to paying the day rates instead of a membership for the first several months. While a quick calculation will convince you that day rates are uneconomical compared to a membership, you'll probably be in for an eye-opener several months down the line when you look back at how often you really went.

If you provide a regular service to customers, take advantage of the gym-technique and publish a "sign-up" fee but then waive it for your "special" customers (e.g. all of them). Presuming the service is actually of value, I'm sure the retention rate will be incredibly high.