New Gym Business Model: Work Out More, Pay Less

At traditional gyms, you pay the same dues whether you visit the facility twice a day or twice a year. This makes a lot of sense for gyms, but doesn’t give you a financial incentive to actually go. But what if you had one?

Behavioral economics tells us that people are more motivated by short-term effects than theoretical long-term ones. Losing money now is a better motivator than the promise of maybe losing weight in the future.

Gym-Pact, an experiment run by two recent Harvard graduates, takes advantage of this. The program is intended to find out if “motivational fees” will help customers keep to their workout schedules. Groups of exercisers at two different gyms receive a free membership–if they keep to their workout schedule. If they don’t, a $25 fee applies for every week that they slip up.

Harvard grads turn gym business model on its head; fitness plan members pay more if they don’t work out [Boston Globe] (Thanks, Patrick!)