Episode 325: Your Classes Are Full… So Why Aren’t You Profitable?

Busy but Broke? How to Calculate True Profitability in Your Studio

Podcast: Female Empowered Podcast
Host: Christa Gurka, PT, Founder of Fit Biz Strategies

Episode Summary

Are your classes full, your schedule packed, and your studio constantly busy—yet there’s still no money in the bank?

In this episode of the Female Empowered Podcast, Christa Gurka breaks down why utilization does NOT equal profitability and walks studio owners through the exact math needed to understand their real revenue quality. If you’ve ever said, “My studio is busy, so why do I still feel broke?”—this episode is for you.

Christa shares simple, real-world studio math (no MBA jargon required) to help you calculate profit per class, profit per hour, and profit per room, so you can quickly identify which services are making you money—and which ones are quietly draining it.

You’ll also learn why unlimited memberships often crush margins in boutique fitness and Pilates studios, how to spot profit leaks in your schedule, and what changes you should make in the next 30 days to protect your business.

What You’ll Learn in This Episode

• Why high utilization can still result in low (or negative) profit
• The difference between revenue and revenue quality
• How to calculate profit per class step-by-step
• How instructor pay and operating expenses impact real margins
• What happens financially when classes aren’t full
• Why unlimited memberships often destroy profitability in Pilates studios
• How to identify your minimum viable class attendance
• When to raise prices, cut classes, or restructure memberships
• How to think like a CEO using real data—not emotions

Key Topics Covered

• Revenue vs. revenue quality
• Gross margin vs. operating costs
• Profit per class and per hour calculations
• Membership pricing guardrails
• Unlimited memberships and margin erosion
• Utilization metrics that actually matter
• Strategic pricing for intro offers
• Making fast, data-driven business decisions

Action Steps from This Episode

After listening, take these steps:

1. Calculate your profit per class or per hour
2. Review your memberships—especially unlimited options
3. Identify one service to raise, cut, or restructure in the next 30 days
4. Stop relying on “busy” as a success metric and start tracking profit

Want Help Running the Numbers?

If you want support breaking down your studio math and making smarter pricing and scheduling decisions, you can work directly with Christa through her coaching programs and strategy calls.

Learn more at christagurka.com and visit the “Work With Me” tab.

Listen + Watch

Listen to the episode on your favorite podcast platform
 Watch the full whiteboard walkthrough on YouTube for a visual breakdown of the math

Remember: Busy doesn’t pay the bills. Data drives decisions—and decisions drive dollars.

Transcript

Christa Gurka | Fit Biz Strategies 0:51

Hey there everyone. Welcome back to another episode of the Female Empowered Podcast. I'm your host once again, Christa Gurka, and today's episode is for studio PT owners, business owners who always say, my classes are full, my schedule's full. this business seems good and busy, but I still feel broke and I, the money in the bank does not seem. Equivalent to the amount of work we're doing and to the fact that our studio seems really busy. So this, came up again a lot in our, community and even in our inner circle conversations of like, our utilization looks great. I just don't understand why I have no money in the bank. So today is gonna be an episode that I'm gonna give you. I feel like I do a lot, some real actionable, tangible ways that you can figure out the real profitability. Of your services, and I'm gonna do a little demonstration. So I know most of you are listening to this as it's a podcast, but I also have a YouTube channel where you get the video of the podcast. so you can see me and all my messy and, Ridiculous glamor of which is a sweatshirt and my hair up and a ponytail. But today I'm actually gonna do some formulas on the my whiteboard. And so if you want, it's hard I think, to listen to math. So if you, after you listen to this, if you take some time, maybe set a reminder and go to my YouTube channel. You can watch the demonstration so you can see the numbers in real time. Okay. So, one of the things that utilization is a great metric. I Utilization. I to use utilization. However, your utilization has to equate to profitability. So what I mean by that is utilization is a great metric to use and if you're not sure what utilization is, it is the amount. Of schedule that is utilized. So if you have 10 spots and eight are filled, you have an 80% utilization rate. So it's a great thing to track as long as you know that what you're charging and what it costs you to deliver that service creates profit because busy being busy, tongue twister, being busy is not the same thing as a healthy, profitable business. Busy is not necessarily productive. You guys have all heard this before, so what we're gonna break down today is, and I hope it's in a very practical way for you, but we're gonna break down the difference between Rev, straight revenue and revenue quality, okay? How to calculate your profit per class, and then also how to calculate profit per room or profit per hour and exactly what to do, whether you need to raise, cut. Restructure services pricing in the next 30 days. Okay. So you can make these decisions and then you just have have to act on them quickly. Okay? So there's gonna be not a lot of MBA jargon, maybe a little bit, but real studio math that you can, after you listen to this podcast. You can do this yourself with your own numbers. That's what I'm really about. I'm about teaching you real actionable things, not a bunch of fluff, but that you can take back to your studios and your businesses and your clinics today and make changes. Okay, so revenue versus revenue quality. let's talk a little bit about what that means. So revenue is simply money that comes in the door, anything you sell. But if you. Take a hundred dollars in and it costs you a hundred dollars,$120 to deliver that service, then the revenue quality is not great. So revenue quality. What revenue quality looks for is the consistency of the revenue, the predictability of the revenue. The repeatability of the revenue and the profitability of the revenue. So something, again, let's say that there's a, a class that you're oh, it's full all the time, but you have to pay your instructor more than what you're bringing in to teach that class. Then it's not profitable regardless of how full it is. Right. And now, there are definitely times where it's okay to run something that's not profitable for a marketing strategy or stuff, but that's not what we're talking about here. Alright? So real life examples. Let me give you a real life example. You have business A that brings in$40,000 a month, but that 40,000 is consistent of drop-in rates. Maybe so one-offs, maybe discounted evals or intro sessions or things that. maybe ClassPass or other third party aggregators. Maybe some free or gift cards or stuff that. So they're still bringing in$40,000, but that's the type of revenue they're bringing in. Then you have Studio or Business B that is also bringing in$40,000, but that$40,000 is coming from recurring membership models. It's coming from people that have bought packages, so they've prepaid for services that have expiration dates. And they're coming from services that have high profit margins. Think something that costs you very, very little to service maybe digital products, virtual sessions or maybe, online Zoom classes, which you can have a hundred people in and one person teaching. Okay? So think of that. So two different businesses, both bringing in$40,000. One is much more the, the. Quality of the revenue is better than the other one. Okay, so let's again talk about how to calculate now your price per class. And this is something that you can do today. And this is where I'm actually going to use the whiteboard. Okay? So what you're gonna do here, and hopefully you can actually let me scoot myself out of the way. Is this gonna work? Okay. Sorry if you're listening. This is me trying to get my whiteboard in place. Okay. So let's say that you charge, let's do a class-based model first. Okay. And you charge 30, or the average cost is$30 per class. Per person. Okay. And let's say you have eight reformers. Okay, so if you fill a class, you generate$240 per class, right? I mean, that math makes sense. Okay? So now what you wanna do is you wanna subtract what it costs for you to provide that class. So the first thing you're gonna subtract is what you pay your instructor. So for today's. Example, I'm gonna use somebody that just pays their instructor a flat rate, which I don't necessarily recommend for group classes, but it's just easier on the math. So let's say you pay your instructor$40,'cause this is gonna be great, easy on the math. So after you pay your instructor, okay, now you're left with$200. So this number here is called your gross margin.$200. Now what that number is, which let me do this math for you. Exactly. So the math for that is then that growth margin for you Okay. Is 85%, which is really great. Phenomenal. Love it. Okay, so that's really good now. But what you also need to take into account is, so this is direct cost. What you also wanna take into account are your, operational fees. So let's say that all of your operational fees, so that's your admin person, your rent, your marketing, your, I don't know, all the little, so you can look at your p and l and you can see how much your, your recurring expenses are each and every month. Okay? So let's say your rent is$4,000 a month. Your admin payroll is maybe$3,000 a month. Maybe you spend$500 a month on marketing, and let's just say you have another thousand dollars of operational expenses. Okay? So that total. Is$8,500. Okay, so now again, we're talking about classes. So$8,500 a month, and let's say that you have 20 classes on the schedule a week. Okay? 20 classes on the schedule a week, or actually let's say, let's say, yeah, 20 a week, and you multiply that by 4.3. So that's how you 86 a month. Okay. And then you divide 8,500 by 80. Let's just do 85, so it's an even number. So 8,500 divided by 85 classes. Okay, so it's a hundred dollars per class in additional operational fees. Okay, so now if you then subtract, you're left with 200, if now you subtract 100 here. Okay?'cause that's what it costs you. So you're left with$100, okay? And then what you need to decide is, is this profitable enough for you? Maybe it is okay, but if you're left with$12, that may not be profitable enough for you. Okay, so, and this is a really good number for you to use with your team. When your team is I don't wanna work for$40, or I feel I need more than$40, and they wanna make 50, 60, 70, you can say, listen, this is what it costs us to run this class. So if you wanna make higher, we need to maximize. Now this is, if the class is full, what happens? Okay, what happens? Now let's take this whole number. Let's take this whole example and say what happens if the class only has four people in it? So you're now you're at$120. Okay. It costs you a hundred dollars to run the class. No, ma, no more. So then now you're at 120 and you still have to pay your instructor 40. Okay, I'm sorry. So 120 minus a hundred is 20, and now you have to pay your instructor 40. Guess what? You're at negative$20. And this is what I talk about when you're losing money with this class. Okay? So this is where it's really important to be able to look at your numbers and know yes, this service is profitable, or No, it's not profitable, and why? Okay. I know if you're listening to this, you probably zoned out. You're what the fuck, Krista? can, can you make this any more difficult while I'm listening to if, if your brain is oozing out of your ears, no worries. Okay, so now if you're an appointment based same, you just do the same thing. How much do you bring in per hour and how much does it cost you run that hour? Is that surface being profitable? And is it not? Okay, so you have your fixed cost, and then you have your operational costs. So you have your gross margin, which is your fixed cost of direct service to your service provider, and then you have the rest of the operational costs. Now. As you go further along in business, I think this is the simplest way to do it, just session by session, because you're thinking, some of you might be thinking, okay, well what happens if I have two classes running at a time, or if I have a class in three privates, or I can do three physical therapy visits in one hour? Yeah, that's great. That's when we talk about. More how to stack those services intelligently so that your schedule works harder, your schedule does, so you're more profitable per hour. And that's something that we actually review in the accelerator. And you can really talk in this. Way you talk about, this is a little bit of the NBA jargon, but it's, you talk about contribution margin and things that. So you can really figure out this is what we need to generate per hour of, revenue generating hour in order to be hit our profitability. All right, so let's now move on. Okay. Here's another example of how people leak profit out of their businesses. This example is specifically for class-based, services. Okay. well, I guess it could be for appointment based, but usually it's not, for class-based services when you have unlimited memberships, okay. Because in our, I, I'm a big proponent of membership, so don't get me wrong, I'm a big, big, big proponent of memberships, but because in our industry we have usually, especially if you're talking about Pilates, I wouldn't say this for yoga or maybe even spinning if you have 40 or 50 bikes in a room. Okay. I would say this for a, a class-based business, if you can, Pilates, if you can only get 6, 8, 10 reformers in your studio, if you have an unlimited membership. Even if it's pricey, even if it's$400 a month. Okay. Which is expensive, even if it's$400 a month. Okay? If you have no guardrails on that, they can, it's truly unlimited. And I'm speaking from experience'cause this happened to us in our, in our studio. Okay? Truly unlimited. The people that usually buy, those are the people that are gonna be coming over and over and over and over and over again. So what if they can take multiple classes a day and you're open seven days a week? So what if this person comes seven every day of the week? Okay, so let's say they come 30. Let me get my whiteboard out again. Let's do our math here. Okay. So if they come 30 times a month, okay, and they pay$400, right? So you divide 400 by 30. I have to get my calculator out'cause I'm not good at math in my head. 400 divided by 30. Okay? They're paying$13 per class. Okay. I can tell you right now at$13 a class, unless you have no rent, and your expenses are extremely low, this is not profitable. No, no, no, no, no. Okay. Now let's say that they come every day and let's say that twice a week they come twice. They do back to back classes. Okay? so now you have. Eight additional sessions. Okay, so now this is 38 classes. Okay? So they're doing 38 classes a month. Okay? So now you have 400 divided by 38 classes a month. Now you're, they're paying 10 50 a class. You cannot even buy a fricking acai bowl or smoothie for$10 anymore. Okay? A venti at Starbucks is 10 bucks. So this is in no way. So this is how Unlimiteds crush your margins. So if you're gonna do Unlimiteds, I don't recommend unlimited. I recommend even if you're doing 30 visits. Even if you're saying 20, okay. And then they can buy per class if they wanna do more. But it's really hard in a Pilates industry to have unlimited memberships. I love 4, 8, 16, 20 24. Okay. This is basically you are paying them for the privilege of serving you, of serving them, sorry. Okay, so you would have to charge for a truly unlimited, especially when people, so a lot of, you're well, the whole idea is that they don't come. I guarantee if you look at your numbers, anyone who's paying$400 a month, 99% of them are coming every day, if not twice a day. So you're probably losing money on them. You think you're gaining money because you're oh,$4,000 a month. For$5,000 a year and I have 10 people, but you're probably losing money on price per service. Okay, so. As I mentioned before, what you can do when you're more sophisticated, and I don't wanna overwhelm you, but what you can do when you're more sophisticated is figure out the profit per room, right? Which is if you have a group classroom, if you have a private room, if you have a PT room, if you have a massage room, how many services can actually operate at one time, and then you can figure out how much does each room need to generate per day? So then you can figure out, wow, is this group class room. For me, the ability to have two classes, is it really generating profit or not? Could I put something else in there that's gonna generate more profit? So an example would be if you have a reformer room and a mat room and you think that it's great because you can have two classes at the same time, but that mat room is only filled three hours a day and the. Profit margin of those classes is not great. You might be able to divide that room and put two private rooms and do privates and have much more revenue coming in and profitability maybe. I don't know if that's true or not. Alright, so that's a little bit more sophisticated, but it really is if you're looking at it from a CFO lens, And that's what we do in our Elevate to Exit program and even in our accelerator program. So this kind of math is something we do in our programs'cause it takes a little bit more nuance and I don't wanna overwhelm anyone. Okay, so once you do these exercises and you figure out the revenue quality and are those services profitable or not? The next thing you're gonna do is. Decide what your actions are. Decide whether you're gonna raise prices, cut classes, restructure your memberships, and I want make the action happen fast. If the numbers are not lying to you, make a decision. If you're looking at your unlimited and you're holy shit, she is right. Make a change. It sucks to make a change. It sucks to go to your clients and say, we have to restructure this, but it's what a responsible business owner does. Okay, so one of the things you can do really well is strategically price. Your intro offers with the right pricing, you don't want bargain shoppers, okay? We don't want bargain shoppers and bargain shoppers usually don't, convert into long paying members. We, I've talked about this a lot. We did a study for 18 months on our intro offers. One of the things we did that made it. Significantly, better at converting clients was we increased actually the price of the new client offers. So what we had initially was a buy one, get one. I'm not a big believer in first class free. Okay? Unless you're a yoga again, unless you're a yoga studio and you can fit 40 people in your room. We did buy one, get one. And what we were finding was we had a lot of visitors, a lot of one-offs, a lot of people that just wanted to try it, buy the buy one, get one, and it made our conversion rate look really low. So what we did was we actually changed it from buy one, get one, I think it was$49 or no, maybe it was buy one, get one for$39.'cause our drop-in was 40. And then we made it three group classes for 79. So someone who's just visiting is not gonna pay for two extra classes that they're not gonna use. So, and increasing that price point put us closer to the next available package. So our four class per month class was 1 29, so 79 to 1 29 is not a huge jump. Alright, so price your intro offers accordingly and make sure that they're. One at a price point that the jump to the next class, if you do$75 and then your next lowest offer is a 10 class card for three 50, that's a big jump. Okay? And that's a big difference for people. If you're attracting someone that can pay$79 and that's a attractive to them, three 50 might be too much. Okay. The other thing is look at your high demand classes and figure out what you're doing well during those times and look at your lower attended classes and figure out, figure out what you can do. So classes that don't hit a minimum should be discontinued unless they're serving another Purpose. Unlimited membership should really be looked at, especially for Pilate Studios. Okay. And try to limit the amount of discounting you're stacking in your packages and pricing. So make sure, so this is how you want, you know, okay. I said, at the first formula, if you have, it costs you$240,$200 to run this class with is your instructor. The share, the pro rata share of your operating expenses, and you're bringing in one 50, you are losing money on that class. So you know, your minimum is you need to have six people or more. What does this mean? What can you do to improve that? Well, you can either raise your prices, okay. You can adjust your expenses. You can work on improving your utilization. So instead of having. Five classes that each have three people. Maybe you change it to three classes that each have five people. Those are gonna be a little bit more profitable for you. So this is something that's really important to look at. And if you're like, oh my gosh, my brain is gonna explode again, this is where you just ask for help, ask for help. There's many, many people out there that are willing to help you that have this knowledge and skillset. I just happen to be someone that lived it. Day, day in and day out for almost 20 years and got to the point that we were generating well over a million dollars in revenue annually. I was paying myself close to a$200,000 a year salary, and we were generating between 15 and 18% profit after my salary. Okay. If you took my salary out, we were over 30% profitable. So you can do it, but you have to know the numbers first. You have to look at objective data first so that you can make the right decisions. And the way that we go about this with business owners is. We have our community membership, which also you have the ability to schedule one-on-one strategy calls with myself at a significantly discounted rate, which we can, which we can grow over this stuff, or you can bring them up in our group coaching calls if that's something you're interested in. Being a more educated business owner so you can make more educated decisions. And like they say, data drives decisions and decisions drives dollars. That's what I want for you. I want you to look at your data to make better decisions so your better decisions gives you more dollars. That's what I want for each and every one of you that listens to this podcast. Alright, so here's your action steps. After you listen, you're going to. Look at your profit numbers, okay? Calculate your profit per class, look at your memberships, adjust them as necessary, and then identify one thing that you can either raise, cut, or restructure in the next 30 days. If you're interested in joining one of my programs or booking a call with me, head on over to my website, christagurka.com. You can check out the"Work with Me" tab, and there's all sorts of information on how you can work with me over there. And until next time, my friends, bye for now.