Losing Money to Be a Tycoon

Pei Qian was even happier after Assistant Xin was done with her explanation.

As expected, the fitness industry was promising!

What was there to worry about since there were so many successful stories of failed gyms?

Pei Qian nodded. "Hm, let me give it some thoughts.

"By the way, are there any newly opened gyms nearby? Or any ready-made venues that can be used directly by setting up some equipment? Look for them, save time for renovation by using money."

Pei Qian wanted to open the first gym as soon as possible and see what would happen.

He would open a few more if everything went well so that he could lose more money in this cycle.

It could also stop loss quickly if he accidentally made money and think of other ways.

Assistant Xin considered it for a moment. "I do know a few… high-end gyms nearby. However, they might not necessarily be willing to transfer ownership. I'll get someone to ask."

Pei Qian began considering his plans for his gym after Assistant Xin left.

He tried to digest and absorb as much 'gym failure experience' from Assistant Xin's investigation report as possible. He would integrate all the characteristics of failed gyms into one!

Pei Qian knew very well that Tengda Corporation had grown rather big and had abundant funds. He would definitely invest a lot no matter which industry he were to enter.

The large amount of initial investment would increase revenue pressure, but it will also be easier to attract customers, especially high-quality customers with high net worth.

The difficulty of losing money was getting higher.

Therefore, he had to steel himself and not be led around by fate if he wanted to lose money!

He shouldn't think 'I can lose money if others can lose money if they do this'. If he really thought so, he would probably make a dogmatic mistake.

According to the analysis of the report, the fundamental reason why many gyms did not make money lied in the relatively large investment in the gym itself such as venues, equipment, labor, or other expenses.

Selling membership cards alone could also get good benefits if it was in some developed countries where people generally have fitness habits. It would then enter into a virtuous circle.

However, due to the economic development level and people's perception in China, most people had no fitness habits. Moreover, they were not willing to spend more money. It would be difficult to make money by selling membership so they must sell private training sessions.

This idea would be the same as the domestic Krypton Gold Online Games. First, use low prices to attract more people into the gym as much as possible and then pick out those richer ones.

There were three kinds of people in the gym to put it bluntly:

The first were the hot-headed lazy bums. They were those who felt the excitement for a short while and would cool off after a while.

People who did not need money and wanted a healthy body. They were afraid that they would not be able to sustain themselves so they signed up for a private training session to supervise themselves.

Those who could persist by themselves.

The gyms like the first two types of people, but it was such people that would resist the offers from the gyms.

However, there were too few of such people around.

The gym mainly earned through membership fees from the first type of people while they earned through private training sessions from the second type of people. They attracted both rich and poor.

Therefore, Pei Qian thought for a while and decided to do the opposite.

It would be the same as the previous idea, to cut expenditures and reduce resources. On the one hand, he had to increase daily expenditures as much as possible; on the other, minimize their target user groups and make less money.

First, do not earn anything from the hot-headed lazy bums!

Other gyms sell half-yearly cards and annual cards. The longer the time, the more discounts there would be. That was to take advantage of their hot-headed characteristics and use discounts to encourage them to apply for long membership cards.

However, these hot-blooded people generally could not sustain this effect. The longer they set it to be, the more they lost out.

Pei Qian decided to calculate the price for the day!

Other gyms are members who sell for half a year or a year and count whether they come or not. The membership that Pei Qian wanted to sell would only be deducted based on the day the customer came.

It was also impossible for the other gyms to refund the membership fees. They could only transfer the membership to others, which was very troublesome. The gym that Pei Qian wanted to open would allow the users to withdraw their balance in their accounts at any time.

This way, the hot-headed lazy bums would not be able to give the gym more money!

Next, he would not earn a penny more from a whale!

The other gyms were frantically selling private training sessions, providing better services for high-net-worth users to obtain greater profits.

Pei Qian decided not to sell any private training sessions.

All personal trainers would have the same benefits and wages and would not earn commissions.

The personal trainers would be on standby all the time. They would answer any questions the clients had. They would also let them know if they see clients doing something wrong. However, they would never talk too much, let alone promote any courses.

Want to find an exclusive personal trainer? Want to pay for a private training session?

Sorry, we do not offer one-to-one services.

The more Pei Qian thought about it, the more satisfied he was.

This plan would shut out most of the clients' money.

The hot-blooded would first be dissuaded by the high price. Even if they applied for the card on a whim, the balance could be refunded at any time.

Those who were rich and wanted one-on-one training would not be able to find such services here.

Those who really understood fitness would definitely choose cheaper gyms as long as there was equipment. There was no need to pay extra to come to this gym.

The only people who were interested in such a model would be those who were slightly affluent, enthusiastic about exercise, and dismissive of hiring private trainers.

However, the current level of economic development had not reached that lifestyle level, and Jingzhou was a less developed second-tier city. The number of this group of people was small, and it was unlikely that the gym would be profitable.

In this way, the gym would become a pure loss. The more he opened, the more he would lose!

Of course, the system was not so foolish.

The requirement of the system was that this industry must have theoretical profitability. The profitability could be reduced to a certain extent if it could earn him a certain reputation.

Pei Qian was going to provide a better fitness environment so he naturally had to set a higher price.

After consideration, Pei Qian decided to set the price much higher than the minimum price allowed by the system.

It was likely to result in small profits but a quick turnover if the price was set based on the lowest price allowed by the system.

If he were to continue increasing the price to a level that most ordinary people couldn't bear, he would be able to dissuade the target group directly from the price!

At present, the gyms in Jingzhou cost about 2,000 yuan per year, and all Tengda employees signed up for it.

That was a relatively high-end gym. A cheaper one could cost even less than one thousand yuan.

According to the mid- to high-end standard of 2,000 yuan per year, it averaged to about five yuan a day.

However, it was obviously impossible for most to go to the gym every day. It was good enough if most of them patronized once or twice.

According to this frequency, the real price per day would work out to about 20 yuan a day.

It would be more worthwhile with a higher frequency of patrons.

Since Pei Qian had decided to use better equipment, create a better environment, hire better coaches; he would use the price to further dissuade consumers. He would set the daily price at 40 yuan!

He should add on to the price, considering that clients would need to spend more money to enjoy personal training in other gyms which could be enjoyed here for free.

Of course, the private training sessions at the other places were one-to-one training. This gym would be a one-to-many so the price could definitely not be set too high.

Pei Qian considered it for a while and raised the price to 50 yuan!

This price should be able to dissuade many people, right?

If one used this premise to calculate how much they had to pay if they visited the gym twice a week, it would cost them 400 yuan a month and 4,800 yuan a year.

If it was more extreme—going to the gym four times a week, then this amount would double at 9,600 yuan.

It was a very outrageous price for the local consumption level in Jingzhou in the year 2011.

It should be an unreasonable figure compared to the price of the other gyms.

"Hmmm… it seems like it was not enough. Is this all I can do to lose money?

"Let me think again."

Pei Qian felt that there was still a certain chance of failure with just the current setting of doing the opposite of these profitable gyms.

What if some people felt that this gym had a conscience and applied for a 'secondary' membership card?

Or what if a big bodybuilder were to come to Jingzhou temporarily and didn't want to apply for a long-term fitness card and applied for a short-term card?

It seemed as though it would still be profitable if there were enough people who came once in a while and the daily flow of people was guaranteed.

Therefore, he had to think of ways to persuade these people to not join them as much as possible!

It was impossible for them to mandate the application of a long-term card. It would be contradictory to the previous rules so he had to think of other ways.

Pei Qian considered it for a while and decided to implement a 'check-in system', using a special method to achieve this effect of persuading clients to leave!

When registering their membership, different training programs were formulated according to each person's physical fitness, work, and life status.

For example, they were required to use the gym three or more times a week; eat and drink in accordance with the prescribed content; and make it mandatory for them to eat only healthy meals launched by Fish-Catching Take-Out.

In this way, consumers would not only have to pay for the gym but also for the mandatory healthy meals!

There were much fewer people willing to spend so much money!

If one failed to complete the check-in goal, there would be a penalty. First, there would be a warning, then allow them to refund. After that, they would not be able to sign up for some time.

In this way, those 'experience parties' who wanted to go to the gym once in a while would also be disgusted and would reduce their savings by a large amount.

Yes, that would be perfect!

After several rounds of considerations, Pei Qian finalized the specific rules for the gym:

After one became a member, they could recharge as much as they liked without any discount.

Take physical examinations and develop training plans as soon as possible, including how many times a week the client would visit the gym; what to train; and what to eat. All the contents would be formulated after consultation with the customer. Once established, it would become mandatory and must be followed through.

The cost of each visit to the gym was 50 yuan if one were to add them all up. The healthy Fish-Catching Take-Out would be mandatory so the price would be calculated separately. The takeaway order system and the gym's app exchange data would be linked.

Of course, the Fish-Catching Take-Out would have to make a loss, too. Healthy meals would be sold at a cost, but the forced food purchase itself was a form of dissuasion to the consumers.

He was losing money and adding a threshold for the clients—perfect.

Clients would be interviewed if they did not eat the healthy meal or did not come to the gyms for a certain number of times. The first two times would be warnings, and the third time would be a direct refund and that client would not be accepted within a month.

Of course, if they corrected it immediately after the first warning, then this consecutive warning effect would be eliminated after two weeks.

Pei Qian decided to name this gym as 'Deposit Fitness'.

On the surface, it meant to 'deposit your body with us'!

The actual meaning meant was for the mentally handicapped AI to beat the crap out of the clients!

A crazy gym like this would be patronized by whales at best.

However, there were not many whales in Jingzhou. The real whales would look for personal trains so the Deposit Fitness would probably not be very competitive.

Many stores would be open, and no one would care about them. It would be simply beautiful because all of them could be used to distribute employee benefits!

Of course, Pei Qian also thought of some other methods such as discounts for successful weight loss, but he rejected them after careful consideration.

These operations seemed to be able to lose money on the surface, but they also seemed to be able to motivate clients and propagate spontaneously—which could be counterproductive.

Therefore, Pei Qian decided to abandon these seemingly beautiful operations and chose to take the safe route after careful consideration.

Losing money required a long term strategy as well.

Then, Pei Qian briefly considered the equipment in the gym.

All fitness equipment must be the most high-end.

Every piece of aerobic exercise equipment—including treadmills, ellipticals, etc.—would be equipped with a small TV in front, so that one could adjust what one wanted to watch.

Showers, changing rooms, restrooms, etc. would all be made in accordance with the highest specifications. All kinds of high-end shampoos, shower gels, hairdryers, and the like would all be provided. In short, wherever they could spend money on.

Moreover, they had to wear a wristband in the gym and download the exercise data from the wristband when they were done. They would only complete the check-in when the amount of exercise reached the standard.

…

Pei Qian nodded in satisfaction after everything was finalized.

He would strive to make this gym an exclusive gym for Tengda employees, so that no one else would be interested in it!

Double happiness when the gym would lose money daily and make more losses when giving benefits to his employees.

He should make fitness plans for all Tengda employees so that they were exhausted from exercise and have no intention of working. Boss Pei would lose money, happily obtaining the best of both worlds!