Strong decisions

A call for fitness

“The most used equipment at the gym is the mirror,” agrees everyone. Nowadays, new gymnasiums are being spread along Egypt, offering a wide variety of services and facilities among which spas, swimming pools, squash courts, physical therapy, nutrition packages and many more, in hopes of improving and maintaining physical fitness and health.

It is an understatement claiming that there are over 20 gyms up and running in Cairo alone. However, memberships are divided monthly, quarterly, semi-annually and annually. Such division supposedly guides an individual wishing to stay fit and gives them the choice of frequency to visit their gym.

“The most used equipment at the gym is the mirror!”

A gym located in Heliopolis offers EGP 1000 memberships per month, EGP 2100 quarterly, EGP 3200 semi-annually and EGP 4900 per year. In addition, it has added the option of an entire year during mornings only for EGP 3500.

Another gym located in Maadi has relatively lower rates. A monthly membership costs EGP 700, while an entire year reaches EGP 2500. According to one of the employees, the gym manages to attract up to 3000 members per year, among which 60 percent register for an annual membership.

Moreover, youngsters aged from 13 to 18 years old are required to have a personal trainer for at least 10 classes in the course of one month, costing them EGP 950 instead of EGP 700.

“Adopting a sportive lifestyle takes time, therefore it is very common that the majority of those 60 percent fail to attend regularly,” noted one of the staff who insisted that attendance is always taken.

Among the most well known gyms in Egypt has 15 branches in the country. Each branch has its own rates according to its location to cater to the selected clientele.

In the Maadi branch for instance, monthly memberships cost EGP 1600, while annual memberships amount EGP 6850. One of the employees of this branch explained that more than half of their clients choose the annual package even though most of them rarely go.

“People who are more advanced tend to subscribe to semi-annually or even annually!”

One final venue in Cairo Festival City Mall begins by convincing rookies that a three to four-hour-weekly exercise is vital to ensure a healthy lifestyle. It pushes them to start with a one or three month’s subscription to keep them motivated. It is then up to the beginner to make up their mind and decide whether to renew, extend or shorten their membership.

A staff member noted that people who are more advanced tend to subscribe to semi-annually or even annually and are likely to commit throughout the entire period.

They are the ones who wish to adopt a more healthy routine. They may desire doing so either by losing weight, gaining muscles or simply stay fit.

Gyms stereotypes

A common statement was shared by more than one gym is that Egyptians tend to think of sports as a hectic responsibility rather than a proper way of living. The perception of physical exercise is portrayed as a daily five-hour weight lifting, when in fact it only entails regular short workout.

The irony arises when we realize that the majority of ‘wannabe’ sport enthusiasts rush to the gyms and subscribe per year essentially because it is cheaper than renewing their membership every month or quarterly.

Opportunity Cost

Basic economics stipulate that an individual must receive a service in exchange of money spent, i.e. making use of the facilities offered in the gym. Apparently that’s not what happens in gym memberships.

In reality, people get excited about subscribing and persuading themselves they will commit, attend classes, do yoga and make use of the entire package, when in fact none of it is even close to the truth.

A deeper subtler conviction persists their economic minds; that of opportunity cost. “How much loss will I incur if I subscribe monthly?,” asks a fresh gym member. “The amount I pay for the upcoming eleven months had I not subscribed for a year from the beginning,” they answer confidently.

Wrong answer pal! Unless a gym member is sure of their commitment for such a long period, they should only subscribe to what suffices them physically. That being said, total utility increases and marginal utility gets closer to its maximum.

In this context, the concept of marginal utility is defined as the amount of satisfaction a gym member gets the next time they go to the gym. While the total utility corresponds to the entire satisfaction gained from going to the gym for a month, three, six or twelve, depending on their physical capabilities.

Ideally, all individuals would want to continue increasing their total utility and stop when their marginal utility is maximized, meaning that the next time they go to the gym, they gain lower satisfaction than the last time.

Economies of scale

On the other side, gyms successfully manage to manipulate their customers and potential ones by choosing those psychological rates, i.e. the longer you subscribe the less you pay, fooling them into ‘economizing’ in terms of money instead of physical skills.

These institutions opt to improve their economies of scale, whereby they increase their clientele by decreasing their unit cost. In this case, the latter essentially consists of the cost of equipment and any extra cost incurred for every new subscriber. Since more people subscribe for longer periods with few of them actually exploiting this subscription, the gym’s equipment costs would be lessened due to less frequent maintenance and less cost per absent subscriber.

Equilibrium?

The lack of consistency between the mentality of subscribers and the gym policies distorts the equilibrium point, which is the level at which everyone is satisfied on their own terms.

If subscribers continue to fish for monetary deals and gymnasiums to set promotional prices, the loop will often more than not be more advantageous to gyms unless subscribers actually exploit their rights. In case of the latter scenario, economic equilibrium is reached and would ensure social welfare and satisfaction from both parties.