Does “discount-led growth” hurt long-term profitability?

Use of discount-led offers has been a common tactic for gym and fitness operators. Is this approach sustainable in the long-term if you want to build a competitive business? Read on to find out.

Discount-led growth is a customer acquisition strategy that uses price reductions, promo codes, and sales to quickly attract a high volume of purchases.

This type of price-based thinking is seductive, common, and used across fitness markets from the UK to the US, to the rapidly expanding fitness scene across Asia Pacific. It’s a strategy that gym operators keep reaching for.

But what are the long-term consequences of this approach to growth?

Let’s get stuck in!

The temptation is real

First, let’s give discounting its due. The logic makes sense. Lower the barrier to entry, fill the floor faster, and grow your member base.

In the short term, and for some business models, it can work.

And let’s not ignore the competitive reality.

The UK fitness market hit a record 12.2 million memberships in 2025, with the low-cost segment now accounting for 806 clubs and 41% of all private sector members. In a market this competitive, it can feel like you must discount.

In the US, that pressure is amplified by the scale and visibility of the country’s high-volume low-price (HVLP) operators.

In APAC, where the gym and health club market is projected to grow at a CAGR of 11.7% through to 2031, the pressure is different. International chains and local operators are racing to capture a fast-growing, fitness-curious middle-class. The temptation is to compete on price to grab market share early.

To compete on price over a sustained period of time, you need to operate a low-cost business model. One that’s focused on attracting high volumes of members at your clubs and offering high-quality simple services and gym access.

That’s not right for all operators.

The hidden cost of discount-acquired members

The most important thing to understand about discount-led growth is who it tends to attract. And what that means for your numbers.

When you lower your price to bring members in, you disproportionately attract price-sensitive members. These are people whose primary reason for joining is the deal.

The danger is that discount-led sign-ups churn faster. And so, deliver lower lifetime value than members who joined because they believed in what you offered.

The consequences can be significant:

Higher acquisition costs on repeat

Acquiring a new member can cost five to seven times more than retaining an existing one. When discount-acquired members churn at higher rates, you’re back on the acquisition treadmill faster. And with a reduced revenue base to fund it from.

Compressed margins

Every member on a discounted rate is earning you less. Multiplied across an estate of several locations, even a modest reduction in your average monthly fee will have a big impact on total revenue.

The UK market’s value growth has been driven significantly by rising membership fees. Average privately-owned gym monthly fees increased from £42.99 in 2022 to £50.10 in 2026. Discounting works against that tide – and makes it harder to keep up with increasing operating costs too.

Misaligned brand perception

One of the most damaging long-term effects of discount-led growth is that it trains your market to expect low prices.

Once members or prospects associate your brand with promotional offers, full-price memberships feel like a premium, even if completely reasonable. You end up in a cycle where you need to run offers just to maintain sign-up volumes.

Every promotion erodes perceived value a little further.

Retention suffers (hitting profitability in the process)

The evidence on retention is consistent. A 5% increase in retention can boost profits by 25% to 95%. Members who stick with you for longer have a higher member lifetime value for your business.

When you’re managing multiple sites, where margins are sensitive to member count at each location, this isn’t a minor optimisation.

It’s the difference between a site that performs and one that doesn’t. When discount-acquired members churn at higher rates, that retention leverage works against you.

A lesson from the US market

The fitness market in the US offers one of the clearest case studies in the limits of discount-led growth, and what lies on the other side of it.

For nearly three decades, Planet Fitness built its business around a $10-a-month Classic membership (raised to $15 in 2024). This has cemented its place as the dominant force in low-cost fitness. By 2025, the fitness giant accounted for roughly 27% of all US gym memberships across nearly 2,900 locations.

At face value, it looks like the ultimate proof that price-led growth works. But the nuances tell a more instructive story.

The Planet Fitness model is built on extraordinary volume (over 20 million members) with economics that function at that scale. The real profit driver is the premium Black Card tier, which by 2025 accounted for 66.5% of all members and generated 67% more monthly revenue per member.

Even the world’s most famous budget gym has built its profitability around upselling members away from the discounted entry price.

Meanwhile, the operators thriving at the other end of the US market tell a different story.

Life Time Fitness generated $2.9 billion in revenue in 2025 from just 190 locations across the US and Canada, with memberships costing around $180-330 per month. Equinox commands $200–$400 per month across its clubs and has pushed further into ultra-premium territory with offerings priced at thousands of dollars a month.

These operators compete on experience, amenity, community, and brand. Members stay precisely because price isn’t the reason they joined.

The lesson? Even the most successful budget operator had to raise prices and build a premium tier to generate real margins. Value leads to profitability. Discounting buys time.

The perception equation

There’s also a brand dimension that goes beyond the spreadsheet.

Price is a signal. For consumers evaluating fitness options, a discounted membership doesn’t just save them money. It tells them something about what the membership is worth.

Premium boutique studios in markets like Sydney, Singapore, London, and New York have seen this play out repeatedly. A price cut chasing volume chips away at the very positioning that justified the price in the first place.

Perceived value is a delicate thing. It’s built through experience, community, service quality, and consistent messaging. Heavy discounting can unravel it fast.

This is particularly true for operators running differentiated offerings across multiple locations. Brand consistency is one of the most powerful retention tools available. Running discount campaigns that vary by location or leaning on price to drive volume at underperforming sites, risks undermining that consistency.

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What the alternative looks like

None of this means you can never run a promotion. It means that promotions which protect your core pricing almost always outperform those that cut it.

The distinction matters. A value-add promotion creates a compelling reason to sign up while keeping the monthly membership price intact. The member joins at full price. Their perceived value of the membership is higher because they received something extra.

There’s no psychological cliff-edge when a promotional rate ends, they’re already paying what they’ll continue to pay.

This approach also connects directly to what drives long-term retention. Members who are engaged, visiting regularly, connecting with staff, and feeling part of a community, stay longer and spend more. That’s a function of experience, not price.

A joined-up gym pricing strategy that reflects the real value of your offering, combined with a genuine focus on member experience, builds the kind of base that compounds over time.

Growing revenue without growing discounts

For operators who want to increase revenue without becoming reliant on promotional cycles, the levers are well-established:

Optimise your membership tiers

Tiered pricing that reflects different levels of access and experience gives members a reason to upgrade rather than churn. Well-designed premium tiers can help you grow average revenue per member, even without increasing member count at all.

Focus on recurring revenue

The most resilient gym businesses are those with stable, predictable income from a high-retention member base.

Growing recurring revenue, through higher-tier memberships, bolt-ons, and reduced churn, is more durable than acquisition-driven growth funded by discounts.

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Raise prices with confidence

Operators who have invested in their facilities, their staff, and their member experience can increase membership fees, provided they communicate the value clearly and give members enough notice.

For example, David Lloyd Leisure introduced a significant price increase in late 2022/early 2023 alongside substantial facility upgrades. At the end of 2023, the health club chain saw membership grow by 3.5% and over 61% of members sign up to premium packages.

That’s what value-led growth looks like in practice.

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The wrap up…

The fitness industry globally is in an exceptional position.

The global health and fitness market is projected to grow from $102 billion in 2024 to $235 billion in 2034. That’s an impressive growth trajectory.

Asia-Pacific and the Middle East are seeing the fastest growth. The US fitness market size reached an impressive $47 billion in 2026. And in the UK, membership numbers and market value have never been higher.

The opportunity is real. And so is the competition. In every major market, the operators building durable, profitable businesses are those who’ve stopped competing on what they charge and started investing in what they offer.

Discount-led growth fills a short-term gap. Value-led growth builds a business that’s still standing, and still growing, five years from now.

Create the type of member experience that keeps members coming back and boosts profitability. See how Resamania can help.