Chapter 14 A Losing Proposition

This unusual question stumped Guo Licheng.

Pei Qian continued, "What's your base salary now?"

Guo Licheng answered truthfully, "1,500."

Pei Qian then asked, "How are commissions calculated?"

Guo Licheng: "The commission varies depending on the coach's level, but it averages around 30%, for a private lesson costing 200."

The price of private lessons was as Pei Qian remembered; that was what he paid for employee private lessons.

Of course, from the perspective of ten years later, it was indeed quite cheap, even a bargain.

Pei Qian quickly calculated, "If you average three private lessons a day, working every day of the month, the commission is 5,400 yuan, plus the 1,500 base salary, totaling 6,900 yuan."

In the current Jingzhou, that was considered a decent income.

Guo Licheng hesitated for a moment and said, "Actually, it's not that much. Because many of the private lessons I teach are transferred to me by other coaches, and I have to share the commission with them. The actual money I get each month is about five to six thousand."

Pei Qian nodded, thinking that this guy was indeed true to his name, very honest, and told everything.

For private coaches, selling lessons was the core competitive advantage; the more lessons they sold, the higher the commission. Many coaches in big cities could earn thirty to forty thousand a month just by selling lessons, but such marketing geniuses were few and far between.

Coaches like Guo Licheng, who were more taciturn, didn't like to talk, and only told the truth, naturally couldn't persuade so many students to buy private lessons.

Those coaches who could persuade students to buy a lot of private lessons, but couldn't teach them all themselves, would transfer them to coaches like Guo Licheng who had more time.

But unless the two people had an excellent relationship, they definitely wouldn't transfer them for free.

Pei Qian nodded. "I'll give you a base salary of eight thousand, no commission, but there are benefits such as meal subsidies, housing subsidies, and regular health checkups."

Guo Licheng was stunned for a moment. "Uh, President Pei, I'm not talking about the salary issue. The main reason I want to leave this industry is because..."

Pei Qian: "Then it's a base salary of ten thousand, plus various benefits, no commission."

Guo Licheng: "..."

He was tempted.

A base salary of ten thousand; even if he left the fitness industry, where else could he get a base salary of ten thousand?

What's more, Guo Licheng really liked the fitness industry; he only wanted to leave because he was disappointed with the current state of the industry.

Now, this base salary of ten thousand was already ridiculously high, and the words "no commission" surprised him even more.

This sincerity moved him.

But it also made Guo Licheng worried about President Pei.

He didn't want such a sincere President Pei to become a sucker, losing everything after taking over the gym.

Guo Licheng hesitated for a moment and asked, "President Pei, have you not had an in-depth understanding of the fitness industry before?"

Pei Qian told the truth, "No."

Guo Licheng revealed a "just as I thought" expression. "To be honest with you, you're thinking a bit too simply."

"Although this condition is very attractive to me, 'no commission' is also a good thing. But it's very unfavorable for the gym!"

"With commissions, the coaches will work hard to sell cards and lessons, and the gym can have enough profits to continue operating. Without commissions, the coaches won't actively promote sales, who will buy lessons?"

Pei Qian smiled. "There's no need to buy lessons. In the future, our gym will no longer have private lessons."

Guo Licheng: "Huh?"

Looking at Guo Licheng's blank expression, Pei Qian felt it was very interesting and simply explained the various rules of "trusteeship fitness."

Guo Licheng's expression went from dazed to shocked to hesitant to confused, and finally to pity.

After Pei Qian finished speaking briefly, Guo Licheng sighed softly, "President Pei, I'm sure now that you really don't understand the fitness industry! To be honest, in this industry, gyms with a conscience don't last long."

"If you operate like this, you'll be pleasing neither side."

"I'm afraid you won't earn either a good reputation or money."

Oh?

Pei Qian was overjoyed, it seemed that his plan had been recognized by a senior industry insider!

This was a good sign.

But he still buried this joy in his heart and asked, "How so?"

Guo Licheng cleared his throat twice, glanced at Manager Wei, who was discussing the contract with Assistant Xin, and then lowered his voice and said, "To be honest, President Pei, the current fitness industry is actually a gamble."

"People who work out gamble that they will go every day after buying a card, while the gym gambles that they won't."

"The result is often that the gym wins."

"But even so, domestic gyms are still closing down and running away in batches. Some people haven't gone for a few months after buying a card, only to find that the gym is empty. This phenomenon is not uncommon."

"So, this is an industry where the bad drives out the good, similar in nature to... certain other industries that are keen on issuing cards and running away."

"You can only make money if you're black-hearted; very few survive by relying on conscience and long-term goals."

The more Guo Licheng spoke, the heavier his tone became, while Pei Qian became happier and happier.

If that's what you say, then the situation is even more optimistic than I imagined?

Pei Qian silently indicated that he loved to hear this!

"Tell me in detail." Pei Qian remained calm.

It seemed that Guo Licheng also had a strong desire to complain about this. He lowered his voice and said, "President Pei, the 50 yuan a day you set, to be honest, is pleasing neither side."

"Most consumers calculate that if they come four times a week, it will cost nearly 10,000 yuan a year, which is five times more expensive than a general gym annual card! They will definitely think it's very expensive."

"But in reality, these gyms selling annual cards for 2,000 yuan are supported by a large number of unused cards and private lessons."

"In other words, with your pricing method, consumers think it's expensive, and then you may not necessarily earn any money. In my opinion, this is simply conscientious, and especially conscientious for those beginners who lack motivation, but the beginners themselves don't think so."

"They all think that buying an annual card will allow them to work out every day, and they will definitely think your plan is not cost-effective."

"That's why I say the bad drives out the good, because there are too many such beginners. It's hard to earn conscientious money, but it's too easy to earn black-hearted money."

"An annual card costs 2,000 yuan, and a two-year card costs 3,000 yuan. At first glance, the two-year card is definitely more cost-effective. The gym gambles that you won't come often, so the longer the membership period, the cheaper it is. On the surface, it looks like the gym is losing money, but for the gym, they only care about the present! We'll talk about the two years later, let's get the 3,000 yuan first."

"As a result, once one gym does this, other gyms can only grit their teeth and follow suit, otherwise all the customers will be snatched away by him."

"These gyms work hard to sell annual cards and three-year cards, earn the money in advance, and then work hard to distribute flyers, pull people in, and sell private lessons, completely disregarding the gym's actual carrying capacity, but they do indeed overwhelm other gyms in terms of momentum."

"They overdraw the nearby customer base, making it impossible for other gyms to survive."

"If you open a conscientious gym and don't earn this quick money, you won't be able to withstand the publicity offensive of these gyms for long and will be squeezed out. Where will the future be?"

"These gyms that earn quick money disrupt the market, overdraw future consumption potential, and quickly run away when they see the situation is not good, leaving a mess behind."

"Another very important point is that fitness is a relatively painful thing for beginners. Consumers in our country generally don't have the right fitness concepts, the fitness threshold is too high, and the consumption experience is too poor. There are too many beginners, so the current gyms have developed into this model."

"If you want to earn conscientious money, then you must at least be prepared to lose money for several years. The resources and manpower that need to be invested are far beyond imagination. You must not only make good products but also cultivate the market and change people's lifestyles. This is too difficult!"

"So, if you're thinking about making a quick buck and running away, then pretend I didn't say anything."

"But I know that Tengda is a conscientious company, so I hope you will think carefully and don't come into this muddy water because of a momentary impulse."

After listening to Guo Licheng's words, Pei Qian fell silent.

He was overjoyed!

Listen, listen, my plan has been recognized by a professional!

And it was highly recognized!

If it's like what you said, then it's even easier for me to lose money?

Seeing President Pei fall silent, Guo Licheng quickly said, "President Pei, the contract over there doesn't seem to be finished yet. There's still time to go back on it now."

Pei Qian smiled. "Go back on it? No, no, no, I've thought this through carefully."

"Since you say this industry is an industry where the bad drives out the good, and you have to be prepared to lose money for many years if you want to earn conscientious money... then let me change this industry!"

"From now on, you are the manager of the 'Trusteeship Fitness' Hando University branch. You have three tasks in the next few days."

"First, recruit a team of coaches, with a base salary of 7,000, with benefits and no commission. All coaches must follow your template. Only recruit introverted ones; don't take anyone who likes to talk too much."

"Coaches will take turns to rest, two days off a week, with early and late shifts rotating. Usually, ensure that there are enough coaches on the premises to guide the students."

"Calculate how many coaches you need to recruit yourself, try to recruit as many as possible, I think twenty or so is about right. In case someone catches a cold and needs to take sick leave, they must be able to adjust shifts in time. No overtime for any reason is allowed under any circumstances."

"Second, find a construction team to redecorate and paint the entrance of the store, keep it low-key."

"Third, purchase fitness equipment, directly according to the highest specifications, don't be afraid of the price, understand?"

Guo Licheng felt a little confused, so all that he had said just now was a waste of breath?

"But President Pei..."

Pei Qian patted his thick shoulder. "No buts, go prepare."

On the other side, Assistant Xin had also finished talking with Manager Wei.

"President Pei, we've reached an agreement. The gym has an area of 1,800 square meters. The original investment in this store was about 1.7 million yuan. The main expenses are: the equipment here is all low-end and some is second-hand, totaling 500,000 yuan; other supplies are about 50,000 to 80,000 yuan, including various equipment and instruments used by private coaches, computers, office desks and chairs, etc.; the decoration cost is about 900,000 yuan, in addition to personnel wages and advertising and marketing expenses, etc."

"If we take over everything, the transfer fee will be about 500,000 to 600,000 yuan, but we are only taking the venue decoration and not the fitness equipment, so the final transfer fee agreed upon is 300,000 yuan."

"Manager Wei will move all the equipment away, we will re-purchase all the fitness equipment, recruit coaches, and also pay the venue rent..."

"Considering that we are preparing to use high standards for fitness equipment, and the personnel salary is also higher than the industry average, the initial investment in equipment, transfer fees, and some miscellaneous aspects is about 1.5 million yuan, and the annual expenses, including rent, water and electricity, and personnel salary, will be nearly 3 million yuan... averaging about 250,000 yuan per month. This is far higher than the expenses of ordinary gyms."

Pei Qian nodded, thinking that this investment didn't seem like much.

The initial investment was 1.5 million yuan, and the monthly expenses were only about 250,000 yuan. Even without customers, it didn't seem like he would lose much money.

But then he thought that this was just one store after all.

If he opened ten stores, wouldn't he comfortably lose ten million a year?

He would first open the store and see what the situation was. If no one came, he would open a few more.

Anyway, as long as he opened more, he would definitely lose more and more!