Losing Money to Become a Tycoon: Starting with Games
Chapter 476: Managed Fitness
After listening to Assistant Xin's explanation, Pei Qian became even happier.
As expected, I knew entering the fitness industry was a decision with great potential!
With so many failed gyms providing successful examples of what not to do, how could he possibly fail to achieve his goal?
Pei Qian nodded.
"Alright, I'll think it over carefully."
"Oh, right. Are there any newly opened gyms nearby? Or perhaps an existing facility that's already equipped and could be put into operation immediately with just a few additional purchases? Look into it. If there's one available, offer a little extra money and take it over directly. That'll save us renovation time."
Pei Qian's plan was to get the first gym up and running as soon as possible and see what happened.
If everything went smoothly, he could quickly open several more and lose even more money during the current settlement cycle.
And if it accidentally started making money, he could cut his losses in time and think of another approach.
Assistant Xin thought for a moment.
"As for high-end gyms nearby... I know of a few, but I'm not sure whether they'd be willing to sell. I'll have someone ask around."
After Assistant Xin left, Pei Qian began thinking about the specifics of his gym's business model.
Based on the report, he wanted to absorb all the "lessons of failure" that Assistant Xin had summarized and combine the characteristics of every failed gym into a single masterpiece.
Pei Qian understood something very clearly.
As Tengda Group continued to grow, it had more and more capital available. Since his goal was to lose money, any industry he entered would inevitably involve substantial investment.
Large upfront investment increased revenue pressure, but it also made it easier to attract customers—especially wealthy, high-quality customers.
As a result, losing money was becoming increasingly difficult.
Therefore, if he wanted to lose money successfully, he needed the proper attitude. He couldn't be careless about it.
He couldn't simply think, "Other people lost money doing this, so I'll lose money doing it too."
That kind of thinking was dogmatic and dangerous.
According to the report, the fundamental reason many gyms failed to make money was that operating a gym required significant investment. Rent, equipment, labor, utilities, and numerous other expenses all added up.
In some developed western countries, where regular exercise was already a widespread habit, gyms could generate decent profits through membership fees alone, creating a healthy cycle.
In China, however, due to both economic conditions and consumer attitudes, most people lacked a regular fitness habit and were reluctant to spend much money. Membership fees alone were rarely enough, which made selling personal training packages essential.
The logic was essentially the same as many pay-to-win online games.
Firstly, attract as many people as possible with low prices, then identify the fattest "whales" and harvest them.
To put it bluntly, there were only three kinds of people in a gym:
1, Complete beginners who bought memberships on impulse and stopped showing up after their enthusiasm faded.
2, Wealthy people who wanted to get in shape and worried they lacked self-discipline, so they purchased personal training sessions to keep themselves accountable.
3, Fitness veterans who could stick to training on their own.
Gyms loved the first two groups.
The third group was the only one that couldn't easily be exploited.
Fortunately for gyms, there simply weren't many people in the third category.
Most gyms made money from membership fees paid by the first group and personal training fees paid by the second group.
Poor customers and rich customers alike were treated as sources of revenue.
After thinking it over, Pei Qian decided to do the exact opposite.
Just like many of his previous schemes, he would focus on two objectives:
Increase operating expenses as much as possible and shrink the target customer base as much as possible.
In other words, earn less money.
First: Not One Extra Cent from Beginners
Most gyms sold six-month or annual memberships, with larger discounts for longer commitments.
The reason was obvious: they took advantage of beginners' temporary enthusiasm, using discounts to persuade them to buy long-term memberships.
And because those beginners usually couldn't stick with exercising, the longer the membership lasted, the more money they effectively wasted.
Pei Qian decided to take the opposite approach.
He would charge by the day.
Other gyms sold memberships lasting six months or a year and counted every day regardless of whether customers actually visited.
His gym would only charge for days when customers came.
If they didn't show up, they wouldn't be charged.
Most gyms made refunds virtually impossible. Customers usually had to transfer their memberships to someone else, and even that was complicated.
Pei Qian's gym, however, would allow members to withdraw any unused balance from their accounts at any time.
This way, even if a beginner acted on impulse, they wouldn't be able to accidentally hand over extra money to the gym.
Second: Not One Extra Cent from Rich Customers
Most gyms aggressively pushed personal training packages because wealthy clients generated the highest profits.
Pei Qian decided that his gym would sell no personal training packages whatsoever.
All coaches would receive the same salary and benefits.
No commissions.
No sales targets.
The coaches would be like internet café attendants—always on standby.
If a customer had a question, they'd answer it.
If they saw someone using equipment incorrectly, they'd offer a quick correction.
But they would never talk excessively, and under no circumstances would they try to sell any courses.
Want a dedicated personal trainer? Want to pay for one-on-one coaching?
Sorry, we don't offer that kind of service.
The more Pei Qian thought about it, the more satisfied he became.
This plan effectively shut the door on money from most potential customers.
Beginners would first be scared away by the high prices. Even if they impulsively signed up, they could withdraw their remaining balance at any time.
Wealthy customers looking for one-on-one coaching wouldn't find the services they wanted here.
As for serious fitness enthusiasts, they only needed access to equipment. They would naturally choose cheaper gyms instead of paying a large premium to come here.
The only people who might be interested in this model were those who were somewhat well-off, wanted to get fit, but didn't want to be exploited by personal trainers.
However, given China's current level of economic development—and the fact that Jingzhou was merely a moderately developed second-tier city—that demographic was quite small.
It was highly unlikely that such a customer base alone could make the gym profitable.
In that case, the gym would operate at a pure loss.
And the more branches he opened, the more money it would lose!
Of course, the system wasn't so easy to fool.
The system required that every business possess at least a theoretical possibility of profitability. If the business generated substantial goodwill and reputation, the profitability requirement could be relaxed to some extent.
Since Pei Qian was providing a better fitness environment, naturally he would have to charge a higher price.
After some consideration, he decided to set the price far above the minimum level permitted by the System.
If he charged the lowest allowable price, customers might view the gym as unusually consumer-friendly, resulting in a "small profits, high volume" scenario.
Instead, he would keep raising the price until it reached a level most ordinary people couldn't afford.
That way, the price itself would directly drive away his target customers.
At present, annual memberships at gyms in Jingzhou cost roughly 2,000 yuan. Even Tengda employees had memberships.
And that was already for relatively upscale gyms. Some cheaper gyms charged less than 1,000 yuan per year.
Using the 2,000-yuan annual membership as a benchmark, the cost worked out to a little over 5 yuan per day.
But nobody went to the gym every single day.
Most people were doing well if they went twice a week.
Based on that attendance rate, the true effective cost came out to around 20 yuan per visit.
The more often you went, the more value you got.
Since Pei Qian intended to provide better equipment, a superior environment, and higher-quality coaches—and also wanted to use pricing to discourage customers—he decided to charge 40 yuan per day.
Then he considered that customers would also receive free coaching guidance that other gyms normally charged extra for.
That meant he should increase the price even further.
Of course, personal trainers elsewhere provided one-on-one instruction, while the coaches at his gym would supervise multiple people at once, helping whoever needed assistance. The value wasn't directly comparable.
After some thought, Pei Qian settled on 50 yuan per visit.
Surely that would drive away the vast majority of customers, right?
At that rate, someone visiting twice a week would spend 400 yuan per month, or 4,800 yuan per year.
If someone were particularly dedicated and went four times a week, the cost would double to 9,600 yuan annually.
Given Jingzhou's local spending levels in 2011, that was an absurd amount of money.
Compared with other gyms, it was undoubtedly a very difficult price to justify.
"Hmm..."
"It still doesn't seem quite enough."
"Is this really the furthest I can go in my pursuit of losing money?"
"Let me think some more."
Pei Qian felt that, while his current model was indeed the exact opposite of what profitable gyms were doing and had a decent chance of failing, it still wasn't completely safe.
What if some people thought the gym was genuinely consumer-friendly and bought memberships simply to use it on a pay-per-visit basis?
Or what if experienced fitness enthusiasts happened to visit Jingzhou temporarily and didn't want a long-term membership, making this gym their short-term option?
If enough people dropped in occasionally, daily traffic could remain high enough that the gym might still make money.
Therefore, he needed another method to discourage these casual users as well.
Forcing customers to buy long-term memberships was out of the question, since that would contradict his earlier principles.
He needed another solution.
After thinking it over, Pei Qian decided to implement a check-in system—a special mechanism designed to achieve exactly this deterrent effect.
When members registered, the gym would create customized training plans based on each person's physical condition, work schedule, and lifestyle.
For example, members would be required to work out at least three times a week, follow a prescribed diet plan, and eat only the healthy meals provided by Moyu Delivery—and these requirements would be mandatory.
This way, customers wouldn't just be paying for gym access; they would also be required to pay for healthy meals.
And since it was compulsory, even fewer people would be willing to spend that much money.
There would also be penalties for failing to meet check-in requirements.
First a warning.
Then another warning.
Then a refund, followed by a temporary ban from signing up again.
As a result, the "casual experience seekers" who only wanted to drop in occasionally would also be filtered out, eliminating another major source of potential revenue.
Perfect.
After much consideration, Pei Qian finally finalized the gym's operating rules:
Members would deposit funds into their accounts after signing up. The amount could be anything they wanted, and there would be no discounts whatsoever.
Upon joining, every member would immediately undergo a fitness assessment and receive a customized training plan.
The plan would specify things such as how many times per week they must visit the gym, what exercises they should perform, and what foods they should eat.
All of these details would be determined through consultation with the customer, but once finalized, they would become mandatory requirements.
In total, every gym visit would cost 50 yuan.
Moyu Delivery's healthy meals would be mandatory purchases, with meal costs charged separately.
The gym's app and Moyu Delivery's ordering system would share data.
Of course, Moyu Delivery itself was still supposed to lose money, so the healthy meals would be sold at cost.
But the mandatory-purchase requirement alone would already discourage plenty of customers.
It both lost money and raised barriers to entry.
The best of both worlds.
If members failed to eat the prescribed healthy meals or didn't visit the gym often enough each week, they would be called in for a discussion.
The first two violations would result in warnings.
The third violation would trigger a full refund and a one-month suspension from membership.
Of course, if someone corrected their behavior immediately after the first warning, the warning could be removed after maintaining compliance for two consecutive weeks.
After thinking it over, Pei Qian decided to name the gym:
Managed Fitness.
On the surface, the name meant:
"Just leave your fitness journey in our hands."
But the hidden meaning was:
"Once you've handed things over, the incompetent AI will immediately throw away a perfect winning hand."
(An analogy from a Chinese card game, meaning that something entrusted to a system ends up being badly mishandled.)
Surely only rich people would be willing to tolerate a gym this outrageous, right?
But there weren't that many wealthy people in Jingzhou to begin with.
And those who were truly wealthy could simply hire personal trainers at ordinary gyms.
Managed Fitness didn't seem to have any particularly compelling competitive advantage.
When the time came, he could open a bunch of locations that nobody visited and then use them as employee benefits.
What a wonderful prospect!
Of course, Pei Qian had considered other ideas as well.
For example, offering discounts to people who successfully lost weight.
But after careful thought, he rejected them all.
Although such measures appeared likely to lose money at first glance, they would also motivate customers and encourage word-of-mouth promotion.
That could easily backfire.
So after weighing everything carefully, Pei Qian decided to abandon all of those seemingly attractive gimmicks and stick with the safer approach.
After all, losing money was something that required patience and consistency.
Next, Pei Qian briefly considered the gym's equipment.
Every piece of equipment would be top-of-the-line.
Every cardio machine—treadmills, ellipticals, and so on—would have its own television screen mounted in front of it so users could watch whatever they wanted.
The showers, locker rooms, lounges, and other facilities would all be built to the highest standards.
Since the goal was to spend money, he might as well go all out.
Premium shampoos, body washes, hair dryers, and every other luxury amenity imaginable would be provided.
In addition, the gym would issue fitness wristbands.
Members would wear them upon entering the gym and remove them when leaving.
The wristbands would upload workout data automatically.
Only if a member's exercise volume met the required standard would the visit count as a completed check-in.
After finalizing everything, Pei Qian looked over the proposal and nodded in satisfaction.
His goal was to turn the gym into something that functioned essentially as a private fitness center for Tengda employees while making everyone else completely uninterested.
The gym would lose money every day.
Providing employee benefits would also lose money.
Double the happiness.
When the time came, every Tengda employee would receive a mandatory fitness plan, leaving them exhausted from exercise and unable to focus on work.
Meanwhile, he would happily continue losing money.
A perfect win-win situation.
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Tn: I updated the story once a day, but if you want to see more chapter of this story ahead of time, please go to my Patreon.
Latest Chapter: Chapter 536: Still Going with the "Bare Walls" Style[1]
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[1] https://www.patreon.com/HannibalNotBarca/posts/losing-money-to-164800513?collection=1399284
[2] https://www.patreon.com/HannibalNotBarca/posts/losing-money-to-164800513?collection=1399284