Gym License Cost Structure

Alex Hormozi built a gym licensing business that evolved from a "gym rescue" concept into a high-margin licensing model with front-loaded costs and recurring revenue.

Core Business Model:

• Started as "Gym Rescue" but rebranded to "Gym Launch" when owners rejected the rescue concept
• Program called "Legacy" with members called "gym lords"
• Used a front-end/back-end pricing structure:
  • Front-end: $16,000 for 16 weeks ($1,000/week)
  • Back-end: $800/week licensing fee (later reduced to $600/week)
  • Annual licensing cost: ~$42,000

Key Financial Results:

• Year 1: $6.8M revenue with $3M EBITDA
• Year 2: $26M revenue with $17M EBITDA
• Year 3: $37M revenue with $13.4M EBITDA

Marketing Strategy:

• Used Facebook ads when costs were lower (2013)
• Lead generation costs were very low:
  • $0.25-$5 per lead
  • 4-5% click-through rates
  • 50% landing page conversion
• Initial offer was a free 6-week challenge
  • Money-back guarantee if clients lost 20 pounds
  • 70-80% success rate due to financial stake
  • Used as customer acquisition tool for licensing program

Revenue Model:

• Front-loaded program to cover acquisition costs
• Down-sold into higher-value continuity program
• High margins (65%+ EBITDA in peak year)