Gym Membership Doomed From Day One

I was just perusing a website I check out about once a week called www.theonion.com, which is a satirical paper that is published in New York. It mainly focuses on current events and is one of the funnier sites out there; however, it can be crude occasionally and is not recommended to anyone easily offended. I just read one of the briefs about a girl's (fictional) experience with getting a gym membership and what ensues thereafter.

I bring it up not just to give a shout out to one of the better sites on the web, but, also because I have seen many people I know who at one moment get highly motivated, sign up for extended gym memberships, and then return only a small handful of times. I am sure this is the type of person that gyms generally love to have join them. Is this type of practice ethical on the gyms part or do these new members basically get what they deserve?

1 comment:

Dr. Tufte said...

-2 on Jacques' post for multiple punctuation errors.

We actually cover this later in ManEc under the topic of two part pricing.

Two part pricing is a "marketing gimick" that has solid microeconomic foundations. It is yet one more way to effectively convert consumer surplus into producer surplus (profits). The idea is to reduce demand a bit with the flat fee (and consumer surplus along with it) in exchange for the producer getting a higher proportion of total surplus.