From navigating the maze of manufacturers to negotiating price and financing options, purchasing cardio equipment for a health club is a complex process. Fortunately, industry experts are sharing some time-tested advice on how to secure the ultimate cardio equipment deal.
Tried and true is better than trendy and new. Club operators should ask themselves whether they are buying what consumers want or what they are personally intrigued with, says Tim Hicks, senior vice president of franchising and licensing for Gold's Gym International, Irving, TX. If the equipment is not something members will use, then it is not a good purchase, regardless of the deal you get, Hicks says.
"If you're going to equip a new gym, the purchasing decision is going to depend a lot on layout, flow and function," Dal Clayton, chief operations officer for Titan Fitness, McLean, VA, says. The key is to choose a large number of staple pieces—treadmills, ellipticals and, to a lesser extent, cycles and climbers. Clayton warns club operators not to get too excited about the latest and greatest machines. Gauge popularity with one or two machines before investing heavily in the latest fad.
"Warranty and reputation are just as important as price," says Catie Gibson, fitness and safety services manager at the University of Colorado, Boulder. "If you have a machine that is down 30 percent of the time, that is going to affect your reputation and your business."
Gibson advises club operators to get to know the manufacturer's maintenance team in their area. Ask who stocks the parts, how long they will take to arrive, where a local dealer or maintenance person is available and how well-trained they are on this product, she says.
Big orders often equal better deals. When club operators band together in purchasing groups, they can combine their purchasing power for quantity discounts. This tactic can offer significant savings, especially for smaller clubs.
"You have a bigger hammer to negotiate with," Clayton says. "You can definitely leverage a bigger order to get better pricing."
The challenge for many independent purchasing groups is coordinating everyone to purchase at the same time. Often, minimum purchase requirements exist, which takes away the flexibility in brand and type of equipment an operator might have access to, he says.
"In theory, they can work, but it requires a lot of coordinating and advance planning," Clayton says. Still, for owners of small clubs, a purchasing group can offer better deals.
Gold's Gym's global vendor program gives franchisees access to six brands at special pricing, along with the potential for volume refunds at the end of the year. Clubs can make purchases at any time of year and still take advantage of the savings they might receive if they were placing a larger order, Hicks says. This is one benefit to being part of a larger franchise group.
Buying used or refurbished fitness equipment can save a club operator thousands of dollars over purchasing new. However, buying used can be complicated and can quickly turn into a nightmare if done carelessly.
When purchasing used equipment, club owners should look for well-maintained, late model equipment with little-to-no high-traffic use, Clayton says. Look for light traffic facilities that closed their doors shortly after purchasing new equipment, or work with manufacturers to take trade show equipment off their hands at a discount after a show, he says. Always make sure the products are in working order and negotiate an extended warranty to cover potential defects.
Hicks suggests purchasing used equipment to replace key pieces in between larger equipment overhauls. Buying used might be worth it, if it is truly a solid refurbishment and it is an upgrade to what you have, he says.
"But don't make it your 'A' equipment," Hicks adds.
Used equipment often comes with higher maintenance costs. Consider your service situation, how much traffic your facility gets and what it will cost you to keep equipment running if it is not covered by a manufacturer's warranty.
Equipment financing is a necessity for many health clubs. Manufacturers often offer subsidized financing programs. Independent banks, credit unions, investors and leasing companies are other options.
Financing is going to be different for everyone, and it is not always found in one place, Clayton says. The best tactic is to shop around, weigh your options and figure out how different payments fit into your particular business plan in the long run.
If you plan to lease, Hicks suggests looking at a lease with a low buyout option where equipment can be purchased for as little as a dollar at the end of the lease. The low buyout allows club operators to keep the equipment or upgrade to something new at the end of the lease.
Most experts agree that time of year can affect pricing, but club operators should consider when new equipment would be most likely to impress and attract members.
"Just like any other business, there are quotas and goals to be met," Clayton says. Buying at the end of the third or fourth quarter tends to bring the most significant price discounts on new equipment. Equipment salespeople will be trying to meet their year-end goals and might be more likely to take a commission hit to close a deal and secure a bonus, he says.
Additionally, from a customer service perspective, the first quarter tends to be the time of year when health clubs see an influx of new members, he says. Bringing in new equipment can offset existing members' frustration about having more members at the club. It also shows your members that you reinvest their fees in the club, he says.
Prioritize long-term value over immediate price discounts, experts say. Getting the best deal on cardio equipment is not always about paying less up front. If you are willing to negotiate, manufacturer reps will often include added-value options in order to close a sale.
"You can never have too many friends in the industry, but in the end, they all have bottom lines," Clayton says.
Manufacturers can only discount a product's price to a certain point before the deal stops making sense for them.
"Things are going to break. An extended warranty can add a lot of value," Gibson says. "In a facility where cardio equipment gets used 16 to 18 hours per day, that extra coverage will surely pay off in the long run."
1. Buying equipment from too many vendors. Variety is good, but it also means stocking more parts and potentially relying on a wider group of service technicians, all of which end up being more complicated and costly.
2. Buying used without knowing the source. Do not purchase used equipment unless you know where and how it was previously used. Avoid pieces that were used in high-traffic facilities and those that are out of manufacturer's warranty.
3. Choosing the first financing program you are offered. Just because a vendor tells you that a program is the best available doesn't mean you cannot find better. Every financier has something different to offer, so shop around before committing.
4. Buying too many "fad" machines. It is easy to get excited about the next big thing. Be sure to test a few machines in your club before committing to a larger order.
5. Failing to negotiate added value. Once you have the best price, do not stop. Ask about extended warranty programs, entertainment options or service training for someone on your staff. Do not leave money on the table by passing on added-value negotiations.