Is Performance-Based Pay a Better Way to Compensate Coaches?

The argument for performance-based pay isn’t really about paying coaches more. It’s about aligning incentives so that the client, the coach, and the business all benefit from the same outcome.

I never wanted to become a coach.

But when I graduated from the Journalism program at Western University in London, Ontario in 2009 during an economic recession, traditional journalism jobs quickly proved challenging to land.

And so, after falling in love with CrossFit and joining what was then CrossFit Vancouver in British Columbia, now Madlab School of Fitness, an opportunity to coach came up, and I figured, ‘Why not?’

Long story short, I coached there part-time for a decade-and-a-half, and would still be there today had I not gotten married and had a baby, and ultimately left Vancouver.

If I’m being honest, I coached for 15 years not because I was that passionate of a coach. It was because the money was too good and it didn’t make sense to quit.

I repeat, yes, as a fitness coach, the money was too good to quit. 

It’s not the common fitness coach story. The normal coach story is one where you work split shifts — 6 a.m. to 11 a.m., and then again from 4 p.m. to 8 p.m. — for $30 an hour, or maybe for a $40,000 to $60,000 annual salary. Typically, you burn out within a few years and start a new career.

This wasn’t my experience. At Madlab School of Fitness, there were no split shifts and no coaching the same group class back-to-back-to-back. Instead, we coached a reasonable number of hours, and were paid like professionals.

By this, I mean our experienced, full-time coaches earned $100,000 a year, and sometimes well beyond that. 

The secret?

Performance-based pay.

Performance Based Pay Explained

Unlike most functional fitness gyms, coaches at Madlab School of Fitness each have their own book of clients. 

First, they onboard a new client via one-on-one personal training, and then the client begins a hybrid membership. At that point, the client can attend any coach’s classes, but they also continue to meet with their personal coach periodically — the most common membership being once every six weeks — for a one-on-one check-in session.

The coach is essentially paid to keep the client around, in that they are compensated a percentage of revenue — between 40 and 50 percent depending on whether the client was a referral or a house lead. If the client quits, the coach’s pay check takes a hit.

Practically speaking, coaches are responsible for coaching four to eight group classes a week, depending on how many clients they have, as well as personal training hours.

In practice, a coach who has 60 clients would coach:

• eight group classes
• eight to 10 hybrid membership personal training hours
• approximately six fundamentals personal training hours each week

And while there are some additional nuances, here’s how it works if the coach has 60 clients.

Assuming half of the coach’s clients are referrals, the coach would earn an average of 45 percent of the revenue their clients generate. 

The current average revenue per member at Madlab School of Fitness is $327.33 a month.

• $327.33 x 60 clients = $19,639.80 
• $19,639.80 x 0.45 = $8,837.91 a month to the coach
• $8,787.91 x 12 months = $106,054.92 a year

One Coach’s Story

Tom Sarosi has been coaching at Madlab School of Fitness since 2012 and has been earning well above the six-figure threshold coaching roughly 25 on-floor hours a week.

He spends an additional two hours or so a week on client management tasks and individual program design. (And, as the general manager, he is responsible for a handful of other duties, including payroll, but he is compensated separately for this role).

A father of two young children, Sarosi is adamant that if he were paid $30 or $40  an hour, or if he were paid a $60,000, or even $80,000 salary a year, he would have abandoned coaching long ago.

“That is a hard no. Not only because it’s not enough money for a city like Vancouver, but because the hours I would have to work to get there if I were paid by-the-hour would be too many and would pull time away from my kids and wife,” he said. 

He added: “The number one thing I appreciate about the performance based pay compensation model is that it reflects my efforts and skills, and building on that, if you stick with it for long enough it becomes predictable, and the ceiling can be high without adding an egregious number of hours on the gym floor.”

Further, Sarosi believes job satisfaction is much higher when you’re so closely connected, and invested, in your clients’ success.

“It is easier to see people reach more milestones in life and in the gym when you manage fewer people for longer,” Sarosi said. 

He added: “You hear about first dates and witness first pull-ups, you hear of highs and lows in the workplace and witness ebbs and flows in the gym. You watch people change their lives over many years…And eventually you realize that you’re the thing this person has committed to the longest in their life.”

Should Coaches Be Salespeople?

One of the biggest objections gym owners have when they think about a performance-based pay model is that coaches should be paid to coach, not to sell. 

Audrey Patterson, a gym mentor with the Madlab Group, who helps independent gyms transition to performance-based pay, asks gym owners to consider this question: “If coaches shouldn’t be salespeople, then who should be?”

“They’re the ones delivering the service, so they’re selling it. So if you’re not teaching your coaches how to communicate and sell and figure out what type of people they want to work with, you’re doing yourself a disservice,” she continued. 

Further, when a coach is involved in the sales process, it’s actually better for the client, Sarosi believes.

“The new client needs the fewest hoops and hurdles to succeed, the least amount of friction possible. And having too many people in touch with one person muddies the water about who is truly trying to help them,” he said. 

Instead, having one coach responsible for the overall success of each client increases the likelihood that they stick around. 

And from the coaching end, eventually it no longer feels like you’re trying to convince someone to buy something.

“It becomes about painting a picture of what someone wants or needs, and then providing them a solution,” Sarosi added.

The Big Picture

Ultimately, the argument for performance-based pay isn’t really about paying coaches more. It’s about aligning incentives so that the client, the coach, and the business all benefit from the same outcome.

The client wants results. Under this model, they have a coach in their corner who is personally invested in helping them achieve those results.

The coach wants job satisfaction, to actually help people, and to be fairly compensated for their efforts. With performance based pay, those things are connected: The better they serve and retain their clients, the more they earn.

The business wants profit. And when coaches are compensated based on the revenue they generate and retain, they are no longer just a labor cost. They become revenue generators with a vested interest in the health of the business. When the coach does better, the business does better, and vice versa.

As Patterson puts it: “Performance-based pay incentives the coach to be interested in doing the things that are best for the business and the clients. And in any compensation model, you want it to be aligned with what the business wants.”

That’s the fundamental difference from the traditional dollars-per-hour or salary model. In this mode, everyone is working toward the same thing: helping clients succeed so they keep showing up, and building a healthier business in the process.