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How to Build Diversified Revenue Streams in Your Cheer Gym
Host Dan Cotton walks gym owners through the revenue streams worth stacking on top of tuition, and the 80 percent gross margin pricing framework that keeps a cheer business healthy.
Revenue Is the Lifeblood
Welcome to another episode of the Cheer Biz Podcast. Host Dan Cotton goes solo this week to talk about how to get additional revenue flowing into your gym. As he puts it, revenue is the lifeblood of your business. Without it you do not really have a business, only an idea, and you need it to grow your company and build the program you want.
Dan begins by inviting listeners to join the Cheer Gym Owners and All-Star Cheer Coaches and Owners groups on Facebook. He also encourages them to sign up for a Cheer Biz Accelerator event, hosted at his gyms, which includes a full one-hour session solving your gym’s specific problems. Events are planned throughout 2027, and a few spots may remain at the Portland event in November, depending on when you listen.
Tuition: The Baseline
In a cheer gym, tuition is the bread-and-butter revenue, and everything else is stacked on top of it. Dan defines tuition as the money that comes into the gym and stays in the gym to run the business. He has covered all-inclusive tuition in earlier episodes and is not a fan. It is difficult to build correctly, and it often becomes an excuse for owners to undercharge, pricing from their own wallet and personal biases about money instead of what customers will pay.
He uses a plumber analogy. Someone may pay $200 to have a toilet unclogged when an auger costs $20 at Home Depot, because the task feels outside their skill set. Coaching a back handspring is the same: routine to a coach, but magic and rocket science to someone who has never done it. Owners must value their expertise accordingly.
Dan also sees all-inclusive tuition used to bamboozle customers. Tuition is advertised as all-inclusive, followed by a long list of exceptions. He compares it to budget airline pricing, where a $99 ticket becomes $500 after fees for a seat, a carry-on, and a checked bag. He would rather see tuition represent only what stays in the gym, so owners know exactly what it takes to operate the program.
Pass-through fees such as competitions, uniforms, music, choreographers, and camp companies are separate. They should carry some margin to cover the cost of delivery, typically 15 to 30 percent at most, but they should not be counted as monthly recurring revenue. Tuition should be predictable. If 180 all-star athletes pay a set amount, or a recreational tumbling program has a known enrollment, you know what is coming in each month.
Start With a Pro Shop
The first add-on Dan recommends is a pro shop. It is relatively easy to deliver and doubles as marketing, since athletes and families wearing your apparel spread your brand. There are several ways to run one.
The first is large bulk orders with product on hand. Dan does not recommend this for most gyms because it requires thousands of dollars up front and ordering is always a guess. He follows this model with DreamCamps because inventory is required, but would love to move away from it. At his gym, he limits it to core gear, such as the family-first apparel, and keeps blanks on hand so items can be pressed on demand.
The second, and the one Dan recommends, is pre-order. Sell a product for a week, then deliver about two weeks later. Most customers are comfortable with this, but on-time delivery is essential, because late orders train clients to expect delays. Dan admits he has dropped the ball on this himself. Many gyms bring production in-house for more control, ordering transfers and pressing them on site. Extra transfers can be reused later on different garments.
Third is the subscription box. Dan does not recommend it for most gyms unless staff infrastructure is strong enough to deliver consistently. He believes boxes are declining in popularity and may reduce what families will spend on one-off offerings. Would you rather collect $60 a month for a $30 box, or run a special where a family spends $180 on a product that costs you $60? He notes that Danielle and Rihanna run boxes successfully in their gyms, but for most owners it can be a distraction.
Privates, Parties, and Camps
Second on the list are private lessons. Dan knows this is a hot-button topic, but argues privates should be financially beneficial to the gym. They are a good way to use half-hours and hours that would otherwise sit empty, especially when classes are hard to fill. Compare the most an instructor can bring in coaching a full class with what they bring in teaching a private. Even when Dan pays staff their normal rate, he makes about 50 percent less on that hour. If an hour of a coach’s time earns the gym only $15, $20, or $30, the math is upside down.
Next are birthday parties, which cost little to run and fit in almost any facility. They require one or two staff members, a space for cake and presents, and some fun. The facilities that do best have a dedicated party space, since the gathering matters far more than bounce houses or trampolines. Parties are an easy upsell for existing operations, but attracting new customers still takes marketing and a strong website.
Finally, camps and specialty clinics. These make use of available time and instructors on no-school days. Stand up back walkover, back handspring, and stunting clinics a couple of times each month, priced slightly above class rates because of the intensity. Families want explosive skill progression, and more time in the gym helps deliver it. Summer camps can bring in revenue too, but check local laws on child care requirements. Dan cautions against opening ten camps in your first year and being upset when only 30 spots sell. Reputation takes time, and many organizations compete for the same families.
The 80 Percent Gross Margin Rule
With the offerings in place, Dan lays out his pricing framework. Start with the cost of goods sold, the cost of delivering the item or service, and price so that gross margin reaches 80 percent. Dan corrected himself on air to explain it: if you charge $100 and delivery costs $20, you keep $80, which is an 80 percent margin. Pricing at $80 would not get there.
Aggressive margins matter because in a service business the cost of delivery is primarily staff, and the remaining margin must cover the front desk, credit card fees, rent, and utilities. Eighty percent is strong, 70 percent is healthy, and 60 percent, where delivery eats 40 percent or more of the price, is abysmal. Owners often add 30 percent to their cost and call it good, which is not far enough.
The target varies by offering. Dan generally prices a garment at about double its cost. Birthday parties should come closer to 80 percent, with staffing under 20 percent of the price. For variable enrollment offerings like camps, clinics, and tumbling classes, set a minimum enrollment, calculate cost and margin from that number, and treat everything above it as gravy. Some sessions will run under minimum and others over, but they average out. Dan apologized for fumbling some math on air and suggests grabbing a calculator.
Margins Make the Business Work
Dan wraps up by noting that this is what it takes to be financially successful running a cheer gym. Strong margins pay the rent and utilities, fund new hires and onboarding, and leave resources to improve the program. Do the basics well first, and only then consider anything more exotic.
Thank you for listening to the Cheer Biz Podcast. Join the Cheer Gym Owners and All-Star Cheer Coaches and Owners Facebook groups to keep the conversation going, and tune in to the next episode.
If you enjoyed this episode, you may also like “Lessons from 2024: My Biggest Takeaways as a Cheer Gym Owner and Entrepreneur”
