Hedonic pricing study of gym memberships in Singapore

Abstract

This study aims to investigate and compare key characteristics that affect prices of open gym memberships in Singapore and help gym owners implement appropriate pricing strategies to sustain in the long run. It also aims to fill the gaps in hedonic price research and research on the gym industry. A hedonic price model has not been used to study the gym market while studies on the gym market tend to be demand-side literature concerned with consumer preferences.

A two-stage approach was adopted which consists of a primary qualitative survey and a hedonic regression model using primary gym data. The qualitative survey aims to identify key gym attributes that consumers consider when in their decisions to significantly impact consumers’ preference for a gym. The robust regression was applied to examine the relationship between the various gym characteristics and membership price. The findings of this study indicate that factors such as Central Area, Review, Number of Classes, and Number of Amenities have a significant and positive correlation with membership price. In addition, Opening Hours has a significant and negative correlation with membership price. This result can thus provide valuable insights for gym owners by helping them to prioritise these key value-adding factors and hence improve their pricing strategies.