Pricing always seems simple on the surface, until you try to work out the details. Then it gets endlessly complicated. What the author is suggesting sounds like

Pricing always seems simple on the surface, until you try to work out the details. Then it gets endlessly complicated. What the author is suggesting sounds like a good idea, but I'm willing to bet it would work out to be a pretty bad business practice. Gym memberships is the kind of thing people do on impulse. It's kind of like new year resolutions where people stick to them for a few weeks and then trail off. I wouldn't be surprised if the 80/20 rule applied to gyms - 20% of the people use 80% of the resources, and 80% of the members go no more than 20% of the time. If this assumption is true (and it most likely is), he'd leave 80% of the money on the table! Most likely, he'd use the system he described to lure in initial customers, and then would switch to the system everyone else uses in order to actually make a profit. Also, I'm guessing that sign up rushes occur during specific times of year. People sign up before summer to get in shape, and after new years, to follow resolutions. That means that during quiet periods he'd have implement promotions to get customers to join, but if he were to keep the promotions during rush signups, he'd leave a lot of money on the table. It's just the nature of the industry. Signups aren't uniformly distributed throughout the year, and consumption isn't uniformly distributed among customers. Price discrimination and contracts is just a consequence of this.