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Sensitivity Analysis
Understanding Risk vs. Reward Across Key Performance Variables
What is Sensitivity Analysis?
Sensitivity analysis helps you understand how changes in key operating assumptions impact your financial outcomes. By modeling various scenarios, you can identify which variables have the greatest effect on profitability and ROI, allowing you to make informed risk management decisions.
Variables Tested
5
Scenario Range
±30%
Confidence Level
95%
Base Model
Standard
1. Court Utilization Rate Impact
How court booking rates affect revenue and profitability
Low Scenario (50%)
Annual Revenue$820K
Net Income$215K
Margin26%
ROI (5-yr)28%
Base Case (70%)
Annual Revenue$1.22M
Net Income$430K
Margin35%
ROI (5-yr)40%
High Scenario (85%)
Annual Revenue$1.52M
Net Income$610K
Margin40%
ROI (5-yr)52%
Insight: Court utilization has moderate impact on overall profitability. Even at 50% utilization, membership and class revenue provide solid baseline. Focus on prime-time bookings (6am-10pm) for maximum revenue capture.
2. Membership Pricing Impact
How average membership price affects financial performance
Low ($155/mo)
Annual Revenue$995K
Net Income$310K
Margin31%
ROI (5-yr)32%
Base ($180/mo)
Annual Revenue$1.22M
Net Income$430K
Margin35%
ROI (5-yr)40%
High ($210/mo)
Annual Revenue$1.48M
Net Income$570K
Margin39%
ROI (5-yr)49%
Insight: Membership pricing is highly elastic and has significant impact on profitability. Premium markets can support $200+ pricing. Start at base pricing and increase based on demand and competitive positioning.
3. Member Retention Rate Impact
How annual retention affects long-term profitability and growth
Low (70%)
Year 3 Members495
Annual Revenue$980K
Marketing Cost+$42K
Net Income$295K
Base (82%)
Year 3 Members675
Annual Revenue$1.22M
Marketing Cost$62K
Net Income$430K
High (90%)
Year 3 Members815
Annual Revenue$1.42M
Marketing Cost-$18K
Net Income$545K
Insight: Retention is the single most important metric. High retention reduces acquisition costs and drives compounding growth. Focus on member experience, community building, and consistent service delivery.
4. Member Acquisition Rate Impact
How quickly you add new members affects cash flow and profitability timeline
Slow Growth
Break-EvenMonth 14
Year 1 Members280
Year 3 Members520
ROI (5-yr)30%
Base Growth
Break-EvenMonth 10
Year 1 Members350
Year 3 Members675
ROI (5-yr)40%
Fast Growth
Break-EvenMonth 7
Year 1 Members450
Year 3 Members850
ROI (5-yr)54%
Insight: Strong pre-opening marketing and community engagement are critical. Founder memberships, referral programs, and local partnerships can significantly accelerate growth trajectory.
5. Class Fill Percentage Impact
How Pilates and group training class attendance affects revenue per square foot
Low (55%)
Class Revenue$185K/yr
Instructor Cost$95K/yr
Net Contribution$90K/yr
Margin49%
Base (75%)
Class Revenue$265K/yr
Instructor Cost$125K/yr
Net Contribution$140K/yr
Margin53%
High (90%)
Class Revenue$330K/yr
Instructor Cost$155K/yr
Net Contribution$175K/yr
Margin53%
Insight: Class fill rate impacts revenue but maintains healthy margins even at lower utilization. Optimize schedule based on demand patterns and offer varying class times to capture different member segments.
Risk Assessment Summary
Highest Impact Variables (Prioritize)
1. Member Retention RateCritical Impact
2. Membership PricingHigh Impact
3. Member Acquisition RateHigh Impact
Moderate Impact Variables (Monitor)
4. Court Utilization RateModerate Impact
5. Class Fill PercentageModerate Impact
Recommended Risk Mitigation Strategies
- Focus on Experience: Invest heavily in member experience and community to drive retention above 85%
- Test Pricing: Start with founder pricing then adjust upward based on demand signals
- Pre-Launch Marketing: Build waitlist and secure 200+ members before opening
- Optimize Scheduling: Use data to adjust class and court schedules for maximum utilization
- Diversify Revenue: Build corporate partnerships and events to reduce reliance on single revenue stream
Want to Run Your Own Sensitivity Analysis?
Use our interactive pro forma calculator to model your specific market assumptions and see how different variables impact your potential returns. You can adjust all key metrics and instantly see updated financial projections.