So once you’re in the app, you can make easy transactions. If you go to one of our athletic events and you want to buy the t-shirt associated with that, it would be a lot easier than it’s happening right now. So there’s kind of work being built. And as I talked about being sequential, I mean, the priorities that we had to get us to the point of $500-plus million of EBITDA, trumped all of these types of work. That was the number one priority. Now that we are there, we’re working on these things. So it will continue to — I hope it’s the first quarter, but at the latest, it will be second quarter of 2024 that we would have those machines all tied up together and then pressing the opportunity for the customers. We are not focused on doing anything different than we’ve had.
Any product that we put out there has to be absolutely the best. It has to be having the right why. And then as far as your second question, the way the prices were established for the company was a function — as I’ve said repeatedly — was a function of delivering the right experiences in the clubs. And COVID, while had many pain points for our company, also allowed us to sort of have a clean slate and really make some wholesale changes that was much tougher to make. And adjusting the price positioning of the clubs was one of those major things. For the most part, most of the clubs are in the right price point, in my opinion. I think maybe 20%, 25% of our clubs will have further opportunity to have the rack rate up a little bit in the next six months to 12 months.
But the bulk of the price changes have been made, and we really like the way the balance of revenues coming from that, the engagement of the membership from that. We really like the experience that the club can provide based on really curating, all right, this club should have 6,500 memberships, not 9,500 memberships. But at 6,500 memberships, we will have more engaged customers. So all of those have been balanced out. I would say probably 80% of the work is complete, 85% is complete. It will be going to the markets that we have been behind in executing our own play with excellence. So we have to deliver the experience the customer is super thrilled with, and then you have the price opportunity to adjust the price because that’s become secondary.
But bulk of the price adjustments have been made. The difference is now is that we still have a significant amount of members who are paying below that rack rate, which we have repeatedly also explained we would not be taking them up to the full rack rate all at once. It will be just a little bit over years, and that creates loyalty with them. Lower attrition rates also provide revenue growth opportunities to the club.
Kate McShane: Thank you.
Operator: Thank you. Our next questions come from the line of Dan Politzer with Wells Fargo. Please proceed with your question.
Dan Politzer: Hi, good morning, everyone.
Bahram Akradi: Hi Dan.
Dan Politzer: I wanted to talk on a little bit of the center OpEx. That takes us out in – just said, it’s been the biggest driver, I think, to your earnings base the last several quarters. This is an environment we keep hearing about rising costs across our companies that we cover. So I guess how are you thinking about OpEx and managing costs into 2024, either on a dollar basis versus 2023 or a per center basis? But I know this could be a little bit noisy given your evolving mix of new centers ramping and asset-light conversion. So any kind of high-level thoughts on 2024 and more on the cost side.
Bahram Akradi: I’ve been — I think that — I think what you’re saying is, are we expecting the cost of operations increase, right? Is that what you’re asking?
Dan Politzer: Yes, whether it’s labor, whether insurance, marketing, any — in terms of your center OpEx, right, because that’s just — that’s driven a lot of the upside at least relative to where we value. So as we think about going forward, maybe the puts and takes as you think about how the cost environment has been pretty much a challenge across the board here.
Bahram Akradi: Yes, I don’t really see that any specific unusual thing. I think, traditionally, you expect labor go up 1%, 2%, 3%, something like that. And that’s part of just the inflation, inflationary factors, normal inflationary factors. But right now, we’re not seeing any major challenges or problems. There’s no employee challenges. There’s no shortage of employees. There is more people applying to get work than they have in the past a couple two, three years. The number of people applying for personal training jobs have doubled. So I — we really have no excuses for that, at least we don’t.
Dan Politzer: Okay. Great. And then another kind of follow-up question on just the conversions. As you think about next year, I don’t know if you’ve given a number specifically in terms of new units. I think we’re usually penciling 10 to 12. So I think as we look in the website, I think maybe two of those are asset-light and seven are the big asset-heavy type build. So one, wanted to see if you have an expectation for a number of new units next year and maybe the mix. And then similarly, how we should think about the evolving change in whether it’s dues per membership or mix of in-center revenues versus the other ancillary services as you shift to more of these asset-light conversions?
Bahram Akradi: No, when we talk about asset light, it’s not — these are not a different business model than — I appreciate you asking and giving us the chance to clarify this. We’re not planning to deliver a different experience or a different product, a different price point with the asset light. It’s just that they’re just asset-light. We’re taking over other assets, remodeling them to deliver the Life Time experience. The landlords are bringing us assets and giving it to us, and they’re giving us significant TIs to take those assets. We think with the pressure on the real estate market, there’s going to be a lot more of those coming up rather than a lot less. But we are not intending to deliver a different price point or a different experience.
And I’m so glad you’re asking so that there’s no confusion here. It’s just going to be still Life Time, it’s still the same price point, so the same margins. Everything is the same. It’s just we don’t have to plop a huge amount of money upfront on our own. And look, again, I look at this company, obviously, super long term. three, four years from now, our EBITDA will be such that will allow us to build all of our ground ups out of internally generated cash flow as well. So — and we still are committed to sale-leaseback. When the interest rates subside, start going the other direction, I think we’ll have the opportunity and we immediately will take into that. In that point, if we take the sale-leaseback proceeds plus our internally generated cash flow, it’s going to be way more cash flow than the company needs.
So it’s either one of the two things, reducing debt substantially more — and that makes sense to a point — and then I will go to the Board and ask for a share buyback plan put together and we have the ability to do that as well when it makes sense. Right now, I just want to be clear, the next important priority for me and the rest of the company, it puts Life Time in control of its own destiny. And that is what we have in our foresight for the second quarter of next year to be cash flow positive after we pay for all of our growth. I really appreciate the questions. I really — one, I think that the questions you guys ask creates more clarity or helps you guys build your models. But for me and Life Time, we have just been sequentially getting done what’s important for the company, and we’re in a really great position right now.
