Their business model exploded thanks to the COVID pandemic, but they weren’t selling cold medicine or throat lozenges or even the cotton swabs that have been stuck up millions of noses at this point.
No, Peloton’s business was home fitness gear, and business was good as the nation went into lockdown and public spaces like gyms were temporarily shuttered.
People looking for ways to keep in shape and suddenly flush with stimulus checks rushed online, bought Peloton’s expensive exercise bikes and subscribed to the company’s personal training regimen, sending not just the cost of the equipment Peloton’s way but also a monthly subscription fee that left the fledgling business’s coffers overflowing with legal tender.
Unfortunately for Peloton, their heady rise was followed just as quickly with a steep tumble back to Earth. Once the world reopened for business and the general public could return to a usual daily routine that included trips to the gym, the sudden fitness giant would crumple under the weight of an expansion that couldn’t last.
But now, the company believes they may have a way to regain at least some of their footing in the exercise marketplace, and it involves making their product drastically more affordable for consumers without so much expendable income, as generous stimulus checks have been replaced by rising costs of everyday goods thanks to supply chain challenges and steep inflation hikes.
The new Peloton plan will feature an option that doesn’t require customers to shell out the sometimes-enormous start-up fee of purchasing a Peloton exercise bike, which can retail for as much as $2,500.
Instead, fitness fanatics can pay one monthly charge that covers both the company’s on-demand fitness classes and the bike required to take advantage of them. And if the subscription gets canceled, users can return the equipment to Peloton instead of having to pay off the remaining cost to keep the bike.
Fees are expected to fall somewhere between $60-100 per month.
“I think there’s enormous opportunity for us to flex the business model and dramatically increase the [total addressable market] for new members by lowering the cost of entry and playing around with the relationship between the monthly recurring revenue and the upfront revenue,” Peloton’s new chief executive Barry McCarthy told CNBC last month regarding the company’s rethinking of its subscription plans.
The company will test the model in Florida, Minnesota, Texas and Denver.
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