Report: Peloton to Begin Testing New Pricing Plans that Bundle the Bike Purchase & Subscription Fee

Update – Peloton has announced their new pricing program, officially called the “One Peloton Club”.

The Wall Street Journal is reporting that Peloton will begin testing new pricing plans that bundle the initial purchase of a Bike with the monthly subscription fee. These plans could sell for anywhere between $60 and $100 per month, and will first be tested at select Peloton showrooms in Florida, Minnesota, Texas, and Colorado beginning on Friday, March 11.

The goal of the test is to identify a price point that brings in new customers by drastically decreasing the costly upfront purchase of a Peloton Bike (currently sitting at $1,745 for the Bike and $2,745 for the Bike+ after Peloton eliminated free shipping and delivery earlier this year), and instead allowing the customer to spend that money over a longer period of time.

Customers would be able to cancel their subscription at any time and return their Bike to Peloton for an additional delivery fee. This offer will only be available for in-person purchases at the selected testing showrooms and will not be available online.

The Wall Street Journal reports:

If adopted, the model would be a major shift for Peloton, which built a business around selling high-price, screen-equipped stationary bikes alongside $39-per-month subscriptions to its connected workout classes. The idea: sell Peloton as a fitness service that can be canceled anytime rather than as a major purchase with a subscription attached.

Peloton provided this statement about their new approach on testing & data:

This aligns with Peloton’s belief that intuition drives testing and data drives decision making as the company sets course for the next phase of its evolution and growth.

According to new Peloton CEO Barry McCarthy, the idea of the test is to let customers indicate what pricing structure works for them, and hopefully help Peloton figure out how to bring in new members. This also demonstrates a calculated shift from relying on the high costs of Bike and Tread devices for profits to an effort to make more money on the monthly subscription fees:

Given Peloton’s ability to retain subscribers, Mr. McCarthy said, higher subscription rates carry big profit potential over time. Even at $39, Peloton subscriptions are hugely profitable, he said. He said he wants to employ models that succeeded at Spotify and Netflix and that Peloton has far higher retention rates than either of those companies.

The $39 per month All Access members (those who own a Bike or Tread device) pay has remained constant since Peloton’s initial Kickstarter campaign. After mentioning in numerous interviews that Peloton’s pricing structure could change, McCarthy confirmed earlier this month that this would only apply to potential new customers. The $39 per month All Access price that current members are used to is not going anywhere, according to McCarthy.

The Wall Street Journal also reports that McCarthy is exploring other new avenues for Peloton:

Among potential offerings he thinks Peloton should look at developing: its own social-media platform, more seamless ways for members to interact and compete with each other during classes, and partnerships that could land Peloton classes on other devices, or allow outside content to stream on Peloton’s screens.

However, it appears that at the moment Peloton is focused on this market test that they believe has the potential to acquire a new set of customers.

The Wall Street Journal first reported this story, and CNBC has also reported on the pricing tests.

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Katie Weicher
Katie Weicher is a writer for Pelo Buddy. She purchased her Peloton Bike in 2016 and has been riding, strength training, and yoga flowing ever since. You can find her on the leaderboard at #kweich.

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