Peloton Pilots a New Pricing Model
The connected fitness company will start a new limited-time pricing system to sell PTON as a fitness service. Will the new pricing model pay off?
Peloton will experiment with a new pricing model starting this Friday, according to The Wall Street Journal. Peloton customers will pay a single monthly fee that covers the bike and a monthly subscription with the new pricing system. Peloton hopes the revamped pricing model will attract new customers and increase profits.
The limited-time pricing experiment will roll out in Peloton stores in Florida, Minnesota, Denver, and Texas, where a Peloton bike and subscription will be offered between $60 – 100 a month. Should a Peloton customer decide to cancel, Peloton will take back its bike, and the customer will incur the cost of the delivery fee.
“There is no value in sitting around negotiating what the outcome will be. Let’s get in the market and let the customer tell us what works,” Barry McCarthy, Peloton’s new CEO, said in an interview.
McCarthy told The New York Times last month that Peloton would be experimenting with its pricing model to find its “sweet spot.”
According to the WSJ, Peloton will also restructure its executive team and consider manufacturing simpler bikes.
McCarthy says Peloton will focus on social media and content offerings instead of equipment. “That’s where the user experience is, right? It’s the music. It’s the instructors. It’s all the social aspects that we have only just begun to develop — and that’s where we’re going to spend our money. Today, it’s a closed platform — but it could be an open platform and part of the creator economy,” he recently told The New York Times.
McCarthy says that in addition to the new pricing, Peloton has agreed to put any talk of selling the interactive fitness company on hold while he tries to right the ship. While McCarthy is confident – telling the New York Times that he stepped into the role believing he could fix things – he appears to be aware of the high stakes. “Either I’m going to leave here successfully or I’m going to leave with a greatly diminished reputation,” he told WSJ.
McCarthy, who has been in his new role for about a month, has referred to his ties with Peloton as a “shotgun marriage” and brings a different leadership style to the connected fitness company.
“You’ll never hear me say we’re a family. We’re a sports team, and we’re trying to win the Super Bowl. And so we’re going to put the best players on the field we can. And if you go down the field, and we throw you the ball, and you drop it a bunch, we’re going to cut you. Because everybody else who’s trying hard to win the game deserves to have the best players on the field. And if you’re a good player, you’re going to love being on this team. I love John’s strengths, but I’m running the company,” he explained.
Peloton also began experimenting with its home trial offer, extending it from 30 days to 100 days. Additionally, the connected fitness company recently emailed $300 discount codes to existing Peloton users, allowing them to share the codes with friends and family or to allow the current Pelotoner to purchase new equipment.
