Hot NY startup ClassPass just made a big change to how it works, and some people will have to pay more

ClassPass started as a $99 a month, all-you-can-sweat dream for fitness lovers, but the New York startup is learning that a one-size-fits all approach may not be the best one.

On Wednesday the company is announcing that it's moving away from offering only unlimited subscriptions and adding monthly bundles that let people pay for just a few classes at a time.

"We're committed to making sure an active lifestyle is accessible to everyone and this is one of the steps in that direction. There's different segments out there, different behaviors out there, so we're continually building our plan to cater to that active lifestyle," said ClassPass founder and CEO Payal Kadakia.

So far, the hot New York startup had only experimented with pricing changes, raising the original $99 monthly price to around $125 in some markets. The membership lets users take fitness classes at a diverse group of studios and gyms, from widely known ones like Barry's Bootcamp and Flywheel to boutique shops offering barre, yoga, pilates, and more. With an average class price of $25 in markets like Boston, it was easy to justify the price in only a couple of workouts.

"The break even is not that many work outs, so we're really confident in the value we're offering," said Fritz Lanman, executive chairman of ClassPass.

Starting Wednesday, ClassPass is raising its prices again, but it's also introducing new workout plans to entice more people to start moving.

Boston boost

Beginning only in Boston, the typical unlimited membership will increase from $119 to $180 for new members. People already on the workout plan will be grandfathered in at $150.

For people who don't want the obligation of an unlimited monthly membership but still want to work out a few times a month, ClassPass is also offering new 5 pack membership bundles of classes for $65 and 10 pack bundles for $120 in Boston.

Elsewhere around the country, unlimited membership prices will stay the same for now, although they also added a 5-class option, priced based on the market..

The new tiers are supposed to attract not only the fitness fanatics who love the unlimited option, but also people looking for a gateway into the boutique fitness classes the company offers.

"So if you're a hardcore runner outside or if you already go to a gym and you want to supplement, we now enable that," Lanman said. "If you're just getting going in fitness and there's something intimidating about getting up and going a lot, it's an easy way to get started."

If a ClassPass user maxes out the three workouts per gym a month rule, they can also start purchasing individual gym classes directly from ClassPass. These aren't set at the full-sticker price like a typical walk in, but the gym still has a say in what discount they're willing to give, Kadakia explained.

The Groupon problem

The new pricing moves could also help the company avoid the dreaded "Groupon problem". As Groupon grew, its businesses who had seen a spurt in sales then struggled to convert customers to pay the full price and regular customers felt like they were then over-paying.

Feedback from the gyms shows they're getting more overall business from both ClassPass users and those who defect to join the boutique and leave the subscription altogether, she says. Adding more offerings for casual fitness users or the die-hards who just want to add one more class benefits both ClassPass and the gym together, Kadakia said.

"We're growing the market, which means the rising tides float all boats," Lanman said.