Peloton cut the price of one of its memberships but ignored another, infuriating some of its most loyal customers
- Peloton reduced the price of its digital-only subscription from $19.49 a month to $12.99 a month at the beginning of December.
- Some of its most loyal users told Business Insider that they were "left salty" after Peloton didn't also reduce the cost of the $39 monthly membership that customers are required to purchase if they buy its bike or treadmill.
- Peloton customers have access to the same live and on-demand classes through both memberships.
- There are two differences with the $39 membership, however. First, it is connected to the bike or treadmill and tracks the performance of the user onscreen. Second, it's possible for multiple users in the same household to use the machine-connected membership, while the app is charged on a per-person basis.
- Some customers say they believe they shouldn't be paying extra to see their performance metrics onscreen, and that this should be included in the cost of the bike or treadmill.
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Peloton announced that it would be cutting the monthly cost of its app by nearly $7 this month, meaning that customers now pay a $12.99 monthly fee to access its live and on-demand classes rather than $19.49.
The news was celebrated online by its app users, but many of its core customers - those who have forked out $2,000 for the Peloton bike or $4,000 for its treadmill and are required to pay $39 a month to access the workout classes on these machines - felt differently, as they didn't see any price decreases to their own membership program.
To understand their grievances, it's important to know the exact differences between these two services.
The $12.99 membership, dubbed the "digital membership," offers customers access to all of Peloton's live and on-demand classes, including any that are designed for the Peloton bike and treadmill. Customers who don't have the Peloton machines can use the app to work out on a standard bike or treadmill or in the gym, for example.
The $39-a-month membership, known as the "connected fitness" membership, is what Peloton sells to customers who have purchased the bike or treadmill so they can access its classes. You cannot use the $12.99 membership with the Peloton bike or the treadmill, so the only options these machine owners have are to either pay the $39 a month to take all of the available classes, or to not buy a membership at all and work out using the three preloaded classes on the machine.
The second difference is that multiple people from the same household can log in and use the $39 membership, while only one person can register to use the $12.99 app.
'I shouldn't have to spend $39 just for my screen to work'
One longtime Peloton bike owner who wished to remain anonymous told Business Insider that she thinks Peloton "missed the mark" with its new price changes. This user, who has owned a bike since December 2016, said she posted her thoughts about the pricing changes to the Facebook group for Peloton members and received a wave of abuse from other Peloton users, so she preferred to keep her identity private.
"The gap between the digital app and the subscription is now $26 a month versus the previous $20. In my mind, all I see is I am paying more for the same service," she said.
She continued: "Don't get me wrong, I love the bike and the app, it's superior to anything else but their current marketing plans are leaving me salty! What are they doing for the people who have been loyal for 3 years?"
Her main issue with the pricing structure is that she doesn't think she should be paying $26 more to have access to her performance metrics. She said she believes that this feature should be included in the cost of the bike and not in the membership.
"I paid for that with the bike," she said. "I shouldn't have to spend $39 just for my screen to work."
She also questioned why Peloton doesn't offer extra benefits for the $39-a-month membership users to keep them happy; she suggested that the company give only these customers access to the live classes.
"In my mind, that makes perfect marketing sense, as that's a fear of missing out," she said.
Other users agreed and said that Peloton's pricing strategy risks alienating its core customer altogether.
"I don't find this price decrease for app riders fair ... We pay over $2,000 for a bike plus monthly subscription. I love my bike, I love the community, and the trainers, but the least they could do is drop the price for us as well," 33-year-old Peloton bike owner Christina Steward wrote in an email to Business Insider. Steward has owned the bike since January.
Another bike owner, Rhonda Harris, told Business Insider that's she's having "buyer's remorse" since she bought her Peloton bike nearly two years ago.
"Between the cost of the bike, the lack of good music now, and the ongoing $40/month, I feel like it's kind of an insult to bike owners to reduce the app fee so much but not reduce the monthly cost for the bike owners," she said.
Harris was one of several Peloton bike owners who previously told Business Insider that she had noticed that the quality of music on the platform had dropped since Peloton was hit with a $300 million lawsuit from a group of music producers this year. The lawsuit meant that Peloton was forced to delete certain classes from its system and not feature hundreds of popular songs.
A Peloton spokesperson did not respond to Business Insider's requests for comment on this article.
Peloton touts the multiple-user option as being a key bonus to the $39 membership. Some users said that while this might make it more affordable for households sharing the bike, it's not a one-size-fits-all solution.
"It's a great deal for families or for those that have multiple riders," Peloton bike user Jared Rahambe told Business Insider, but "in my opinion, most people only have one user on their bike."
The price cut to the app is likely intended to lure more people into the Peloton network. The company clearly stated in the paperwork for its recent IPO that the core focus of the app is to give users the opportunity to try Peloton content before they purchase the bike or the treadmill. But, some users say this price cut could end up doing the reverse.
"If this was the current situation when I was deciding whether to order I would not have ordered the bicycle and bought a high-end spin bike using the app instead," 31-year-old bike owner Jessica Skapetis wrote in a Facebook message to Business Insider.
Making sure the price is right
Correct pricing of products is clearly a concern for the company. Earlier this week, Peloton's CEO John Foley said that the company is working on a new, lower-priced version of its treadmill to roll out in the coming years as it looks to have more of a mass-market appeal.
And keeping its core customer loyal should remain at the forefront of its agenda as the connected-fitness subscribers are its biggest revenue driver. According to Peloton's S-1 filing, there were around 500,000 connected-fitness subscribers in fiscal 2019 versus 102,000 app subscribers as at the end of June 2019.
The new pricing changes aren't dismaying all of its customers, however. Plenty of Peloton bike owners are defending the company in Facebook groups and still say it is a more affordable option than attending spin classes in boutique fitness studios, for example, where a class can often cost anywhere between $25 and $45.
"I am still saving a huge amount," 38-year-old Kristin Jackson, who previously attended Flywheel studio classes before buying a Peloton bike in October, wrote in an email to Business Insider.
"For me, it's totally worth the extra cost," she said.
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