Peloton Trials New Pricing Model

Peloton is set to introduce a new pricing system Friday (March 11) that allows customers to pay one monthly fee for their workout equipment and to take part in the home fitness brand’s on-demand exercise classes.

According to a CNBC report Thursday (March 10), the trial program will run in Texas, Florida, Minnesota and Denver, with fees ranging from $60 to $100 a month. The option will only be available through Peloton’s physical stores and fitness studios and not online.

If users decide to cancel, Peloton will take back the Bike at the cost of an added delivery fee, the company said.

Peloton spokeswoman Amelise Lane told the network the company wants to explore various pricing models and options for new customers.

“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,” she said.

Read more: New Peloton CEO: No Plans to Sell Floundering Connected Health Brand

The report also quotes BMO Capital Markets analyst Simeon Siegel, who wondered what the program will do to Peloton’s brand, and its finances.

“For a company that has been plagued with logistic issues, they are now effectively allowing people to return their piece of equipment, at a moment’s notice,” he told CNBC, saying Peloton was doubling down on delivery and logistics “rather than walking away from it.”

Siegel also wondered what the program would do to Peloton’s churn rate, which the company has so far been able to keep low.

“Does Peloton become a winter experience for customers who every year rent the bike for four months, and then give it back when the weather’s nice?” he asked. “That becomes a very expensive customer.”

Last month, Peloton’s newly minted CEO Barry McCarthy said he wanted to help the company pursue growth opportunities such as doubling its slate of on-demand content offerings, expanding into new companies and adding new products. He also dismissed the notion that the company was on the verge of being sold.

“If I thought it was likely that the business was going to be acquired in the foreseeable future, I can’t imagine it would be a rational act to move across the country,” he said. “There are lots of other things I could be doing with my time that are quite lucrative than hanging out with a business that’s about to be sold.”