Peloton Testing Out Bundled Pricing as Company Looks for Boost

Aiming for More Subscribers

Interest in at-home workout solutions is cooling as the pandemic wanes. Peloton (PTON) currently has 6.6 million members, and the company is now tinkering with its pricing model in the hopes of attracting new customers. The firm’s competitors include Hydrow, Tonal, and Lululemon (LULU), which also offers equipment and on-demand classes.

Peloton hopes to build customer loyalty by offering integrated fitness solutions, with a range of connected options. The latest strategy involves bundling equipment purchases and subscriptions together as a package deal, in select markets.

Getting Financials into Shape

Barry McCarthy has been Peloton’s CEO for around one month. He’s looking to draw on his experience as an executive at Netflix (NFLX) and Spotify (SPOT) to guide Peloton to profitability. The company’s stock price has tumbled from its 2020 high-water mark, and is currently trading below its $29-per-share IPO price.

Peloton will now offer a bike-plus subscription package for $60-$100 per month. If customers want to cancel, they only need to cover the bike’s delivery fee. These terms leave some industry analysts wondering if the strategy will just add to the company’s woes by making it too easy for customers to quit. Peloton’s churn rate in the latest period has been relatively low, coming in at just 0.79% per month.

More Fitness Options at a Lower Cost

Consumers who live in Texas, Florida, Minnesota, and Colorado will be able to take advantage of the pilot program. The workout equipment and access to a variety of on-demand fitness classes such as cycling and yoga will be included in the monthly fee.

Analysts suggest the sector could soon begin offering equipment options going beyond just bicycles. For example, Peloton plans to add a rowing machine and other cardio options to its lineup. Getting fit may become less expensive, customized, and accessible as the market evolves and competition heats up.

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