Peloton’s testing a leasing program for its Bike
Peloton CEO Barry McCarthy hasn’t been coy about how he plans to get the struggling fitness company back on course. A few weeks ago, McCarthy both quashed sale rumors and dangled the idea of shaking up Peloton’s subscription models. Now, Peloton says it’ll pilot a new subscription model called One Peloton Club in select states starting Friday.
Under the new model, customers will pay a single $60–$100 monthly fee that covers renting the Bike and the cost of classes, according to a Wall Street Journal report. If the customer decides to cancel, Peloton will take back the bike free of charge. The pilot will be available in Texas, Florida, Minnesota, and Denver for a limited time. Customers will have to stop by a local showroom to sign up — it’s not available online. You can see the addresses of those locations here. In certain markets, Peloton will also charge a one-time $250 delivery fee.
“Peloton has created a limited pilot program in select U.S. markets to explore various pricing models and options for new members,” Peloton spokesperson Amelise Lane told The Verge in an e-mail. “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.”
Until now, users have had to buy the Bike and pay a separate $39 monthly subscription fee. If a customer were to use financing, that would mean a monthly payment of $45. Together with the monthly subscription, that adds up to $84 a month until the Bike is paid off. Under the new pilot, it’s possible to pay less each month to have the Bike at home. Previously, the cheapest option would’ve been Peloton’s digital-only subscription, which costs $12.99 monthly. This rental doesn’t eventually pay off your bike, but Peloton says that, like car leases, subscribers have the option to purchase their bike with “Buyout” pricing detailed in the club agreement.
This isn’t the only move Peloton’s made to draw in new customers. Last week, Peloton extended its free at-home trial from 30 to 100 days for a limited period.
Regardless of whether the new pricing strategy pays off, it’s a clear sign that McCarthy is putting his stamp on things. McCarthy was previously the CFO of Spotify and Netflix, and former CEO John Foley pointed to his experience with subscriptions as a major reason why McCarthy was brought on. At last month’s Q2 earnings, it was also clear that Peloton is aware that it needs to shift from a hardware-first strategy to one that puts its content front and center. McCarthy echoed that sentiment in a recent Financial Times interview.
That doesn’t mean Peloton is completely jettisoning hardware from its overall business. The company is expected to launch its camera-based Peloton Guide strength training system this year, and a connected rower has also been rumored.