peloton
Bulletins

Forget buying a Peloton bike upfront. The company now wants a monthly subscription.

Peloton is testing a model where customers buy a monthly fee that includes the equipment and subscription.

Peloton Interactive Inc. stationary bicycles sit on display at the company's showroom on Madison Avenue in New York, U.S., on Wednesday, Dec. 18, 2019

Peloton is trying to make money again.

Photo: Jeenah Moon/Bloomberg via Getty Images

Peloton has a new idea to rake in money again: Bundle the bike and subscription costs.


The company is testing out a new plan in which customers get a bike and subscription for between $60 and $100 a month. Customers who cancel their subscription can return their bike at no charge. Previously, users purchased the stationary bike, then paid a $39 monthly subscription for its workout classes.

Peloton implemented a hiring freeze in November, and just a couple of months later, it hiked the price of its bikes and treadmills. The company's former CEO blamed a decrease in bike purchases on the allegedly waning COVID-19 pandemic. Peloton later laid off a slew of sales and marketing staff, temporarily stopped production of its bikes and tapped a firm to help cut costs at the start of the year.

Now, the company has a new CEO, Barry McCarthy, and rumors about a potential sale of the company are floating around, although McCarthy swears it won’t happen any time soon.

McCarthy told The Wall Street Journal that higher subscriptions are more profitable over time, and Peloton already does a good job at retaining subscribers. So rather than getting people to make a major Peloton purchase from the start (the cheapest Peloton bike at the moment is $1,495), the new model will slowly draw customers in with no upfront costs and the option to cancel at any point. The new subscription model is currently being tested in Texas, Florida, Minnesota and Denver, Colorado.

McCarthy also plans to reshuffle Peloton's executive team and look into simpler bikes, according to The Wall Street Journal. He wants to turn the company’s capital spending strategy around by spending more money on Peloton’s digital systems and content rather than investing mostly in equipment like bikes and treadmills.

The company got its Apple Watch integration to work, too. The Peloton watch app will alert users any time they start a class on the Bike, Bike Plus or Tread, and users can start recording their workouts from there.

This story was updated to clarify Peloton's monthly fee.

Sarah Roach

Sarah (Sarahroach_) writes for Source Code at Protocol. She's based in Boston and can be reached at sroach@protocol.com

barry mccarthysubscriptionspeloton
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