Classpass Is Changing Its Business Model in a Huge Way
ClassPass announced today it is making some big changes to its much-talked-about business model, and they'll likely impact current and new members as well as fitness studio owners in major ways.
The biggest change is the introduction of a five-class package in all of its markets across the country, which will be available in addition to its unlimited monthly memberships.
"We are creating an easier entry point for new users who have an appetite for boutique fitness, while maintaining the ability to keep offering an exceptional experience to those who love our unlimited product," says CEO and co-founder Payal Kadakia, noting that a one-size-fits-all membership is no longer diverse enough to serve all ClassPass members' needs.
Members will also now be able to purchase individual discounted classes at studios via ClassPass, to supplement their workout schedule after hitting monthly limits. (Boston's prices are going up, too, to a hefty $180 per month for the unlimited, compared to NYC and LA's $125. Sorry, Boston.)
ClassPass is rolling out discounted five-class packs and individual classes in all of its markets across the country.
While ClassPass democratized the previously inaccessible boutique fitness scene for less wealthy consumers with its unlimited workout class membership model, it's also faced a lot of recent criticism from some studio owners, who say it hurts the industry by devaluing fitness classes and making it difficult for them to make ends meet, since most users do not convert to regular customers. (ClassPass says they have a 96 percent retention rate among studios.)
Last week, ClassPass executives did damage control in London after popular studios said they were discontinuing their partnership based on a change in revenue structure, according to Welltodo. The company also recently announced the hiring of its first CMO and CTO.
So how might these most recent changes shake things up?
The introduction of the five-class package (at $75) could help with some studio complaints since consumers will be paying more per class (and are therefore higher value customers), and it adds an option that will help ClassPass attract a wider range of members.
Higher monthly membership prices in Boston may signal increases in other cities.
And Kadakia says data has shown that users have high interest in returning to favorite studios after hitting monthly limits but rarely go outside of the platform to purchase classes directly from studios, so offering the ability to purchase extra discounted classes via ClassPass could help studios. "ClassPass is enabling studios to gain incremental revenue by filling additional unsold spots to users who would have not otherwise purchased by making it easier to manage the booking process," she says.
The higher monthly price in Boston also seems to suggest that monthly membership prices may soon increase in other cities, although ClassPass won't confirm specifics. "We don’t have specific cities or timelines to share at this point, but we will continue to evaluate and analyze pricing and packages on a by-city basis to determine what's best given the varied dynamics of each specific market given factors like class rates, studio density, and member usage behavior," Kadakia says.
Find out about another company that could seriously change how people book fitness classes.
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