The company announced today that as of November 2, it would no longer offer its “Unlimited” plan, meaning subscribers to the fitness membership plan will have to choose between a 10- or five-class plan.
ClassPass originally launched as a monthly package of 10 classes for $99, but after it offered a promotion for unlimited classes in 2014 that was wildly popular, it kept the promotion in place, and unlimited monthly classes quickly became the main draw for many subscribers.
Over the past year, however, it seems the company has been involved in some serious self-reflection as to how to make its controversial business model more viable, and it’s made many changes—like raising prices and tweaking its products—to various effect. Why was discontinuing the Unlimited plan the next step?
“We simply couldn’t make the plan work for our business.”
To coincide with today’s announcement, CEO Payal Kadakia posted her surprisingly honest, detailed take on why the Unlimited plan could never have worked from a business perspective on the company’s blog.
“For every class taken, we paid our studio partners. The more classes that were taken, the more we paid. As you can imagine, our business costs increased rapidly. So we raised our plan prices in an effort to compensate—but we tried not to raise them too much. After all, we wanted to remain as accessible as possible,” Kadakia explains. “But in some cities, we even had to raise our prices twice in one year, which was awful for our members and painful for my team. We simply couldn’t make the plan work for our business.”
How will the new model work?
Here are the nitty-gritty details you need: the Unlimited plan is discontinued as of today, and ClassPass-ers who are currently on it will be switched to the Core plan, which comes with 10 classes per month (and varies in price depending on the city). To ease the transition, those customers will get 30 more days of unlimited classes and then will receive 10 bonus classes per month for the first three months on the new plan.
Going forward, ClassPass will offer five- and 10-class packs in all markets, with the option to purchase add-on packs of extra discounted classes.
What will the long-term effects be?
While the overall value will still be a good deal if you’re partial to studios with $35 classes, you could see how some fitness junkies may bail on the plan if they can’t use it to satisfy their everyday workout needs.
But Kadakia says they don’t expect a high percentage of members to opt out. “We know that users have fallen in love with the variety, flexibility, and convenience that we offer, and with the new packaged options and add-on packs of classes, we think it will still be the most affordable and seamless for our members to get what they need from both us and our partners,” she says.
And for the studio owners—who love the exposure ClassPass offers but often complain about the rates they’re paid and how few members convert to regular customers—it’s hard to know what the effects may be. It seems likely that fewer classes per month will be booked overall, which means they may make less, but it could also add a sense of value to each class and encourage people to book at specific studios when their classes run out.
“While we don’t have immediate plans to adjust our rates to studios and gyms, this step in investing in our own business economics will set us up to expand our offerings in ways that directly benefit our partners by driving even more exposure,” Kadakia promises.
Either way, the death of the Unlimited plan will most certainly result in many people spending this week rethinking their fitness routines.