In a significant change after 26 years, Planet Fitness is increasing its $10 membership fee.
Planet Fitness will be increasing the cost of its "classic" membership from $10 a month to $15 for new members starting in the summer. This membership offers access to only one location. While the $25 monthly "Black Club" membership won't see any price hike, executives mentioned they might test higher prices for this plan in the future.
The reason for raising the base plan price by 50% for the first time since 1998 is still undisclosed by Planet Fitness executives. However, this decision comes at a time when higher interest rates and construction costs have been causing delays in new gym openings. Unlike luxury gyms, Planet Fitness has a cost-effective business model, also known as the high volume, low price (HVLP) approach, which is more sensitive to price changes.
Many businesses have increased their prices since the pandemic began in 2020, but Planet Fitness's $10 membership fee was one of the few stable constants, as it had become associated with the brand. The former CEO of Planet Fitness once described the $10 membership fee as "a 'get you off the couch' price."
Planet Fitness has used this inexpensive membership to attract individuals who want to start exercising but have never been part of a gym before, feel intimidated by gym pros at other clubs, or cannot afford more expensive options. In the US, the average monthly gym membership cost is approximately $50, and high-end gyms and specialized classes can cost double or even triple that.
Planet Fitness heavily promoted its $10 membership, including annual fees and free training, through commercials. The company has had a sizable presence at the Times Square New Year's Eve celebration for several years, aiming to encourage potential members to sign up for their resolutions. Around 40% of new Planet Fitness members had never been part of a gym before, according to the company.
The $10 membership was a profitable balancing act: affordable enough to entice customers who want to become fit and important enough that they wouldn't cancel if they didn't frequent the gym often.
After luring customers with the $10 plan, Planet Fitness tries to encourage them to upgrade to its Black Card membership, which costs more per month, offers access to all Planet Fitness gyms, and provides extras such as water massage beds, massage chairs, and tanning equipment. Black Card members are also allowed to bring a guest.
During a Thursday conference call, one analyst, Sharon Zackfia from William Blair, remarked, "it seems like an unusual time to take a 50% price increase on the classic card," considering the current economic struggles and the desire for deals. However, Planet Fitness executives insisted that consumers are accustomed to pricing adjustments and this move won't damage their business.
"We've seen in every industry people move in price," said Planet Fitness' interim CEO, Craig Benson. "So, it is not going to come as a shock to anybody that we are moving a price that's been in effect for a long, long time."
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Planet Fitness' decision to increase its classic membership fee from $10 to $15 could impact the affordability of its gym services, potentially making it less appealing to budget-conscious customers. In the media coverage of this change, analysts and consumers might discuss the impact of this price hike on the business's ability to maintain its reputation for cost-effectiveness.
Source: edition.cnn.com
