Peloton, which said the cuts will be effective at 6 p.m. “The price of hardware relative to the subscription is one of many levers by which we are looking to reduce barriers to entry.” “There’s a cost to creating exceptional content and an engaging platform, and this price increase will help us continue to deliver for our members,” Peloton said. Peloton’s hardware margins are much lower - 6.4 per cent in the second quarter - and the price cuts will squeeze them further. The company had 2.77 million subscribers as of its second quarter this year, along with gross margins of nearly 68 per cent.
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The monthly subscription service, known as the All-Access Membership, allows Peloton hardware customers to attend the company’s full array of virtual workout classes. Former CEO and co-founder John Foley became executive chairman as part of the changes. McCarthy embarked on a turnaround plan after taking the job in February, part of a shake-up that included management departures and layoffs. Peloton has lost more than three-quarters of its value over the past year. The stock was down 0.6 per cent to US$24.89 as of 11:12 a.m. Peloton investors initially applauded the new pricing strategy, sending the shares up nearly 6 per cent, but the rally soon faded. The company had been a highflier during the pandemic, when stuck-at-home consumers snapped up its product, but demand slowed in the past year and its stock plummeted. New Chief Executive Officer Barry McCarthy is betting he can lure more customers to Peloton’s platform, which has long been viewed as a luxury product, and then collect more revenue from a bigger customer base. and to US$55 from US$49 in Canada, but isn’t currently changing internationally. The price is rising to US$44 from US$39 per month in the U.S. To offset the lower cost of the hardware, the company plans to increase its monthly subscription fee for the first time in eight years. “This is a strategic decision to play for scale and increase market share.” “We want more people to be able to afford our hardware,” the New York-based company said in a statement. The fitness company’s treadmill will cost US$2,345, down US$150. The price of Peloton’s original Bike will now be US$1,195, down US$300, and the higher-end Bike+ will drop US$500 to US$1,995. is slashing prices for its three major hardware products while boosting the cost of its subscription, part of a comeback plan that centers on generating more recurring revenue.
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