Why Planet Fitness hasn’t increased its $10 monthly gym price in 30 years – CNN | CarTailz

new York
CNN business

A gym membership typically costs around $50 per month in the United States. Boutique gyms and high-intensity classes run double and triple that.

However, Planet Fitness has been offering $10 monthly memberships for 30 years. The no-frills gym chain hasn’t hiked the price, making it one of the few things that’s still priced the same despite experiencing the highest inflation in decades.

Planet Fitness belts out its $10 fitness plan, which includes annual fees and free exercise, in commercials, and the company has long sponsored the New Year’s Eve celebration in Times Square to get people considering signing up for membership as a resolution .

This almost sacrosanct $10 price tag has become a key element of the company’s brand positioning as an accessible, “non-judgmental” club that benefits casual athletes. Planet Fitness members typically go five or six times a month, and about 60% of them don’t visit within 30 days.

“It’s a very powerful marketing tool,” said Simeon Siegel, who oversees the company at BMO Capital Markets. The $10 price tag is spot on, he said: cheap enough to lure people to Planet Fitness looking to get in shape and, just as important, not so expensive that they quit if they don’t go often .

For $10 a month, infrequent users are more likely to hold on to a membership to say they belong to a gym than cancel, he said.

Planet Fitness uses $10 fees, which can be canceled at any time, to recruit people who are interested in exercising but have never joined a gym, are intimidated by fitness fanatics at other gyms, or can’t afford more expensive clubs . The company believes that $10 is an entry point for the roughly 80% of Americans who don’t belong to a gym.

This low-cost gym membership model — known in the fitness industry as High Volume, Low Price, or “HVLP” — is also tailored to appeal to high school students accompanied by a parent, college students, and people recovering from injury or surgery recover, said Rick Caro, president of Management Vision and longtime advisor to the fitness industry.

“It’s an award that gets you off the couch,” said Christopher Rondeau, chief executive officer of Planet Fitness (PLNT), which has grown to more than 2,300 gyms nationwide and hit a record high of 16.6 million members last quarter. “You’re not going to try something for the first time and spend $50, $60, $70,” he said.

Planet Fitness has no plans to increase the price from $10 any time soon. Instead, it will keep the price down by getting people to trade with more perks up to its $24.99 monthly “Black Card” membership.

“The longer I can stay at $10, the better I can get people off the couch, try fitness, and continue to drive more value into the Black Card,” Rondeau said.

The higher-priced monthly plan offers access to all of Planet Fitness’ gyms and perks like hydromassage beds, massage chairs, and tanning equipment, and Black Card members can bring a visitor too.

More than 60% of members subscribe to this tier, which Planet Fitness increased by $2 a month earlier in the year. The average Planet Fitness member pays around $17.60 per month, which helps the company keep the lower plan at $10.

“It’s not that different from other companies that lure you in with a low price point and then offer you higher options,” said Joseph Altobello, an analyst at Raymond James.

To appeal to casual gym-goers, Planet Fitness’ clubs also have more cardio and light-weight machines than many of its competitors, and less heavy free weights. Planet Fitness discourages so-called “lunk” behavior, such as

Planet Fitness has benefited from consolidation in the fitness industry during the pandemic, which has left the company with less-affordable gym competitors.

Around 25% of US gyms and studios permanently closed during the pandemic – around 10,000 facilities, according to the industrial trade group. Several large chains, including 24 Hour Fitness and Gold’s Gym, filed for bankruptcy.

However, Planet Fitness has not permanently closed any gyms during the pandemic. This was in large part due to the franchise gym model, where some of the gyms are owned by private equity groups.

The company has also benefited from Americans looking to get in shape after the pandemic. Monthly visits to US gyms are higher than in 2019, according to Placer.ai, which tracks foot traffic to retailers.

Despite the rise of Peloton and the at-home workouts that many people have become accustomed to during the pandemic lockdowns, at-home workouts are no threat to Planet Fitness’ $10 model.

“It’s a different customer,” Altobello said. “Not everyone has the money or space to set up a home gym.”

Leave a Comment