New York
CNN Business
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A gym membership in the United States typically costs around $50 per month. Boutique gyms and high-intensity classes are doubling and tripling.
fitness planet, however, has offered monthly memberships of $10 for 30 years. The no-frills chain of gyms hasn’t raised its price, making it one of the few things that still costs the same despite the higher inflation in decades.
Planet Fitness highlights the $10 gym plan, which includes annual fees and free training, in commercials, and the company has long sponsored a New Year’s Eve celebration in Times Square to get people thinking about signing up for memberships. as your resolution.
That almost sacrosanct price tag of $10 has become a key part of the company. brand positioning as an accessible, “judgment free” club conducive to casual gym goers. Planet Fitness members typically go five or six times a month, and about 60% of them don’t visit in a 30-day period.
“It’s a very powerful marketing tool,” said Simeon Siegel, who covers the company at BMO Capital Markets. The $10 price is right in the sweet spot, he said: cheap enough to attract people to Planet Fitness who want to get in shape and, equally important, not so expensive that they’ll cancel if they’re not going to often.
For $10 a month, infrequent users are more likely to stick with their membership to say they belong to a gym rather than quit, he said.
Planet Fitness uses $10 dues, which can be canceled at any time, to recruit people who are interested in working out but have never joined a gym before, are intimidated by fitness freaks at other gyms, or can’t afford most expensive clubs. The company believes that $10 is a buy-in for about 80% of Americans who don’t belong to a gym.
Known in the fitness industry as high volume, low price, or “HVLP,” this affordable gym membership model is also designed to appeal to high school students accompanied by a parent, college students, and people recovering from injury or surgery, said Rick Caro, president of Management Vision and a longtime consultant to the fitness industry.
“It’s a ‘get you off the couch’ price,” said Christopher Rondeau, CEO of Planet Fitness.
(PLNT), which has grown to more than 2,300 gyms across the country and reached a record 16.6 million members last quarter. “You’re not going to try something for the first time and spend $50, $60, $70,” she said.
Planet Fitness doesn’t plan to increase the $10 price anytime soon. Instead, it will keep the price down by having people trade up to their monthly “Black Card” membership of $24.99 with more benefits.
“The longer I can stay at $10, the better I am at getting people off the couch, testing fitness and continuing to build more value on Black Card,” Rondeau said.
The highest-priced monthly plan offers access to all Planet Fitness gyms and perks like water massage beds, massage chairs and tanning equipment, and Black Card members can also bring a visitor.
More than 60% of members sign up at this level, which Planet Fitness increased by $2 a month at the beginning of the year. The average Planet Fitness member pays about $17.60 a month, which helps the company keep the plan lower at $10.
“It’s not that different from other businesses that lure you in with a low price and then sell you with 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-strength equipment than many competitors and fewer heavy free weights. Planet Fitness advises against what it calls “lunk” behavior, such as dropping weights and grunting, and has a “lunk alarm” to prevent people from dropping them.
Planet Fitness has benefited from the consolidation of the fitness industry during the pandemic, which has left the company with fewer budget gym competitors.
About 25% of US gyms and studios Closed permanently during the pandemic: About 10,000 facilities, according to the industry trade group. Several major chains, including 24 Hour Fitness and Gold’s Gym, have filed for bankruptcy.
Planet Fitness, however, did not permanently close any gyms during the pandemic. This was largely due to its gym franchise model, with some of the gyms owned by private equity groups.
The company has also capitalized on 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 many people have grown accustomed to during the pandemic lockdowns, home fitness isn’t a threat to Planet Fitness’s $10 model.
“It’s a different customer,” Altobello said. “Not everyone has the money or the space to create a home gym.”
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