Source: CNN
The Planet Fitness $10-a-month membership plan is a powerful marketing tool and a central part of its strategy. But the largest gym chain in the United States is hiking that monthly fee for the first time in more than two decades.
Planet Fitness will raise the price of its “classic” membership from $10 a month to $15 for new members beginning in the summer. The “classic” membership gives people access to one location. (Planet Fitness’ $25 monthly “Black Card” membership offers more location access and perks. Planet Fitness is not hiking this fee, although executives said they may begin testing higher prices for the plan.)
Planet Fitness executives did not specify why the chain is raising the basic plan by 50% for the first time since 1998, but the move comes as higher interest rates and construction costs have slowed down new gym openings. Planet Fitness has no-frills gyms, with a basic selection of machines, no steam rooms or towels in the locker room to hold down costs. Higher costs threaten its business model — known in the fitness industry as high volume, low price, or “HVLP” — more so than luxury gyms.
Businesses around the country have raised prices since the pandemic began in 2020, but Planet Fitness’ $10 fee was one of the few things that had not changed because it was synonymous with the brand.
“It’s a ‘get you off the couch’ price,” Planet Fitness’ former CEO told CNN in 2022.
Planet Fitness has long used the $10 basic membership to recruit people who are interested in exercising but have never joined a gym before, are intimidated by fitness fanatics at other gyms or can’t afford pricier clubs. (A gym membership in the United States typically costs around $50 a month, and boutique gyms and high-intensity classes run double and triple that.)
Planet Fitness blared out the $10 gym plan, which includes annual fees and free training, in commercials. The company has sponsored the New Year’s Eve celebration in Times Square for years to get people thinking about signing up for memberships as their resolution. Forty percent of new Planet Fitness members have never belonged to a gym prior to signing up, according to the company.
The $10 price was right in the sweet spot: cheap enough to draw people to Planet Fitness who want to get in shape and, equally as important, not so expensive that they will cancel if they don’t go often, say analysts.
Planet Fitness then tries to upsell these members by pushing them to its Black Card membership. The higher-priced monthly plan offers access to all of Planet Fitness’ gyms and perks like water massage beds, massage chairs and tanning equipment, and Black Card members can also bring a visitor.
On a conference call Thursday, one analyst, Sharon Zackfia from William Blair, said, “it does seem like an odd time to take a 50% price increase on the classic card,” given that consumers have been strained by inflation and are searching for deals.
But Planet Fitness executives said consumers have grown accustomed to price hikes and the move will not hurt business.
“We’ve seen in every industry people move in price,” Planet Fitness interim CEO Craig Benson said. “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.”