Why Planet Fitness Hasn't Raised Their Monthly Gym Price by $10 in 30 Years |  CNN Business

Why Planet Fitness Hasn’t Raised Their Monthly Gym Price by $10 in 30 Years | CNN Business

New York
CNN Business

A gym membership in the United States usually costs around $50 per month. Boutique gyms and high-intensity classes run doubles and triples.

Planet Fitness, however, has offered monthly $10 memberships for 30 years. The no-frills gym chain hasn’t raised the price, making it one of the few things that still costs the same despite the highest inflation in decades.

Planet Fitness unveils the $10 gym plan, which includes annual fees and free training, in ads, and the company has long sponsored the New Year’s Eve celebration in Times Square to get people to consider signing up. memberships as their resolution.

That near-sacrosanct $10 price tag has become a key part of the company’s brand positioning as an accessible, “judgment-free” club that appeals 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 business at BMO Capital Markets. The $10 price tag is in just the right place, he said: cheap enough to attract people to Planet Fitness who want to get in shape and, just as importantly, not so expensive that they’ll cancel if they don’t go there often.

For $10 a month, infrequent users are more likely to keep their membership to say they belong to a gym rather than quit, he said.

Planet Fitness lures customers into gyms with $10 memberships and convinces them to trade up to its $24.99 plan.

Planet Fitness uses $10 dues, which can be canceled at any time, to recruit people who are interested in exercise but who have never joined a gym before, are intimidated by other fitness fanatics. gyms or cannot afford more expensive clubs. The company thinks $10 is a doorway for about 80% of Americans who don’t belong to a gym.

This inexpensive gym membership model — known in the fitness industry as high volume, low price, or “HVLP” — 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 fitness industry consultant.

“It’s a ‘get off the couch’ award,” said Christopher Rondeau, chief executive of Planet Fitness (PLNT), which has more than 2,300 gyms nationwide and has reached a record 16.6 million. members in the last trimester. “You’re not going to try something for the first time and spend $50, $60, $70,” he said.

Planet Fitness isn’t planning on raising the price by $10 anytime soon. Instead, he will hold the price down by enticing people to trade up to his $24.99 “Black Card” monthly subscription with more perks.

“The longer I can stay at $10, the better I am at getting people off the couch, trying fitness, and continuing to generate more value in the Black Card,” Rondeau said.

The pricier 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.

Over 60% of members subscribe at this level, which Planet Fitness increased by $2 per month earlier in the year. The average Planet Fitness member pays around $17.60 per month, which helps the company keep the lowest plan at $10.

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

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 discourages what it calls “lunk” behaviors, such as weight dropping and growling, and has a “lunk alarm” to keep 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 low-budget competitors.

About 25% of US gyms and studios permanently closed during the pandemic – about 10,000 installations, according to the industry trade group. Several major chains, including 24 Hour Fitness and Gold’s Gym, have filed for bankruptcy.

Planet Fitness, however, has not permanently closed any gyms during the pandemic. This was largely due to its franchise gym model, with some of the gyms being owned by private equity groups.

The company has also capitalized on Americans looking to get in shape in the aftermath of the pandemic. Monthly visits to US gyms are higher than they were 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 shutdowns, home exercise isn’t a threat to Planet Fitness’ $10 model.

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

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