New York
Act Daily News Business
—
A fitness center membership within the United States usually prices round $50 a month. Boutique gyms and high-intensity lessons run double and triple that.
Planet Fitness, nonetheless, has supplied $10 month-to-month memberships for 30 years. The no-frills fitness center chain hasn’t raised the value, making it one of many few issues that also prices the identical regardless of the highest inflation in many years.
Planet Fitness blares out the $10 fitness center plan, which incorporates annual charges and free coaching, in commercials, and the corporate has lengthy sponsored the New Year’s Eve celebration in Times Square to get folks fascinated about signing up for memberships as their decision.
That nearly sacrosanct $10 worth has turn into a key a part of the corporate’s model positioning as an accessible, “judgment-free” membership conducive to informal fitness center goers. Planet Fitness members usually go 5 or 6 instances a month, and round 60% of them don’t go to in a 30-day stretch.
“It’s a very powerful marketing tool,” stated Simeon Siegel, who covers the corporate at BMO Capital Markets. The $10 worth is correct within the candy spot, he stated: low-cost sufficient to attract folks to Planet Fitness who need to get in form and, equally as essential, not so costly that they may cancel in the event that they don’t go usually.
For $10 a month, rare customers are likelier to carry onto the membership to say they belong to a fitness center quite than give up, he stated.
Planet Fitness makes use of $10 dues, which could be canceled at anytime, to recruit people who find themselves excited by exercising, however have by no means joined a fitness center earlier than, are intimidated by health fanatics at different gyms or can’t afford pricier golf equipment. The firm believes $10 is an entryway for the roughly 80% of Americans who don’t belong to a fitness center.
This cheap fitness center membership mannequin – identified within the health business as excessive quantity, low worth, or “HVLP” – can also be tailor-made to attraction to high-school college students accompanied by a father or mother, school college students and folks recovering from an damage or surgical procedure, stated Rick Caro, the president of Management Vision and longtime health business guide.
“It’s a ‘get you off the couch’ price,” stated Christopher Rondeau, the chief govt of Planet Fitness
(PLNT), which has grown to greater than 2,300 gyms nationwide and reached a record-high 16.6 million members final quarter. “You’re not going to give something a try for the first time and spend $50, $60, $70,” he stated.
Planet Fitness doesn’t plan to lift the $10 worth anytime quickly. Instead, it would maintain down the value by getting folks to commerce as much as its $24.99 month-to-month “Black Card” membership with extra perks.
“The longer I can stay at $10 the better off I am to get people off the couch, give fitness a try and continue to drive more value in the Black Card,” stated Rondeau.
The higher-priced month-to-month plan gives entry to all of Planet Fitness’ gyms and perks like water therapeutic massage beds, therapeutic massage chairs and tanning tools, and Black Card members also can carry a customer.
More than 60% of members subscribe to this tier, which Planet Fitness elevated by $2 a month earlier within the 12 months. The common Planet Fitness member pays round $17.60 a month, serving to the corporate preserve the decrease plan at $10.
“It’s not that different from other businesses that entice you with a low price point and then upsell you with higher options,” stated Joseph Altobello, an analyst at Raymond James.
To attraction to occasional fitness center goers, Planet Fitness’ golf equipment even have extra cardio and light-weight energy tools than many rivals and fewer heavy free weights. Planet Fitness discourages what it calls “lunk” conduct, reminiscent of dropping weights and grunting, and has a “lunk alarm” to stop folks from dropping them.
Planet Fitness has benefited from the consolidation of the health business throughout the pandemic, which has left the corporate with fewer budget-gym rivals.
Around 25% of US gyms and studios completely closed throughout the pandemic – roughly 10,000 amenities, based on the business commerce group. Several main chains, together with 24 Hour Fitness and Gold’s Gym, filed for chapter.
Planet Fitness, nonetheless, didn’t completely shut any gyms throughout the pandemic. This was largely because of its franchise fitness center mannequin, with among the gyms owned by private-equity teams.
The firm has additionally capitalized on Americans seeking to get in form within the aftermath of the pandemic. Monthly visits to US gyms are increased than they have been in 2019, based on Placer.ai, which tracks foot visitors to retailers.
Despite the rise of Peloton and the at-home exercises many individuals received used to throughout pandemic lockdowns, at-home train shouldn’t be a risk to Planet Fitness’ $10 mannequin.
“It’s a different customer,” Altobello stated. “Not everyone has the money or the space to create an at-home gym.”