Peloton, the fitness equipment and content company, is now charging people who buy its used products a one-time activation fee. Unless they purchase a refurbished product from Peloton or its distribution partners, customers in the U.S. and Canada will have to pay Peloton to use secondhand machines.
The company detailed the specifics in the Q4 2024 letter to its shareholders, noting that sales of its machines went up 16% in the secondary market. The extra sales brought in more subscribers to its monthly paid fitness subscriptions, and these new subscribers have a higher retention rate than Peloton’s direct customers. “We believe a meaningful share of these subscribers are incremental, and they exhibit lower net churn rates than rental subscribers,” the letter reads.
Peloton stationary bikes sell for a fraction of their original price (which is relatively high) on secondhand online marketplaces, and these secondhand buyers can subscribe to Peloton’s $44 monthly plan to access fitness classes and content. In order to “ensure these new Members receive the same high-quality onboarding experience Peloton is known for,” the company has implemented an activation fee.
In that context, effective immediately, people will have to pay $95 (or 125 CAD) to activate pre-owned Peloton models. This fee only applies to peer-to-peer purchases. The fee covers virtual custom fitting of Peloton Bike and Bike+, the history of the used hardware (how much the bike has been used), and discounts on bike-related products (bike shoes, mats, and spare parts to name a few). The company tried to justify the fee in an earnings call, sayinging, “It’s also worth highlighting that this activation fee will be a source of incremental revenue and gross profit for us, helping to support our investments in improving the fitness experience for our members.”
It’s pretty silly to see Peloton double-dipping on used equipment sales: users already pay a subscription, and now they have to pay another fee. What will they think of next?
Source: Peloton
