In a move that marks a significant shift in its pricing strategy, Planet Fitness, the largest gym chain in the United States, has announced plans to increase its monthly membership fee for the first time in 26 years. The company's "classic" membership, which currently costs $10 a month, will rise to $15 for new members starting this summer.
The "classic" membership, which offers access to a single location, has been a cornerstone of Planet Fitness's marketing strategy and a key driver of its growth. The company's $25 "Black Club" membership, which provides access to multiple locations and additional perks, will not see a price increase, although executives have hinted at potential tests of higher prices for this plan.
While the company did not provide a specific reason for the 50% increase in the basic plan, the decision comes amidst a backdrop of rising interest rates and construction costs that have hampered the opening of new gyms. Planet Fitness, known for its no-frills approach with a basic selection of machines and absence of amenities like steam rooms or towels in locker rooms, operates on a high volume, low price (HVLP) business model. This model is more susceptible to cost pressures than luxury gyms.
The price hike is a notable departure from the company's long-standing pricing strategy. Since the pandemic began in 2020, businesses across the country have raised prices, but Planet Fitness's $10 fee remained a constant, becoming almost synonymous with the brand. The former CEO of Planet Fitness described it as a "get you off the couch" price in a 2022 interview with CNN.
The $10 basic membership has been instrumental in attracting individuals interested in fitness but deterred by the high costs or intimidating atmosphere of other gyms. A typical gym membership in the United States costs around $50 a month, with boutique gyms and high-intensity classes often charging double or triple that amount.
Planet Fitness has successfully leveraged the $10 gym plan, which includes annual fees and free training, in its advertising campaigns. The company has also sponsored the New Year's Eve celebration in Times Square for several years, encouraging people to consider gym memberships as part of their New Year's resolutions. According to the company, 40% of new Planet Fitness members have never belonged to a gym before signing up.
Despite the price increase, Planet Fitness executives remain confident that the move will not negatively impact the business. Interim CEO Craig Benson stated, "We've seen in every industry people move in price. 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."
However, some industry analysts have expressed concerns about the timing of the price hike. Sharon Zackfia from William Blair noted, "it does seem like an odd time to take a 50% price increase on the classic card," given the current economic climate where consumers are grappling with inflation and seeking out deals.
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