Planet Fitness is ditching the $10 membership it has had for 26 years, and hiking basic prices by 50%
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- Planet Fitness is hiking the price of its Classic Card membership plan by 50% to $15 a month.
- It had held the price at $10 for 26 years, which would be worth around $19 in today's money.
- The price increase will be introduced in the summer and will only apply to new members.
Planet Fitness is hiking the price of its basic membership plan by 50% after holding it at $10 a month for 26 years.
The new $15 charge will come into effect in the summer and will only apply to new members, interim CEO Craig Benson told investors Thursday. Current members on $10-a-month plans won't be affected by the change, CFO Thomas Fitzgerald said.
The price is for Planet Fitness's Classic Card, which gives users unlimited access to one gym.
Benson said that Planet Fitness had started testing $12.99 and $15 price points in the fall. The $15 fee drove the biggest increase in average revenues per gym "with the least impact to the rate of joins," he said.
Planet Fitness isn't the only company to ditch its trademark price point as inflation pushes up how much businesses pay for staff, goods, and overheads. Dollar stores have been dropping their $1 price point and fast-food chains have been charging customers more.
"Our Classic Card membership has been priced at $10 since 1998, which based on inflation would be about $20 in today's dollars," Fitzgerald said. According to the Bureau of Labor Statistics' inflation calculator, $10 in January 1998 would have the same buying power as $19.33 in March 2024.
But it will take a while for the benefits of the price change to trickle through and boost gym margins because it only applies to new members, Fitzgerald said.
He also noted that the majority of Planet Fitness's members — about 62% — had its Black Card membership, which is more expensive and allows them to bring a guest, use any of its gyms, and access some other facilities like tanning and massage chairs.
Around the time that the new Classic Card price is introduced, Planet Fitness will start testing new prices for the Black Card, Benson said. The last time its price was increased was in May 2022, Fitzgerald said.
As part of the Classic Card price change, Planet Fitness plans to focus more heavily on its "price for life" policy, Benson said.
"We ought to get the benefit of a subscription-based business that doesn't change pricing on people in the middle of their usage of those services," he said.
Former CEO Chris Rondeau was abruptly fired in September.
Planet Fitness said that at the end of March it had about 19.6 million members and more than 2,500 gyms worldwide. It reported an 11.6% increase in first-quarter total revenue to $248 million and a 6.2% increase in system-wide same-store sales.
But results were hit by a number of headwinds, including consumers focusing on saving money, concerns about COVID-19 infections and other illnesses, and an advertising campaign that Benson said "may not have resonated as broadly as we had anticipated."