One of America’s biggest gym franchises is raising its membership fees for the first time since the 1990s.
Planet Fitness Price Change
New Planet Fitness members might be shaking their fists at the sky over recent news that the company, one of America’s largest fitness franchises, will be raising their monthly fees for basic memberships.
Announced During Earnings Call
The New Hampshire-based company confirmed the new changes on Thursday last week, during the company earnings call for the first quarter of 2024.
“Effective This Summer”
“The increase will be effective this summer, only for new members,” said Interim Chief Officer Craig Benson.
From $10 to $15
When summer comes the price of the Classic Card membership will be raised from $10 a month for new members to $15. It is the first time Planet Fitness has raised its basic membership price since 1998.
No Change for Current Members
Long-time basic members of Planet Fitness will be pleased to know that their $10 membership fees will not change for the foreseeable future, which was confirmed by Chief Financial Officer Thomas Fitzgerald.
No Shock for Customers
While the price rise may cause outrage among some gymgoers, Benson was adamant that the change should not be a “shock” to anyone inside or outside of the company.
“In Effect for a Long, Long Time”
“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, 25 years,” he said, after sharing the news and the company’s Q1 financial results with analysts.
Testing Results
He also explained that several tests had been run to determine which path could be taken to raise monthly membership without losing customers as a result.
Most Successful Price Point
Two of these tests involved raising prices in some areas to $12.99 or $15 in the fall season. The company found that a $15 price point was most successful in driving up revenue “with the least impact to the rate of joins,” according to Benson.
Reducing the Worst Economic Impacts
While the franchise did not give a specific answer as to why prices have been raised, it is likely a strategy to reduce the effects of compounding inflation, higher interest rates, and mounting construction costs that hinder its ability to open new gyms.
2,400 Planet Fitness Clubs
Planet Fitness has been operating since 1992 when it first opened in Dover, New Hampshire. Today it has around 2,400 fitness clubs around the world.
Back to Basics
Its clubs are known for their basic style, with minimalist decor, basic equipment and machines, and no steam rooms.
An HVLP Model
This “no-frills” style has been lauded by gymgoers for decades, but introducing higher prices could threaten their ‘HVLP’ model, also known as ‘high volume, low price.’
Still Below Inflation
CFO Fitzgerald has defended the decision, pointing out that after 26 years the new price change is still below the rate of inflation.
Lower Than It Should Be?
“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. This is supported by the Federal Bureau of Labor Statistics inflation calculator.
Black Card Membership
While the basic membership for long-term Planet Fitness customers will not be changed any time soon, this does not apply to the Black Card Membership, a more expensive pricing model that accounts for 62% of all club memberships.
More Testing to Come
Benson also declared that new pricing would be tested for the Black Card, beginning at the same time that basic membership fees are permanently raised to $10.
Extra Benefits for Members
The Black Card membership gives Planet Fitness members access to bonus facilities such as tanning beds and massage chairs, as well as access to all fitness clubs instead of just one, amongst other benefits.
Not Guaranteed Yet
Whether the Black Card price changes will be permanent or not is yet to be decided. It was last increased in May 2022.
“The Right Time to Do It”
“We think it is the right time to do it,” Benson said of the coming changes. “We also think it’s the right time to look at different options on the Black Card, which may or may not change.”
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The content of this article is for informational purposes only and does not constitute or replace professional financial advice.
