June 3, 2024 • 25 mins
In this episode, Olive and Kayla, MBA students at Feliciano School of Business, delve into the ramifications of Planet Fitness's price hike and the shifting landscape of subscription utility. Uncover the truth behind rising rates, "shrink-flation," and its impact on consumer perception. Tune in as they navigate through the latest in business news and strategy!
In this episode, Olive and Kayla, MBA students at Feliciano School of Business, unravel the Planet Fitness price hike and the evolving landscape of subscription models. Dive into the discussion as they dissect the impact of utility on consumer perceptions and explore the broader implications of "shrink-flation". Tune in for insights and analysis on the latest business topics!
Join Olive and Kayla from Feliciano School of Business as they break down Planet Fitness's price increase and how it affects subscription services. Also, get the lowdown on "shrink-flation" and what it means for consumers. Tune in for a discussion on the latest business moves!
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:10):
Now, you're just getting ready, I'm ready.
Speaker 2 (00:15):
Anyhow, have you had time with?
You know, classes approachinggraduation, I'm sure the job
hunt to even get to the gym,because I know that's your
little Kayla thing, you know.
Speaker 1 (00:25):
I always try to make it to the gym four to five times
a week.
But that also brings me to ourtopic of today of Planet Fitness
increasing their prices for thefirst time since 1998.
Speaker 2 (00:37):
I don't really know how they were able to get this
far with it, especially with allthose renovations over the
years.
Speaker 1 (00:43):
I think it's really interesting how many people must
have a membership but not useit, and I think it's so enticing
because it's ten dollars andwith everything going up, it's
like okay, if it's ten dollars Ican keep my membership, I don't
have to worry about kind ofswitching gyms and I can go as I
(01:04):
want without having to be, Iguess, feeling guilty about
spending a whole lot of moneyand not really using it.
Speaker 2 (01:09):
I've heard this sentiment before, like I think
the $10 was kind of a sweet spotfor a basic membership.
To be honest with you, a basicmembership for me is not
appealing.
I'm not even going to hold you.
I used to pay like $50 a monthfor YMCA because I eliminate all
those high school kids.
Speaker 1 (01:25):
You feel me?
Speaker 2 (01:27):
I got my steam room after.
But it's like you know that's$600 a year.
Speaker 1 (01:30):
After a certain point I was just like well, then it
all goes back to like how oftendo you go?
Because then you can really getthe most out of what you're
spending per month.
So if you end up using it halfof the month, it's not really
that bad per usage well, that'swhat I mean, though, from what
you mentioned.
Speaker 2 (01:46):
Like, if you don't go all the time, the basic for 10
is like.
I guess what I failed to saywas I've actually heard people
say that like whatever, I didn'tgo this month, but it's only
ten dollars.
That's like three cups of well,it's like one cup of coffee if
you go to certain, certainplaces, which is for another
episode, because definitelydon't get the cost of a cup of
(02:07):
coffee right now what is it onthe top?
Speaker 1 (02:10):
not the um, the cool whip.
Right, the cool whip, not thecool whip.
So what is it?
I'm blanking, I'm really blank,that's okay.
Cold foam.
Cold foam adds in the extra $3.
Speaker 2 (02:26):
Saxby's, we have a no , which has been nice, but all
to say, they really hit thatsweet spot with like if I go,
I'll go and it's worth the $10,the high value, low cost kind of
model, but then if I don't go,it's two, three cups of coffee,
no big deal.
I think this is the whole,before we even get to
(02:47):
subscription utility, like thatprice sensitivity.
I just think it's reallyfascinating because it's kind of
what we mentioned in the lastepisode.
People were willing to pay $20,but that $5, $5 as we move
towards you, you know peoplebeing more conscious of the
(03:08):
dollar post-covid is people thatweren't typically price
sensitive are kind of tallyingit all up now.
Cent percent.
Speaker 1 (03:18):
well, the thing is is that the price increase will
only apply to new customers, sothen it's like you're keeping
the ones that don't consistentlygo, and then I feel like for
the people that aren't goingconsistently it may trigger a
questioning of like should Ichange my current gym to pay for
a price that's moreaccommodating and for something
(03:38):
that I don't really use all thetime?
Before that $5 price increase?
Or people will just stay withthe current gym that they are
going to now.
Speaker 2 (03:45):
See, you know me, I have to entertain a marketing
ploy.
You know I have to, I have to.
I don't know what goes throughthe minds of these people, but I
can't help.
First of all, they have tooblige with letting their
audience know, or prospectivecustomers know hey, the prices
will go up at this date.
(04:06):
I appreciate that because a lotof the times you get in those
contracts or it's in the fineprint on the commercial prices,
subject to you know what is itSubject to pricing?
Right and whatever at ourdiscretion.
So I appreciate that part, butI cannot help but think of it as
a driver to capture a newaudience.
(04:26):
I think you're absolutely rightabout the convenience factor
Like okay, the price is going up, is it really worth starting at
a whole new gym Because theyalso have their annual fee,
which maybe it's too early inthe conversation to get into
this part.
But I I think it's reallyfascinating that they have
(04:48):
chosen to interrupt theirpricing strategy for their um
lowest tier subscription when Ireally feel like they could have
just done a higher annual fee,even if it translated to the
same amount.
Speaker 1 (05:02):
I'm not even gonna hold you make sense seriously,
because I think that the annualfee, like personally, if I feel
like it always throws me offbecause it's not something that
I necessarily want to pay for.
It's part of the contract,right?
So then it's like you'regetting hit with the membership
fee for that month and then alsothe annual fee and it's like a
(05:22):
double whammy.
So I think like it's just moreimpactful for it to be like you
know, let's say thirty fortydollars extra in your annual fee
and you're like, so you likethe idea of parsing it out.
Yeah, okay in my head, yeah,and it's five dollars compared
to you know, adding that up allin one shot just feels a little
bit more.
And then you start to maybequestion your membership there,
(05:42):
like is it really worth thismuch?
Speaker 2 (05:44):
of an annual.
You know it's too a little toomuch friction, right?
Is this really what I'm payingfor?
Because really my othercompeting theory is that they're
making us pay for this MeganThee Stallion campaign from
earlier this year.
Speaker 1 (05:57):
Well, also their current filling in CEO, Craig
Benson, was talking about howthe beginning of this year, the
first quarter of 2024, they didnot meet their quota or touch, I
guess, their expected number ofnew memberships, and that's
generally the time that they'resupposed to be making the most
(06:19):
money as a gym.
Speaker 2 (06:20):
Yes.
Speaker 1 (06:20):
New Year's resolutions.
They are the ones that promotethe New Year's event in New York
City.
That's all Planet Fitness spaceand I just think it's a little
bit funny how the CEO ismentioning about how there was
like loss of memberships becauseof the RSV and COVID-19 in
January.
I was like we're four years outof the pandemic.
(06:41):
People would choose not to goon a temporary basis, but to
close their memberships.
I think that's a little drasticbecause of a little sickness
going around.
No, you're absolutely right, andI think there's, like other
underlining problems that arenot being looked into.
He also mentioning some of themarketing campaigns and it's not
reaching the crowd that they'reexpecting and their whole
messaging is the no judgmentzone.
(07:03):
But do people really resonatewith that message and actually
feel that's true?
When it comes to the brand,it's another thing, that's
questionable.
Speaker 2 (07:12):
But that's why I'm so confused about the whole thing.
If utility went down, if peopleused it less but maintained
their memberships through thenew year, I would understand
that more.
But it's the new year and we'redealing with high churn.
That's weird.
I think it's really fascinatingthat.
I mean they have expressed thatthey're trying to target a
younger generation, which can beevidenced, because I never
(07:34):
thought of Planet Fitness with amascot of any sort.
And then you go with Megan TheeStallion.
So you're trying to reach ayounger audience while raising
the basic price.
Speaker 1 (07:46):
I'm a little confused , but also in comparison.
We have talked about thisextensively in regards to when
you're looking at yourcompetitors.
Even raising it up to $15 onlyto new customers, you're still
relatively cheaper than a lot ofthe other competition and
something like.
I've been to Retro, I've beento LA Fitness, I've been to
Planet Fitness.
La seems to be one of the moreexpensive ones, but it's all
(08:08):
about like the colors.
I feel like you know Retro, youget the ketchup and mustard
combo and then you know Planetfitness is that bright, purple
and yellow?
Speaker 2 (08:17):
and I feel like the alay, fitness, the gear's going.
Speaker 1 (08:19):
It's just like the corporate of the alay the gym
kind of lifestyle type of thing.
So, um, it goes back to likethat brand identity and how you
see yourself and where you wantto be associated with.
So I feel like planet fitnessFitness, even if it's increasing
price, it's still having a lotof that base of people that
don't consistently go to the gymso they don't really feel like
(08:40):
they're losing much, and a lotof the younger kids that can't
afford more than $10 to $20 fora membership.
Speaker 2 (08:47):
That $10 membership was for people that say they
have a gym membership but theydon't really be in there like
that.
Speaker 1 (08:54):
That's why you have to wait after the first two to
three weeks of the new year, andthen it evens out.
Speaker 2 (08:58):
Yeah, no, you're so right.
But just a question.
I want to kind of like get yourthoughts Do you think that,
rather than mess with that, thatthey could have maybe kind of
dealt with their black cardmodel, or do you think that that
(09:18):
would have been more of abackfire?
Speaker 1 (09:19):
they're doing test pricing for that, but I know
that right now they're onlydealing with the basic
membership.
Well, it's also like if youraise the price of the basic, I
think it just makes sense toraise the price of the black
card, because then it's like Idon't know the pricing of the
black card currently, but thenit's like it could be relatively
close in pricing and then, likeyou know, that could be part of
the strategy Like oh, only for$10 more, I get all these other
extra amenities, so might aswell just get.
Speaker 2 (09:40):
Well, that's what I'm getting.
At those amenities they takemaintenance.
I mean like those waterbeds andwhatever.
I mean like there are costsassociated but part of it is not
necessarily amenities based.
Speaker 1 (09:51):
It's more like oh, you can go to other places and
you're not limited to one.
So sometimes it's notnecessarily other amenities that
you're using, it could just beother features that are included
in that.
But also it's interesting, Ithink, about less people going
to the gym and that membershipdecrease.
I'm also fascinated if morepeople working at home is kind
(10:16):
of reducing the need to go tothe gym.
Having that accessibility athome, you're like, oh yes.
Speaker 2 (10:22):
I feel like with I don't want to say the advent,
you know, because I know peoplewere working at home before
COVID but I feel like that kindof happening standardized that,
like it's a part of our societyin a bigger way than it was
before and I didn't think abouthow that plays into it.
But it does make me think aboutthe other motivators you know
we talked about.
(10:42):
The motivation might just bethat people don't want to go
through the hassle of going andopening a new membership.
There's also the routine of it.
There's the intimacy thatpeople have with their gyms.
I'm going to tell you right nowI've been on the road, on tour
or like whatever I'm doing,where having that Planet Fitness
(11:05):
membership is like a godsend,because sometimes you just want
to.
You've just been driving for solong, you just want to pull
over and take a shower and chill.
Yeah, like you know, maybe gofor a walk because you've been
driving to Miami for hours andyou know, yeah, yeah.
And, like you know, doing thatthing where you're stopping for
a cup of coffee is not enough,like you just want to, like you
(11:26):
know what I'm saying, so I lovethat.
But there's also that partwhere you like your location.
Some people actually have acloser relationship to gyms that
are, like further away fromthem, not necessarily the
closest one to them, but I feellike you know that routine and I
feel like that's also a barrierfor people exiting, like I
actually do.
Like this is only affecting newcustomers, because I think it
(11:47):
would affect the loyalty of thepresence demographic a little
too much.
But it's also exactly what yousaid.
It's it's the, the, the loveyou have for the location that
you're in, but it's also havingaccess to all these different
places.
Let's get into that part, theuh utility.
Speaker 1 (12:04):
I personally um like, even for my membership, I like
that it's a little bit moreexpensive, but it kind of weeds
out a lot of the younger peoplethat I don't need to be there at
the gym.
Even for me personally, thereare other amenities that I pay
for, like there's a pool,there's classes, zumba classes,
cycling classes that I don't useenough you know, even if I do
(12:28):
go, to the gym roughly half ofthe month.
I'm not using my membership asmuch as I should in the extent
of, oh, I could go to this classif I want to switch up my
workouts, things like that andall.
I think this doesn't have atier program.
It's more like, oh, you have amembership and, depending on
when you signed up for themembership, if there was a
(12:48):
promotion taking place or not,that would just be the only
discrimination of pricedifferences basically basically
Right right.
So it's very interesting, whenit comes to services and
subscription-based models, thatthere's a question of the
utility factor and how muchpeople are really using that to
its fullest.
Speaker 2 (13:06):
Absolutely, and not to backtrack again, but it's
like the Red Lobster thing trackagain.
But it's.
It's like the red lobster thing.
There was a bigger utilityfactor for people, or rather a
bigger incentive, you know, toget endless shrimp for 20 bucks.
That increase the utility formost people fell and that's why
(13:28):
they're in the hole they're in.
There's so many other examplesof that, even like netflix.
Okay, so netflix's prices aregoing up, right, but I have not
heard a single thing that peopleactually want to watch in like
five years I don't know, I'm soserious but and maybe this is
just coming from- a person whois a woman.
Speaker 1 (13:47):
So yeah, I'm bitter because I literally have film
degrees.
Speaker 2 (13:50):
I don't even remember the last time I watched a movie
.
You know the whole thing withsharing memberships, which, okay
, I get it Like the IP address.
I get it, I get it, but see,that's totally something
different.
That's a whole other thing.
Speaker 1 (14:00):
I feel like Well, it's also like you kind of
question are you getting themost out of this subscription
that you used to before?
Yeah, so it's like you'repaying for it.
So it's like you're giving thatlogin.
Um, they do have profiles.
So it's like who says thatthose profiles have to be all
(14:21):
within a household?
And then now, if you open yournetflix account and it's to a
different address compared towhere it's supposed to be, then
it's like are you traveling, oryou know they lock you out and
things like that.
So then it's like you're gettingless value for the same thing
that you were paying before.
And it's meant to encouragemore people to get their own
(14:41):
Netflix account and open moreaccounts in that sense, hence
making more money from it.
Speaker 2 (14:49):
Everybody's tripping man.
Speaker 1 (14:50):
They're facing a lot of competition with other
platforms you know Disney+ andall of that stuff to kind of
maintain their current audienceand customers in that sense.
But it's becoming verydifficult to maintain that it's.
Speaker 2 (15:06):
it's this is where I have the moment where it's like
I just get like it's not thatI'm frustrated with the thing.
I know, in the interest ofhuman progression or whatever,
things tend to get moreexpensive.
The cost of living versusinflation things have just not
kept up.
I know these CEOs are nothungry.
Let me just start there and letme end it there too.
(15:28):
I'm just wondering you know howmuch we are keeping up with
their costs and you know Iunderstand they're I with their
costs and you know I understandthere I mean, this is bigger
than I understand, because whenI just think about the sheer
amount of servers it must take,it's like run a thing like
Netflix.
I get it like there there areall kinds of costs, but I just I
(15:48):
feel the shift in the air ofpeople just, first of all,
understanding the value of adollar more because they have to
with the cost of living.
If you want to breathe, itcosts money, and if you take a
deep breath, that's extra too,and it's like okay, I think
people are starting to.
(16:09):
I want to see a consumerrevolution.
I'm not even going to hold youand I don't know if it's enough
for people to just withdraw.
You know, because when, likewe're seeing with Planet Fitness
, when their expectations werenot met, now it's falling back
on the consumer and I'm justwondering where the line will be
.
And I only bring up the CEOs,because a lot of these people
(16:29):
have more money than they'llever spend by the time their
great, great, great, greatgreats have that money.
Money will not even be.
Eventually, we're going totranscend currency.
So why do you need billions ofdollars, like, can we just, can
we just?
You see?
And then it's so hard not toget lost.
But you know, this subscriptionutility is something that's,
(16:51):
it's beyond Netflix, it'severything.
Speaker 1 (16:54):
I remember you were talking to me about a skincare
subscription base that you weretrying, yes, kind of how you
felt like you weren't able toget the most value out of it
because it was just like, boomSee, that's the thing, here's
another support.
Speaker 2 (17:06):
Yep, you know what I'm adjusting myself in the
chair.
It's about to go there.
It's not even about utility, inthe sense of I'm not getting
what's worth it.
First of all, it was like $150or whatever.
For what?
It wasn't that good, like anacid of some, a cleanser, a
(17:29):
lotion, and I think they threwin like, uh, it might have even
come with this sample, but itwas a spf and okay, 150, which I
meant to cancel.
After I got the samples that Iforgot.
Okay, yeah, and it's formulated, you know, specifically for my
skin or whatever, which I hadthese online tests because it's
like function of beauty.
Speaker 1 (17:44):
Now it's like their entire model 150.
Speaker 2 (17:47):
It might have even been more than that.
That's the crazy part.
But the subscription model wasfor the renewal to come every
three months I don't, I can'teven I'm not even finishing the
product before I'm spendinganother 200, for I'm not gonna
say who the company is, buty'all are not who you think you
are with this skincare.
I should have just got Fenty.
(18:08):
Honestly, that's a little toomuch for a product that's not
even giving me what is promisedand it's a customized thing.
Exactly and I would have happilypaid for it had I.
There goes the utility again.
I would have happily paid forit if it was doing the thing
that you needed, and yeah, butit's really not that, it's not
all that it's cracked up to be,and for that price.
(18:29):
And I'm not even finishing inthree months and I've been using
it every day, like I've beentrying to use it every day.
Speaker 1 (18:35):
You need to watch your face five times a day so
you could being a student again,being a working artist.
Speaker 2 (18:40):
You know, things are very much financially seasonal
in my life and they've alwayskind of been like that because
I've been a gig girl forever.
But it's like if I had themoney to blow and it's like if I
had the oh yeah, $10, I'm noteven going to the gym, whatever
kind of attitude about this.
It would be different.
It would be piling up in myhouse.
I'd be giving it away becauseit's like I'm not at what, and
(19:01):
that's the thing.
I feel like utility works bothways.
It's like the, and maybe somepeople need more, but I mean,
I'm using it twice a day, I'musing it as directed.
My point is that if I can'teven get through it, what is the
point of paying for it?
I could just do thissubscription what?
Twice a year for 400, insteadof whatever it was going to cost
(19:23):
me.
If you're going to send it tome every two months, three
months, whatever the cycle wasit's, it's a balance, right,
it's a balance of the utilityand the ever-increasing costs of
doing business I think, withinflation, I kind of, I guess,
see it as services andsubscriptions having their own
version of shrinkflation andkind of offering less and then
(19:45):
charging more.
Speaker 1 (19:46):
You know, when netflix first came out, it was
like oh, I believe it was likefive dollars, and then there was
no ads, no commercials, andthen now they have like the
three-tier programs wait, oh,you get commercials when netflix
started.
Speaker 2 (20:02):
Let's rewind.
Speaker 1 (20:03):
I'm saying like once there were a streaming service.
Speaker 2 (20:05):
But that's what I'm trying to say.
At that time, like before thisdigital revolution, it was
actually worth every dimeBecause, first of all, you save
the trip to Blockbuster orHollywood Video, you can order
as many movies as you want, keepthem for as long as you want
and then put them in the mail.
It was worth it because welived in a different world.
(20:26):
Now you want to raise prices inthe world of well, because
every network plus customers.
Speaker 1 (20:31):
They have their customers.
So then, once they have you,the next step is spread that out
.
So then it's like you can paythe same price, but then you're
going to get commercials.
You can pay a little bit moreand then not have commercials,
and then the options of you canspend even more and then have
more devices that use this umsame password at the same time
(20:54):
but their base price is going upexponentially.
This is not even a five dollarsthat they've been.
Speaker 2 (21:00):
Yeah, this is not a five dollars and they had the
nerve to do this after they tookFriends off of it, because I
know that was a whole uproar, Ithink last year or whenever it
was, people were not happy aboutthat.
I actually knew two people thatonly got Netflix to watch
Friends whenever they wanted, atany time.
Speaker 1 (21:14):
And then that's part of the thing too is that
sometimes people only sign upfor these memberships or
subscriptions subscriptions onthe basis of one specific thing
when it comes to oh, I want towatch a specific episode.
Or you know, Planet Fitness,I'm trying to just lose this 20
pounds and then I end it, youknow.
So sometimes it's just thattemporary solution and I think
(21:35):
people aren't realizing thatyou're trying to get the
longevity of these memberships,not just in one quarter but
trying to keep those customersthroughout the entire year, not
just like, oh, my New Year'sresolution and then that's it.
Speaker 2 (21:47):
I do want to mention one thing that I didn't earlier
and I meant to.
I know that you were sayingkind of like the price being a
barrier for certain demographicsthat you in particular, and I'm
sure many others, find likethey don't want to do it.
They don't want to be aroundkids when they're doing it.
I don't even mind kids ifthey're going to work out what.
Speaker 1 (22:08):
I mind, are the influencers.
I don't want to be, but I feellike that's becoming common on
all different levels.
You know, you have people thatare just starting at the gym.
Speaker 2 (22:14):
Girl, I don't want to have my big back in somebody's,
in the background of somebody'svideo.
Speaker 1 (22:19):
People are viral Like is she working out?
Speaker 2 (22:22):
There's people that, like, take selfies in the locker
room.
I see them pop up all the time,like when I'm just scrolling,
you know.
That's why I feel like incertain situations, like don't
tell me the rate's going to goup unless you get these people
out of here.
Speaker 1 (22:37):
Because you're basically I'm paying more to be,
but then that's what you'repaying for, you know.
Yeah true, sometimes you pay acheaper price for a cheaper kind
of experience.
Speaker 2 (22:46):
I think this utility factor is first of all, it's
just at the forefront of my mindevery day.
Is this really going to bringme joy in the way that I need?
Because it's not justsubscriptions, it's all kinds of
streaming and services.
Again, with the Red Lobster,people want more for less and
they want it to be hot.
They want it to be fly.
Speaker 1 (23:05):
And then, especially when you get used to kind of
like the same type of pricingmodel Planet Fitness is doing
the same thing for over 20 yearsyou get used to that.
And then when a brand is just,you know, not making enough
money to sustain itself and it'strying to change that, there's
some, I guess, pushback fromyour customers in that sense
that there's some, I guess,pushback from your customers.
Speaker 2 (23:26):
In that sense, what do you think you know, just
hypothetically, what planetfitness would have to do?
Like how can they make thisappealing?
What would make this appealing?
What would justify that change?
Speaker 1 (23:37):
well, I'm just thinking now, like so, since
it's only for new customers, thepeople that are already going,
they're not phased.
But I think what would be acool feature for planet fitness,
to kind of take it to the nextlevel, would be offering, like
their black card members,extended time that the regular
membership isn't there.
So like extended hours beyond,like, let's say, from 5 to 9 pm
(24:02):
anybody can come in, but maybefrom 9 pm anybody can come in,
but maybe from 9 pm to 12 am orsomething like that, only black
guard members, the YMCA does dothat.
Oh, that's so cool.
Speaker 2 (24:13):
Because there's a lot of older people that go there,
at least in Montclair.
I can't speak to otherlocations, but I know they have
like a coffee hour once in awhile where it's like just drop
in and you know whatever.
Actually, if I'm going to keepit real, I would have tried
messing with the pricingstrategy at the end of last year
on some like new year, new us.
We'll see how it goes.
(24:33):
But I know that people wantmore for less than they want it
to be.
What are we?
Speaker 1 (24:38):
going to do about it.
It'll be interesting to see howthis plays out in the future.
Speaker 2 (24:45):
I'll stand by.
If you would like to watch moreepisodes of the Human Side of
Business and enjoy our othercontent, please follow us at
Montclair underscore, feliciano.
Now, you're just getting ready, I'm ready.
Speaker 2 (00:15):
Anyhow, have you had time with?
You know, classes approachinggraduation, I'm sure the job
hunt to even get to the gym,because I know that's your
little Kayla thing, you know.
Speaker 1 (00:25):
I always try to make it to the gym four to five times
a week.
But that also brings me to ourtopic of today of Planet Fitness
increasing their prices for thefirst time since 1998.
Speaker 2 (00:37):
I don't really know how they were able to get this
far with it, especially with allthose renovations over the
years.
Speaker 1 (00:43):
I think it's really interesting how many people must
have a membership but not useit, and I think it's so enticing
because it's ten dollars andwith everything going up, it's
like okay, if it's ten dollars Ican keep my membership, I don't
have to worry about kind ofswitching gyms and I can go as I
(01:04):
want without having to be, Iguess, feeling guilty about
spending a whole lot of moneyand not really using it.
Speaker 2 (01:09):
I've heard this sentiment before, like I think
the $10 was kind of a sweet spotfor a basic membership.
To be honest with you, a basicmembership for me is not
appealing.
I'm not even going to hold you.
I used to pay like $50 a monthfor YMCA because I eliminate all
those high school kids.
Speaker 1 (01:25):
You feel me?
Speaker 2 (01:27):
I got my steam room after.
But it's like you know that's$600 a year.
Speaker 1 (01:30):
After a certain point I was just like well, then it
all goes back to like how oftendo you go?
Because then you can really getthe most out of what you're
spending per month.
So if you end up using it halfof the month, it's not really
that bad per usage well, that'swhat I mean, though, from what
you mentioned.
Speaker 2 (01:46):
Like, if you don't go all the time, the basic for 10
is like.
I guess what I failed to saywas I've actually heard people
say that like whatever, I didn'tgo this month, but it's only
ten dollars.
That's like three cups of well,it's like one cup of coffee if
you go to certain, certainplaces, which is for another
episode, because definitelydon't get the cost of a cup of
(02:07):
coffee right now what is it onthe top?
Speaker 1 (02:10):
not the um, the cool whip.
Right, the cool whip, not thecool whip.
So what is it?
I'm blanking, I'm really blank,that's okay.
Cold foam.
Cold foam adds in the extra $3.
Speaker 2 (02:26):
Saxby's, we have a no , which has been nice, but all
to say, they really hit thatsweet spot with like if I go,
I'll go and it's worth the $10,the high value, low cost kind of
model, but then if I don't go,it's two, three cups of coffee,
no big deal.
I think this is the whole,before we even get to
(02:47):
subscription utility, like thatprice sensitivity.
I just think it's reallyfascinating because it's kind of
what we mentioned in the lastepisode.
People were willing to pay $20,but that $5, $5 as we move
towards you, you know peoplebeing more conscious of the
(03:08):
dollar post-covid is people thatweren't typically price
sensitive are kind of tallyingit all up now.
Cent percent.
Speaker 1 (03:18):
well, the thing is is that the price increase will
only apply to new customers, sothen it's like you're keeping
the ones that don't consistentlygo, and then I feel like for
the people that aren't goingconsistently it may trigger a
questioning of like should Ichange my current gym to pay for
a price that's moreaccommodating and for something
(03:38):
that I don't really use all thetime?
Before that $5 price increase?
Or people will just stay withthe current gym that they are
going to now.
Speaker 2 (03:45):
See, you know me, I have to entertain a marketing
ploy.
You know I have to, I have to.
I don't know what goes throughthe minds of these people, but I
can't help.
First of all, they have tooblige with letting their
audience know, or prospectivecustomers know hey, the prices
will go up at this date.
(04:06):
I appreciate that because a lotof the times you get in those
contracts or it's in the fineprint on the commercial prices,
subject to you know what is itSubject to pricing?
Right and whatever at ourdiscretion.
So I appreciate that part, butI cannot help but think of it as
a driver to capture a newaudience.
(04:26):
I think you're absolutely rightabout the convenience factor
Like okay, the price is going up, is it really worth starting at
a whole new gym Because theyalso have their annual fee,
which maybe it's too early inthe conversation to get into
this part.
But I I think it's reallyfascinating that they have
(04:48):
chosen to interrupt theirpricing strategy for their um
lowest tier subscription when Ireally feel like they could have
just done a higher annual fee,even if it translated to the
same amount.
Speaker 1 (05:02):
I'm not even gonna hold you make sense seriously,
because I think that the annualfee, like personally, if I feel
like it always throws me offbecause it's not something that
I necessarily want to pay for.
It's part of the contract,right?
So then it's like you'regetting hit with the membership
fee for that month and then alsothe annual fee and it's like a
(05:22):
double whammy.
So I think like it's just moreimpactful for it to be like you
know, let's say thirty fortydollars extra in your annual fee
and you're like, so you likethe idea of parsing it out.
Yeah, okay in my head, yeah,and it's five dollars compared
to you know, adding that up allin one shot just feels a little
bit more.
And then you start to maybequestion your membership there,
(05:42):
like is it really worth thismuch?
Speaker 2 (05:44):
of an annual.
You know it's too a little toomuch friction, right?
Is this really what I'm payingfor?
Because really my othercompeting theory is that they're
making us pay for this MeganThee Stallion campaign from
earlier this year.
Speaker 1 (05:57):
Well, also their current filling in CEO, Craig
Benson, was talking about howthe beginning of this year, the
first quarter of 2024, they didnot meet their quota or touch, I
guess, their expected number ofnew memberships, and that's
generally the time that they'resupposed to be making the most
(06:19):
money as a gym.
Speaker 2 (06:20):
Yes.
Speaker 1 (06:20):
New Year's resolutions.
They are the ones that promotethe New Year's event in New York
City.
That's all Planet Fitness spaceand I just think it's a little
bit funny how the CEO ismentioning about how there was
like loss of memberships becauseof the RSV and COVID-19 in
January.
I was like we're four years outof the pandemic.
(06:41):
People would choose not to goon a temporary basis, but to
close their memberships.
I think that's a little drasticbecause of a little sickness
going around.
No, you're absolutely right, andI think there's, like other
underlining problems that arenot being looked into.
He also mentioning some of themarketing campaigns and it's not
reaching the crowd that they'reexpecting and their whole
messaging is the no judgmentzone.
(07:03):
But do people really resonatewith that message and actually
feel that's true?
When it comes to the brand,it's another thing, that's
questionable.
Speaker 2 (07:12):
But that's why I'm so confused about the whole thing.
If utility went down, if peopleused it less but maintained
their memberships through thenew year, I would understand
that more.
But it's the new year and we'redealing with high churn.
That's weird.
I think it's really fascinatingthat.
I mean they have expressed thatthey're trying to target a
younger generation, which can beevidenced, because I never
(07:34):
thought of Planet Fitness with amascot of any sort.
And then you go with Megan TheeStallion.
So you're trying to reach ayounger audience while raising
the basic price.
Speaker 1 (07:46):
I'm a little confused , but also in comparison.
We have talked about thisextensively in regards to when
you're looking at yourcompetitors.
Even raising it up to $15 onlyto new customers, you're still
relatively cheaper than a lot ofthe other competition and
something like.
I've been to Retro, I've beento LA Fitness, I've been to
Planet Fitness.
La seems to be one of the moreexpensive ones, but it's all
(08:08):
about like the colors.
I feel like you know Retro, youget the ketchup and mustard
combo and then you know Planetfitness is that bright, purple
and yellow?
Speaker 2 (08:17):
and I feel like the alay, fitness, the gear's going.
Speaker 1 (08:19):
It's just like the corporate of the alay the gym
kind of lifestyle type of thing.
So, um, it goes back to likethat brand identity and how you
see yourself and where you wantto be associated with.
So I feel like planet fitnessFitness, even if it's increasing
price, it's still having a lotof that base of people that
don't consistently go to the gymso they don't really feel like
(08:40):
they're losing much, and a lotof the younger kids that can't
afford more than $10 to $20 fora membership.
Speaker 2 (08:47):
That $10 membership was for people that say they
have a gym membership but theydon't really be in there like
that.
Speaker 1 (08:54):
That's why you have to wait after the first two to
three weeks of the new year, andthen it evens out.
Speaker 2 (08:58):
Yeah, no, you're so right.
But just a question.
I want to kind of like get yourthoughts Do you think that,
rather than mess with that, thatthey could have maybe kind of
dealt with their black cardmodel, or do you think that that
(09:18):
would have been more of abackfire?
Speaker 1 (09:19):
they're doing test pricing for that, but I know
that right now they're onlydealing with the basic
membership.
Well, it's also like if youraise the price of the basic, I
think it just makes sense toraise the price of the black
card, because then it's like Idon't know the pricing of the
black card currently, but thenit's like it could be relatively
close in pricing and then, likeyou know, that could be part of
the strategy Like oh, only for$10 more, I get all these other
extra amenities, so might aswell just get.
Speaker 2 (09:40):
Well, that's what I'm getting.
At those amenities they takemaintenance.
I mean like those waterbeds andwhatever.
I mean like there are costsassociated but part of it is not
necessarily amenities based.
Speaker 1 (09:51):
It's more like oh, you can go to other places and
you're not limited to one.
So sometimes it's notnecessarily other amenities that
you're using, it could just beother features that are included
in that.
But also it's interesting, Ithink, about less people going
to the gym and that membershipdecrease.
I'm also fascinated if morepeople working at home is kind
(10:16):
of reducing the need to go tothe gym.
Having that accessibility athome, you're like, oh yes.
Speaker 2 (10:22):
I feel like with I don't want to say the advent,
you know, because I know peoplewere working at home before
COVID but I feel like that kindof happening standardized that,
like it's a part of our societyin a bigger way than it was
before and I didn't think abouthow that plays into it.
But it does make me think aboutthe other motivators you know
we talked about.
(10:42):
The motivation might just bethat people don't want to go
through the hassle of going andopening a new membership.
There's also the routine of it.
There's the intimacy thatpeople have with their gyms.
I'm going to tell you right nowI've been on the road, on tour
or like whatever I'm doing,where having that Planet Fitness
(11:05):
membership is like a godsend,because sometimes you just want
to.
You've just been driving for solong, you just want to pull
over and take a shower and chill.
Yeah, like you know, maybe gofor a walk because you've been
driving to Miami for hours andyou know, yeah, yeah.
And, like you know, doing thatthing where you're stopping for
a cup of coffee is not enough,like you just want to, like you
(11:26):
know what I'm saying, so I lovethat.
But there's also that partwhere you like your location.
Some people actually have acloser relationship to gyms that
are, like further away fromthem, not necessarily the
closest one to them, but I feellike you know that routine and I
feel like that's also a barrierfor people exiting, like I
actually do.
Like this is only affecting newcustomers, because I think it
(11:47):
would affect the loyalty of thepresence demographic a little
too much.
But it's also exactly what yousaid.
It's it's the, the, the loveyou have for the location that
you're in, but it's also havingaccess to all these different
places.
Let's get into that part, theuh utility.
Speaker 1 (12:04):
I personally um like, even for my membership, I like
that it's a little bit moreexpensive, but it kind of weeds
out a lot of the younger peoplethat I don't need to be there at
the gym.
Even for me personally, thereare other amenities that I pay
for, like there's a pool,there's classes, zumba classes,
cycling classes that I don't useenough you know, even if I do
(12:28):
go, to the gym roughly half ofthe month.
I'm not using my membership asmuch as I should in the extent
of, oh, I could go to this classif I want to switch up my
workouts, things like that andall.
I think this doesn't have atier program.
It's more like, oh, you have amembership and, depending on
when you signed up for themembership, if there was a
(12:48):
promotion taking place or not,that would just be the only
discrimination of pricedifferences basically basically
Right right.
So it's very interesting, whenit comes to services and
subscription-based models, thatthere's a question of the
utility factor and how muchpeople are really using that to
its fullest.
Speaker 2 (13:06):
Absolutely, and not to backtrack again, but it's
like the Red Lobster thing trackagain.
But it's.
It's like the red lobster thing.
There was a bigger utilityfactor for people, or rather a
bigger incentive, you know, toget endless shrimp for 20 bucks.
That increase the utility formost people fell and that's why
(13:28):
they're in the hole they're in.
There's so many other examplesof that, even like netflix.
Okay, so netflix's prices aregoing up, right, but I have not
heard a single thing that peopleactually want to watch in like
five years I don't know, I'm soserious but and maybe this is
just coming from- a person whois a woman.
Speaker 1 (13:47):
So yeah, I'm bitter because I literally have film
degrees.
Speaker 2 (13:50):
I don't even remember the last time I watched a movie
.
You know the whole thing withsharing memberships, which, okay
, I get it Like the IP address.
I get it, I get it, but see,that's totally something
different.
That's a whole other thing.
Speaker 1 (14:00):
I feel like Well, it's also like you kind of
question are you getting themost out of this subscription
that you used to before?
Yeah, so it's like you'repaying for it.
So it's like you're giving thatlogin.
Um, they do have profiles.
So it's like who says thatthose profiles have to be all
(14:21):
within a household?
And then now, if you open yournetflix account and it's to a
different address compared towhere it's supposed to be, then
it's like are you traveling, oryou know they lock you out and
things like that.
So then it's like you're gettingless value for the same thing
that you were paying before.
And it's meant to encouragemore people to get their own
(14:41):
Netflix account and open moreaccounts in that sense, hence
making more money from it.
Speaker 2 (14:49):
Everybody's tripping man.
Speaker 1 (14:50):
They're facing a lot of competition with other
platforms you know Disney+ andall of that stuff to kind of
maintain their current audienceand customers in that sense.
But it's becoming verydifficult to maintain that it's.
Speaker 2 (15:06):
it's this is where I have the moment where it's like
I just get like it's not thatI'm frustrated with the thing.
I know, in the interest ofhuman progression or whatever,
things tend to get moreexpensive.
The cost of living versusinflation things have just not
kept up.
I know these CEOs are nothungry.
Let me just start there and letme end it there too.
(15:28):
I'm just wondering you know howmuch we are keeping up with
their costs and you know Iunderstand they're I with their
costs and you know I understandthere I mean, this is bigger
than I understand, because whenI just think about the sheer
amount of servers it must take,it's like run a thing like
Netflix.
I get it like there there areall kinds of costs, but I just I
(15:48):
feel the shift in the air ofpeople just, first of all,
understanding the value of adollar more because they have to
with the cost of living.
If you want to breathe, itcosts money, and if you take a
deep breath, that's extra too,and it's like okay, I think
people are starting to.
(16:09):
I want to see a consumerrevolution.
I'm not even going to hold youand I don't know if it's enough
for people to just withdraw.
You know, because when, likewe're seeing with Planet Fitness
, when their expectations werenot met, now it's falling back
on the consumer and I'm justwondering where the line will be
.
And I only bring up the CEOs,because a lot of these people
(16:29):
have more money than they'llever spend by the time their
great, great, great, greatgreats have that money.
Money will not even be.
Eventually, we're going totranscend currency.
So why do you need billions ofdollars, like, can we just, can
we just?
You see?
And then it's so hard not toget lost.
But you know, this subscriptionutility is something that's,
(16:51):
it's beyond Netflix, it'severything.
Speaker 1 (16:54):
I remember you were talking to me about a skincare
subscription base that you weretrying, yes, kind of how you
felt like you weren't able toget the most value out of it
because it was just like, boomSee, that's the thing, here's
another support.
Speaker 2 (17:06):
Yep, you know what I'm adjusting myself in the
chair.
It's about to go there.
It's not even about utility, inthe sense of I'm not getting
what's worth it.
First of all, it was like $150or whatever.
For what?
It wasn't that good, like anacid of some, a cleanser, a
(17:29):
lotion, and I think they threwin like, uh, it might have even
come with this sample, but itwas a spf and okay, 150, which I
meant to cancel.
After I got the samples that Iforgot.
Okay, yeah, and it's formulated, you know, specifically for my
skin or whatever, which I hadthese online tests because it's
like function of beauty.
Speaker 1 (17:44):
Now it's like their entire model 150.
Speaker 2 (17:47):
It might have even been more than that.
That's the crazy part.
But the subscription model wasfor the renewal to come every
three months I don't, I can'teven I'm not even finishing the
product before I'm spendinganother 200, for I'm not gonna
say who the company is, buty'all are not who you think you
are with this skincare.
I should have just got Fenty.
(18:08):
Honestly, that's a little toomuch for a product that's not
even giving me what is promisedand it's a customized thing.
Exactly and I would have happilypaid for it had I.
There goes the utility again.
I would have happily paid forit if it was doing the thing
that you needed, and yeah, butit's really not that, it's not
all that it's cracked up to be,and for that price.
(18:29):
And I'm not even finishing inthree months and I've been using
it every day, like I've beentrying to use it every day.
Speaker 1 (18:35):
You need to watch your face five times a day so
you could being a student again,being a working artist.
Speaker 2 (18:40):
You know, things are very much financially seasonal
in my life and they've alwayskind of been like that because
I've been a gig girl forever.
But it's like if I had themoney to blow and it's like if I
had the oh yeah, $10, I'm noteven going to the gym, whatever
kind of attitude about this.
It would be different.
It would be piling up in myhouse.
I'd be giving it away becauseit's like I'm not at what, and
(19:01):
that's the thing.
I feel like utility works bothways.
It's like the, and maybe somepeople need more, but I mean,
I'm using it twice a day, I'musing it as directed.
My point is that if I can'teven get through it, what is the
point of paying for it?
I could just do thissubscription what?
Twice a year for 400, insteadof whatever it was going to cost
(19:23):
me.
If you're going to send it tome every two months, three
months, whatever the cycle wasit's, it's a balance, right,
it's a balance of the utilityand the ever-increasing costs of
doing business I think, withinflation, I kind of, I guess,
see it as services andsubscriptions having their own
version of shrinkflation andkind of offering less and then
(19:45):
charging more.
Speaker 1 (19:46):
You know, when netflix first came out, it was
like oh, I believe it was likefive dollars, and then there was
no ads, no commercials, andthen now they have like the
three-tier programs wait, oh,you get commercials when netflix
started.
Speaker 2 (20:02):
Let's rewind.
Speaker 1 (20:03):
I'm saying like once there were a streaming service.
Speaker 2 (20:05):
But that's what I'm trying to say.
At that time, like before thisdigital revolution, it was
actually worth every dimeBecause, first of all, you save
the trip to Blockbuster orHollywood Video, you can order
as many movies as you want, keepthem for as long as you want
and then put them in the mail.
It was worth it because welived in a different world.
(20:26):
Now you want to raise prices inthe world of well, because
every network plus customers.
Speaker 1 (20:31):
They have their customers.
So then, once they have you,the next step is spread that out
.
So then it's like you can paythe same price, but then you're
going to get commercials.
You can pay a little bit moreand then not have commercials,
and then the options of you canspend even more and then have
more devices that use this umsame password at the same time
(20:54):
but their base price is going upexponentially.
This is not even a five dollarsthat they've been.
Speaker 2 (21:00):
Yeah, this is not a five dollars and they had the
nerve to do this after they tookFriends off of it, because I
know that was a whole uproar, Ithink last year or whenever it
was, people were not happy aboutthat.
I actually knew two people thatonly got Netflix to watch
Friends whenever they wanted, atany time.
Speaker 1 (21:14):
And then that's part of the thing too is that
sometimes people only sign upfor these memberships or
subscriptions subscriptions onthe basis of one specific thing
when it comes to oh, I want towatch a specific episode.
Or you know, Planet Fitness,I'm trying to just lose this 20
pounds and then I end it, youknow.
So sometimes it's just thattemporary solution and I think
(21:35):
people aren't realizing thatyou're trying to get the
longevity of these memberships,not just in one quarter but
trying to keep those customersthroughout the entire year, not
just like, oh, my New Year'sresolution and then that's it.
Speaker 2 (21:47):
I do want to mention one thing that I didn't earlier
and I meant to.
I know that you were sayingkind of like the price being a
barrier for certain demographicsthat you in particular, and I'm
sure many others, find likethey don't want to do it.
They don't want to be aroundkids when they're doing it.
I don't even mind kids ifthey're going to work out what.
Speaker 1 (22:08):
I mind, are the influencers.
I don't want to be, but I feellike that's becoming common on
all different levels.
You know, you have people thatare just starting at the gym.
Speaker 2 (22:14):
Girl, I don't want to have my big back in somebody's,
in the background of somebody'svideo.
Speaker 1 (22:19):
People are viral Like is she working out?
Speaker 2 (22:22):
There's people that, like, take selfies in the locker
room.
I see them pop up all the time,like when I'm just scrolling,
you know.
That's why I feel like incertain situations, like don't
tell me the rate's going to goup unless you get these people
out of here.
Speaker 1 (22:37):
Because you're basically I'm paying more to be,
but then that's what you'repaying for, you know.
Yeah true, sometimes you pay acheaper price for a cheaper kind
of experience.
Speaker 2 (22:46):
I think this utility factor is first of all, it's
just at the forefront of my mindevery day.
Is this really going to bringme joy in the way that I need?
Because it's not justsubscriptions, it's all kinds of
streaming and services.
Again, with the Red Lobster,people want more for less and
they want it to be hot.
They want it to be fly.
Speaker 1 (23:05):
And then, especially when you get used to kind of
like the same type of pricingmodel Planet Fitness is doing
the same thing for over 20 yearsyou get used to that.
And then when a brand is just,you know, not making enough
money to sustain itself and it'strying to change that, there's
some, I guess, pushback fromyour customers in that sense
that there's some, I guess,pushback from your customers.
Speaker 2 (23:26):
In that sense, what do you think you know, just
hypothetically, what planetfitness would have to do?
Like how can they make thisappealing?
What would make this appealing?
What would justify that change?
Speaker 1 (23:37):
well, I'm just thinking now, like so, since
it's only for new customers, thepeople that are already going,
they're not phased.
But I think what would be acool feature for planet fitness,
to kind of take it to the nextlevel, would be offering, like
their black card members,extended time that the regular
membership isn't there.
So like extended hours beyond,like, let's say, from 5 to 9 pm
(24:02):
anybody can come in, but maybefrom 9 pm anybody can come in,
but maybe from 9 pm to 12 am orsomething like that, only black
guard members, the YMCA does dothat.
Oh, that's so cool.
Speaker 2 (24:13):
Because there's a lot of older people that go there,
at least in Montclair.
I can't speak to otherlocations, but I know they have
like a coffee hour once in awhile where it's like just drop
in and you know whatever.
Actually, if I'm going to keepit real, I would have tried
messing with the pricingstrategy at the end of last year
on some like new year, new us.
We'll see how it goes.
(24:33):
But I know that people wantmore for less than they want it
to be.
What are we?
Speaker 1 (24:38):
going to do about it.
It'll be interesting to see howthis plays out in the future.
Speaker 2 (24:45):
I'll stand by.
If you would like to watch moreepisodes of the Human Side of
Business and enjoy our othercontent, please follow us at
Montclair underscore, feliciano.
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Crime Junkie
Does hearing about a true crime case always leave you scouring the internet for the truth behind the story? Dive into your next mystery with Crime Junkie. Every Monday, join your host Ashley Flowers as she unravels all the details of infamous and underreported true crime cases with her best friend Brit Prawat. From cold cases to missing persons and heroes in our community who seek justice, Crime Junkie is your destination for theories and stories you won’t hear anywhere else. Whether you're a seasoned true crime enthusiast or new to the genre, you'll find yourself on the edge of your seat awaiting a new episode every Monday. If you can never get enough true crime... Congratulations, you’ve found your people. Follow to join a community of Crime Junkies! Crime Junkie is presented by audiochuck Media Company.