For Peloton users who are looking to save some money and buy equipment secondhand, the company is wising up.
In a recent letter to its shareholders, the company said it will begin charging a $95 activation for any new customers who purchase their bike from a previous owner.
“Although these secondary market sales are not from Peloton-owned channels or any of our third-party distribution partners, we want to ensure these new members receive the same high-quality onboarding experience Peloton is known for,” the company wrote.
“With that in mind, we’re initiating a new, one-time $95 USD/ $125 CAD used equipment activation fee in the U.S. and Canada.”
Breaking into the secondhand market
The cost of a new Peloton bike starts at $1,445, while the starting cost of the Bike+ comes in at $2,495. On top of that, a monthly Peloton membership, which gives users unlimited access to classes and exclusive features, runs consumers $44/month.
These high price tags have prompted consumers to start scouring secondhand sites for cheaper options.
The shareholder letter noted that the secondhand market continues to grow, and these purchasers are going on to become paid subscribers of the Peloton membership. This segment of Peloton’s business increased 16% from this time last year.
So, while the company maintains that the new activation fee goes towards enhancing users’ experience, Peloton also wants to capitalize on their secondhand customers.
“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,” interim co-CEO Christopher Bruzzo said in a call with investors.
Refurbished bikes are fee-free
For consumers who opt for a refurbished Peloton bike from either the company itself or a third-party distributor, there is no activation fee. Those who take to secondhand sites like Facebook Marketplace or Facebook groups dedicated to cheaper Peloton equipment are going to incur the one-time fee.
While consumers will have to pay it to start their membership, Peloton is also offering secondhand members discounts on accessories, like bike shoes, bike mats, and spare parts, as well as a history summary on their pre-owned equipment and a virtual custom fitting.
“We view the secondary market as an important channel and will continue to improve the member experience,” the company said in its letter.