Peloton Drops Free-Membership Tier After Less-Than-Expected Results

Connected fitness company Peloton has stopped offering an unlimited free-membership tier that was once a key part of its growth strategy.

The free tier for the company’s app was added in May 2023 to attract new customers but was dropped within the last few weeks after failing to convert these new users into paid subscribers, CNBC reported Monday (April 15).

People who already signed up for the tier will continue to have access to it, but new users will be able to choose from only two paid options — at $12.99 per month and $24 a month — after a seven-day free trial, according to the report.

The app was designed to provide an option for potential customers who were interested in the brand but balked at the cost of its fitness equipment, the report said. The free tier for the app was meant to encourage customers to sign up for the app, enjoy the content and then move up to a paid tier that offers additional content.

However, by last November, Peloton found that this option was engaging and retaining fewer subscribers than the company had expected, per the report. Executives determined that the offer of limited free trial would be more likely to accomplish those goals.

When announcing the company’s earnings in November, Peloton CEO Barry McCarthy said the free version of the app had been downloaded more than 1 million times, with limited marketing support.

“The bad news is we were less successful at engaging and retaining free users and converting them to paying memberships than we expected,” McCarthy said at the time.

By the time of its February earnings call, Peloton was rolling out new solutions to drive subscription growth.

These include a business-to-business (B2B) program designed to capture businesses’ corporate wellness spending, and a partnership with social media platform TikTok that aims to grow engagement with younger consumers.

“Corporate wellness … is having a moment in corporate America for sure, where companies are investing at the margin increasingly in fitness, nutrition, mental wellness, and I think we’re well positioned to participate in that,” McCarthy said at the time.