The price increases arrive months after Peloton slashed the cost of both machines. The company is also laying off close to 800 employees.
I’ve been with PCMag since October 2017, covering a wide range of topics, including consumer electronics, cybersecurity, social media, networking, and gaming. Prior to working at PCMag, I was a foreign correspondent in Beijing for over five years, covering the tech scene in Asia.
To bring in more revenue, Peloton is resorting to some major price hikes for the company’s Bike+ and Tread machines in an effort to target high-end customers.
On Friday, Peloton announced(Opens in a new window) it’s raising the price for the Bike+ by $500, which will now cost $2,495. Meanwhile, the Tread machine is going up in cost by $800 to $3,495. The price changes roll out today to markets including the US, Canada, UK, Germany, and Australia.
The news arrives as Peloton is trying to engineer a comeback when demand for the company’s exercise machines and programs has declined. In February, Peloton laid off 2,800 employees while its CEO resigned.
Friday’s price increase is a little surprising because in April Peloton went in the opposite direction and slashed prices. The Bike+ dropped $500 to $1,995 while the Tread decreased $150 to $2,695. In a statement, Peloton said the price increases are part of a strategy to better position the company “for long-term success.”
“Inspired by the progress we’ve made on our transformation journey, we’re adopting a more strategic pricing strategy for our premium products,” the company said on Friday.
The good news is that the pricing for the original Peloton Bike will remain unchanged in all markets, according to the company. It currently costs $1,445 in the US.
Peloton’s new CEO, Barry McCarthy, also discussed the reasoning behind the pricing change in a memo to employees, which the company shared with PCMag.
“This pricing change achieves three objectives—we maintain an attractive entry point for new Members; we continue to sell down excess Bike v1 inventory, creating a financial tailwind on investments already made; and we maintain our position as the undisputed premium brand in the Connected Fitness category,” he wrote.
Despite the optimistic tone, Peloton is preparing to lay off about 800 employees, which was first reported by Bloomberg(Opens in a new window). “We have to make our revenues stop shrinking and start growing again,” McCarthy added in the memo.
To further cut down on costs, the company last month decided to end in-house manufacturing for its exercise machines. Instead, Peloton is outsourcing the production to a Taiwanese manufacturer called Rexon. On Friday, the company also told PCMag it’s reducing its North American customer support team and shrinking its retail footprint in the region.
“Unfortunately, these workforce shifts result in the departure of 784 employees from the company,” the company added in a statement. “Any decision we make that impacts team members is not taken lightly, but these moves enable Peloton to become more efficient, cost effective, and agile as we continue to define and lead the global Connected Fitness category.”
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I’ve been with PCMag since October 2017, covering a wide range of topics, including consumer electronics, cybersecurity, social media, networking, and gaming. Prior to working at PCMag, I was a foreign correspondent in Beijing for over five years, covering the tech scene in Asia.
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