Liza Lecher (leg and logo detail) works out on her Peloton Tread+ treadmill on May 24, 2021 in Williamstown, New Jersey. Earlier this month, Peloton recalled its Tread and Tread+ treadmills due to multiple injuries and the death of a child, after initially resisting a U.S. safety agency’s warning about the machines. Michael Loccisano/Getty Images
Peloton, as shared by CNBC, has announced it will start charging a $95 one-time activation fee for new subscribers who purchase used hardware. This change targets consumers who acquire Peloton Bikes or Treads from secondary markets like Facebook Marketplace.
The activation fee will apply to subscribers in both the US and Canada as of now.
Peloton has observed a notable rise in the number of new customers who are buying used Peloton equipment. Specifically, this segment has grown by 16% compared to the previous year. Despite these customers buying used items, they are still valuable to Peloton because they pay for ongoing monthly subscriptions, which generate continuous revenue for the company.
Essentially, Peloton sees these new subscribers as a profitable group, even though they initially bought used equipment.
According to The Verge, interim co-CEO Christopher Bruzzo explained that the new $95 activation fee is meant to cover the expenses of setting up new subscribers who buy used equipment and to help fund improvements to Peloton's fitness services.
Bruzzo also noted that subscribers who purchase used equipment tend to stay subscribed longer than those who use rental equipment, making them a desirable customer group for the company.
Ari Kimmelfeld, founder of Trade My Stuff, a startup selling used Peloton equipment, estimates that each sale could generate over $600 in new revenue for Peloton in the first year. Despite the new fee, Kimmelfeld believes it won't deter customers from purchasing used equipment, as it still offers savings and faster delivery compared to new purchases.
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