Peloton raises subscription fees, cuts prices for Bikes, Treads

Peloton is hiking the monthly monthly fee for its on-demand fitness content for the first time ever, while it also slashes the prices of its Bike, Bike+ and Tread machines in a bid to reach new customers under Chief Executive Barry McCarthy.

McCarthy, who has been at the helm of the company for a little over two months, is set to announce the sweeping changes internally Thursday. It comes as Peloton is attempting to turn around a recent sharp decline in its share price.

The CEO, a former Netflix and Spotify executive, has been candid in recent press interviews about what he viewed as an opportunity at Peloton to cut hardware costs. This, in theory, would lower the barrier to entry for a consumer, and then the company could pivot its focus to growing monthly recurring revenues.

“The pricing changes being announced today are part of CEO Barry McCarthy’s vision to grow the Peloton community,” a company spokesman told CNBC.

Peloton shares initially jumped on the news before they were halted shortly after 11 a.m. for trading volatility. Shares resumed up slightly.

Effective June 1, the price of Peloton’s all-access subscription plan in the United States will go up to $44 per month, from $39. In Canada, the fee will rise to $55 per month, from $49. Pricing for international members will remain unchanged, Peloton said. The cost of a digital-only membership, for people who don’t own any of Peloton’s equipment, will still be $12.99 a month.

Peloton explained the decision in a company blog post seen by CNBC. “There’s a cost to creating exceptional content and an engaging platform,” the company said. The price increases will allow Peloton to continue to deliver to users, it added.

Meantime, beginning Thursday at 6 p.m. ET, Peloton will slash the prices of its connected-fitness bikes and treadmills in hopes of making its products more affordable to a wider audience and increase its market share coming off of a pandemic-fueled surge in demand.

• The price of its Bike will drop to $1,445 from $1,745. The cost includes a $250 shipping and set-up fee.
• The Bike+ will drop to $1,995 from $2,495.
• The Tread machine will sell for $2,695, down from $2,845. The Tread cost includes a $350 shipping and set-up fee.

Peloton is also currently testing a rental option in select U.S. markets, where users can pay a monthly fee anywhere between $60 to $100 for a rented Bike and for access to its workout content library. The company said it recently expanded the test to additional markets and has added the Bike+ as another rental option.

As of Dec. 31, Peloton counted 2.77 million connected fitness subscribers. It has more than 6.6 million total members, including people who only pay for access to its workout classes.

The company has already shown a penchant for making its hardware more affordable, particularly as…