To attract more customers, Peloton is slashing the price of its first exercise bike from $1,895 down to $1,495.
“We know price remains a barrier and are pleased to offer our most popular product at an attractive everyday price point,” the company wrote in a shareholder’s letter.
Obviously, $1,495 is still quite expensive for the Peloton Bike. But it represents a big step down from $2,245, which is what it cost when it debuted a few years back. (That said, the exercise bike originally went for $1,500 when it first emerged on Kickstarter.)
The discount comes as the company’s financial growth may be slowing. Peloton today reported fiscal Q4 earnings, which show a quarter-over-quarter revenue drop of 25% to $937 million.
In 2020, the company saw major growth as COVID-19 sparked an increased interest in at-home fitness and demand for Peloton exercise equipment. However, the company now expects to face “normal seasonal patterns” due to the pandemic softening and more people going out.
In the next quarter, Peloton also predicts its revenue will fall even further down to $800 million, partly due to the price cut to the original Peloton Bike. The company is also warning component shortages could affect production costs, although it's working to limit disruptions.
Despite the slowing financial growth, Peloton executives say the company is still seeing "robust" demand for Peloton Bike and the more expensive Bike+, which goes for $2,945.
"The price drop with B one was absolutely offensive as we think about the competitive landscape, and democratizing access to great fitness," Peloton CEO John Foley in an earnings call. He added Peloton is expecting to produce close to 2 million fitness hardware units this year, up from a mere 10,000 machines from when the company first started.
"The scale of which we've seen, put in place, and invested in across our entire supply chain with Bike ... allowed us to consider lowering the price of B one and we think it's the right thing for our business," Foley said.
The new $1,495 price is available for customers in the US, UK, Canada, Australia, and Germany. In addition, Peloton is introducing a new financing option, enabling consumers to pay $39 per month for the exercise bike over a 39-month period.
While the price is going down, new customers will still need to pay for a subscription, at $12.99 or $39 per month, to get access to the exercise videos for the bike.