When you think of “Peloton,” your first thought is probably that disastrous commercial. Your second thought is, most likely, in what world is anyone paying $2,245, plus a monthly subscription of $39, for an exercise bike? But despite this, the company has, thus far, been surprisingly successful, with a hyped-up IPO following a $4 billion valuation (though it’s not currently profitable, of course, because such things have no actual basis in reality).
But why does a fake bike that goes nowhere cost more than most real bicycles? What the hell is this company actually peddling? (Sorry, not sorry.) The answers explain as much about human beings as they do about Peloton. Let’s ride…
Seriously, why is the bike over $2,000?
Oh, that. Ever heard of the Chivas Regal effect? Many decades ago, Chivas was looking to increase sales. They had the crazy-like-a-fox idea to simply double its price, without making any changes whatsoever to the scotch. Sales duly increased. Why? Because scotch is, to some extent, an aspirational product and people are conditioned to automatically associate price with quality. When they saw a high-priced scotch they swooped it up. This stupidly brilliant move cemented its status as a popular, upmarket whiskey. These items are more broadly known as Veblen goods — items for which the increased price enhances their appeal and inverts the laws of supply and demand.
Similarly, Peloton’s CEO is on the record saying that they doubled the price early on, and sales took off! It was originally priced at $1,200. He concludes that the higher price was simply in line with what people expected a nice product to cost. Aspiration is a centerpiece of marketing any sort of fitness, and the move likely made the Peloton bike seem like a premium piece of equipment, rather than yet another hunk of metal in the overcrowded fitness-machine marketplace.
But is there anything special about the bike?
Aside from the fact that it’s Wi-Fi-enabled and has a screen that displays the company’s proprietary programming? Nope! The bike can track some of your metrics, but lots of exercise bikes can do that. Competitors like NordicTrack are said to have better technology. But nobody buys into Peloton for the bike alone (more on that in a bit).
Sounds like some amazing(ly bullshit) marketing.
Yeah, between the price and the presentation, Peloton is marketed to a specific customer. It’s pretty easy to discern who this is, and for that, the company’s gotten hilariously roasted on the internet about it. Twitterer ClueHeywood deftly skewered the consistent imagery in all of Peloton’s branding: Bougie, already-fit types riding their machines in amazing, often penthouse-level spaces, literally looking down at all us poor slobs who have to work out at (whisper it) ground level, in public. In one shot, the bike is on an elegant, elevated platform (quite the buildout for an exercise bike) before a wall of floor-to-ceiling windows that overlook a Zen garden. And in none of the pictures is the bike actually plugged in!
Then someone else shared an email she’d received from her dad, who sought to pour icy-cold water on her desire for a Peloton. It went viral, with the dad comparing Pelotons to cocaine (both signs from God that people have too much money, he says), and calling it “a ridiculous amount of money for such a basic concept as riding a stationary bike. You can ride a bike you own for as long as you want and cut the inevitable boredom factor by listening to podcasts or watching TV or clips of waves on sand. … The idea of looking at a screen while some cycling pro broadcasts encouragement is preposterous. I would implore you not to waste precious after-tax income on this latest attempt to encourage social strivers to show that they live at a more rarified level than the proletariat.” (His daughter apparently didn’t go on to procure a Peloton.)
And of course, as we mentioned earlier, the company finally pushed it a bit too far last Christmas season when it epicly failed to read the room. It famously caught hell for a TV ad in which a husband gifts his already fit, attractive wife a Peloton for Christmas. She proceeds to spend the following year in her elegantly appointed home documenting the experience with a permanently terrified expression, before finally putting together a highlight reel to show to her silent husband, to his apparent satisfaction.
In terms of their other marketing, just as celebrities were once crucial to the rise of Soul Cycle, Peloton has some famous faces who use the product: Ellen DeGeneres, Michelle Obama, Jimmy Fallon and many others.
So it really is all just about the marketing?
Not quite. Peloton is actually genius in what it’s offering: a product for both affluent and aspirational adults, many of whom nowadays are overworked and overweight. These people have at least a notional desire to exercise, but work and kids leave them no time to go to the gym.
So far, nothing new here — at-home exercise machines have been around for decades, and working out at home has been popular since The Jack LaLanne Show debuted in the 1950s. However! What Peloton brought home to your spare bedroom or the corner of your living room are community and interactivity. More specifically, it brought the Soul Cycle experience: group environment, deejayed music, charismatic instructors, self-actualization, a whiff of spirituality, a sense of belonging, a shared, temporary yet ultimately uplifting ordeal. Imagine if obsolete fads like Soloflex scratched people’s itch for community, engaging instructors and a fun experience.
The reality is that it’s the programming that people come for. The instructors are engaging and are true believers (even they admit they drink the Kool-Aid), and, as niche subcultural celebrities who personify the brand, some earn six figures and stock options. The live, on-demand sessions foster a sense of belonging and cater to people’s inherent FOMO, which they can participate in from the corner of their tiny bedroom — or perhaps while overlooking their own Zen garden. Communities have sprung up around Peloton, in which people fly across the country to meet up with one another.
The truth is that, so far, Pelotons appear to be an outlier: It’s a piece of home exercise equipment that many people enjoy and actually stick with, which is rare in this fad-filled industry. Peloton’s dropout rate (at least, according to their numbers) is astonishingly small: Last year the company reported that less than 1 percent of its subscribers cancel each month. (Though at the time, over half of the 500,000 subscribers had joined within the past year.) People even get Peloton tattoos. It’s all to do with their sought-after programming — the bike is simply the price of admission, kind of like the initiation fee into a club.
Yes — and this is the truly brilliant part. Pretty much every group, organization, cult and secret society knows the value of initiation. Having people go all in on something, psychologically, reinforces a stronger attraction to the group and increases feelings of affiliation. In other words, asking people to plunk down a couple G’s is the rite of passage toward what Peloton is offering.
Then, think about this: The bike, which is sitting in your home, taking up space, derives so much of its value from Peloton’s programming. More to the point, the bike loses a lot of its value if you were to stop subscribing. You’d be left with an exercise-bike-shaped white elephant that’s taking up space in your house, holding your dirty clothes you toss onto it or whatever.
That is to say, the programming is both Peloton’s carrot and its stick.
But you don’t have to buy the bike, right?
That’s right — for people who don’t want to blow two grand on an exercise machine, there are all sorts of hacks involving a regular exercise bike and an iPad: Peloton also offers its programming without the bike for $12.99 a month.
Still, the sinister fitness geeks behind Peloton basically saw right through us all, huh?
Yep — Peloton’s sold more than half a million bikes (and treadmills, for $4,295) so far, and has 700,000 subscribers. But it still has a tough road ahead — it has plenty of competitors; it’s not profitable; it recently settled a lawsuit for what appears to be several million dollars in a dispute over music licensing; and it’s spending big money with plans to build out studios in New York City and London, as well as a new broadcast production facility in Manhattan, plus new showrooms. And like any other publicly traded company, it’s now subject to the whims of its shareholders and a CEO whose job it is to please them.
But if people keep buying them, riding together online in its popular classes and even getting Peloton tattoos, who’s to say the ride will ever end?
The somewhat tragic fact is, we as humans are exactly flawed and desperate enough for a $2,245 exercise bike to be perfectly priced.