Peloton is hiking prices because of inflation
Peloton says inflation and supply chain challenges have forced the company to hike the price of its flagship bike, just five months after cutting it drastically to boost sagging sales.
Beginning Jan. 31, customers will be required to pay US$250 for delivery and setup for Peloton's US$1,495 bike — a service that the company previously included in the price. Customers buying Peloton's Tread treadmills will be charged a US$350 fee for delivery and installation starting later this month.
With these fees, the price of the bike in the United States will jump to US$1,745 (CAD$2,185) and the Peloton Tread will soon cost US$2,845 (CAD$3,562). Peloton also said it will hike the base price of both pieces of equipment for customers in the United Kingdom, Germany and Australia, although it will continue to include delivery and setup for no extra charge.
Peloton said in a statement that "continued constraints are driving up costs," a complaint echoed by companies across several industries.
"Like many other businesses, Peloton is being impacted by global economic and supply chain challenges that are affecting the majority, if not all, businesses worldwide," it said. "Even with these increases, we believe we still offer the best value in connected fitness, and offer consumers various financing options that make Peloton accessible to a wide audience."
The $2,495 (CAD$3,123) price of its higher-end Bike+ will remain the same and will continue to include delivery and setup at no extra charge.
Peloton reduced the price of its bike by roughly 20 per cent in August 2021 to jumpstart sales. It tried to keep up with the breakneck pace of 2020, when the company's products skyrocketed in popularity as gyms closed and people were forced to work out at home.
But a massive Tread recall, gyms reopening and unfortunate cameo on HBO's "Sex and the City" sequel made Peloton's 2021 rougher than it had expected. Peloton revealed in its most recent earnings report that sales of its stationary bikes and treadmills fell 17 per cent. Those two machines are the company's bread and butter, making up 60 per cent of its business.
Peloton shares fell nearly 3 per cent in premarket trading and the stock is down 80 per cent over the past year.