classpass-business-model

How Does ClassPass Make Money? The ClassPass Business Model In A Nutshell

ClassPass is a North American fitness class provider using a flat-rate monthly subscription model. ClassPass primarily makes money via a subscription model leveraging five main plans, ranging from $15/month to $199/month. It also provides enterprise services to large companies like Under Armour, Morgan Stanley, and Google. Besides, ClassPass charges a cancellation fee of $15 if a cancellation is made within 12 hours of the class start time.

Origin Story

ClassPass is a North American fitness class provider using a flat-rate monthly subscription model.

The company was founded in 2013 by Indian-American MIT graduate Payal Kadakia. Years earlier, Kadakia had lamented searching for an open ballet class in New York City for over an hour.

This led to the release of Classtivity in 2012, a search engine with a built-in reservation system for fitness classes. After being renamed ClassPass in 2014, the idea for the service pivoted to a Groupon-style system where users could pay a fixed amount for 10 classes every year.

Incorporating detailed feedback, this was increased to 10 classes per month. In 2016, ClassPass had already booked 17 million reservations and added tiered pricing to its business model. In the wake of the COVID-19 pandemic, ClassPass lost 95% of its revenue – despite online classes increasing in popularity.

ClassPass revenue generation

As hinted at earlier, ClassPass makes money through a subscription-based model.

Each plan gives users access to credits they can use to book virtual and in-studio fitness classes, salons, and spas. These classes vary in value according to their popularity, type, location, and whether special offers are redeemable.

Users can try the ClassPass service with a free, 14-day trial. Alternatively, they can purchase one of the following five plans:

  1. $15/month – including 7 credits to book up to 2 classes.
  2. $49/month – 23 credits to book up to 8 classes.
  3. $79/month – 38 credits to book up to 13 classes.
  4. $139/month – 68 credits to book up to 24 classes.
  5. $199/month – 100 credits to book up to 35 classes.

It’s important to note that ClassPass is only providing the subscription system – it does not run the fitness classes themselves.

When a user attends a class, the company takes a 5% commission from the total price the fitness provider would ordinarily charge. This arrangement ultimately benefits both the consumer and ClassPass, with a certain number of unused credits able to be rolled over to the next month.

Enterprise solutions

Some of the more famous ClassPass enterprise customers include Under Armour, Morgan Stanley, and Google.

Bundled access is provided to large enterprises to give employees near-complete access to every class offered on the platform. Pricing is contingent on the size of the organization and also its location.

Late and missed fees

ClassPass charges a cancellation fee of $15 if a cancellation is made within 12 hours of the class start time.

For users who fail to attend a reservation without canceling, the fee is up to $20. In the case of an unattended virtual class, the user forfeits the credits used to make the reservation.

Key takeaways

  • ClassPass is a subscription-based, North American fitness provider. It was created after founder Payal Kadakia experienced difficulty in finding a ballet class in New York City.
  • ClassPass allows users to purchase fitness classes using credits that can be bought across five subscription plans. The company then takes a 5% commission for each fitness class a user attends.
  • ClassPass also offers enterprise solutions, with prices tailored to suit specific needs. It also charges cancellation and missed class fees.

Read Also: Peloton Business Model, Subscription Business Models.

Main Free Guides:

Published by

Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which reached over a million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get The FourWeekMBA Flagship Book "100+ Business Models"