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.

Table of Contents

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’s Value Proposition:

Variety and Flexibility: ClassPass provides users with access to a diverse range of fitness classes, allowing them to explore different workout styles, studios, and locations, all through a single subscription.
Affordability: Users can choose from multiple subscription plans with varying credit allocations, catering to different budgets and fitness goals. This flexibility makes fitness classes more accessible.
Convenience: The platform’s mobile app and website make it easy for users to discover, book, and manage fitness class reservations. They can schedule workouts at their preferred times and locations.
Community: ClassPass fosters a sense of community by connecting users with fitness enthusiasts and instructors. Users can share their experiences, discover new classes, and stay motivated.

Customer Segments:

Fitness Enthusiasts: Individuals who are passionate about fitness and value variety in their workouts. They use ClassPass to access a wide range of fitness classes.
Casual Exercisers: Users who enjoy occasional workouts and prefer flexibility in their fitness routines. They appreciate the pay-as-you-go model.
Enterprises: Large companies that offer ClassPass memberships as part of their employee wellness programs, promoting a healthy and active workforce.

Distribution Strategy:

Mobile App: The ClassPass mobile app is a primary distribution channel, allowing users to explore available classes, book reservations, and track their fitness activities on the go.
Website: The ClassPass website complements the app, providing users with additional access to class information, subscription options, and account management.

Marketing Strategy:

Digital Advertising: The company invests in digital advertising to increase brand visibility, reach potential users, and promote subscription offers.
Social Media: ClassPass leverages social media platforms to engage with its community, share user-generated content, and provide fitness tips and motivation.
Referral Program: ClassPass offers a referral program that rewards users for referring friends and family, encouraging user growth through word-of-mouth marketing.
Email Marketing: The company uses email marketing campaigns to communicate with users, share personalized class recommendations, and inform them about promotions and new features.
Partnerships: ClassPass collaborates with fitness studios, instructors, and wellness brands to expand its class offerings and enhance its value proposition.
Corporate Wellness Programs: The enterprise segment is targeted through partnerships with companies looking to provide fitness and wellness benefits to their employees.
Cancellation Fees: ClassPass enforces cancellation and no-show fees, incentivizing users to attend their booked classes, which helps manage class availability.

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:

$15/month – including 7 credits to book up to 2 classes.
$49/month – 23 credits to book up to 8 classes.
$79/month – 38 credits to book up to 13 classes.
$139/month – 68 credits to book up to 24 classes.
$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.

Element	Description
Value Proposition	ClassPass offers a compelling value proposition for its users, including: – Variety: Access to a diverse range of fitness classes and wellness activities. – Flexibility: The ability to book classes at different studios and gyms. – Cost Savings: Cost-effective alternative to traditional gym memberships. – Convenience: Easy booking and scheduling through the ClassPass app. – Discovery: Discovering new fitness studios and experiences. – Personalization: Tailoring fitness routines to individual preferences and goals. – Community: Building a fitness community through social features. – Wellness: Offering options for activities beyond traditional workouts. – Global Access: Access to classes in various cities worldwide.
Core Products/Services	ClassPass’s core products and services encompass: – ClassPass App: A mobile application for iOS and Android devices, enabling users to discover, book, and attend fitness classes. – ClassPass Membership Plans: Subscription plans offering a certain number of class credits per month. – Studio and Gym Network: Partnerships with fitness studios, gyms, and wellness centers, providing access to their classes. – Virtual Classes: Offering virtual classes and online workouts, especially during the COVID-19 pandemic. – Health and Wellness Activities: Expanding beyond fitness to include activities like meditation, dance, and more. – Corporate Wellness Programs: Providing corporate wellness solutions for businesses and employees. – ClassPass Live: A live streaming and on-demand fitness platform. – ClassPass Go: Offering audio-based guided workouts. – Dynamic Pricing: Utilizing dynamic pricing to manage class availability and demand. – Analytics and Insights: Providing data and insights to fitness studios and partners.
Customer Segments	ClassPass serves a range of customer segments, including: – Fitness Enthusiasts: Individuals looking for diverse fitness experiences and classes. – Casual Exercisers: Users who prefer flexibility in their fitness routines and want to explore various activities. – Corporate Clients: Businesses offering ClassPass as part of their employee wellness programs. – Fitness Studios and Gyms: Partnering fitness studios and gyms seeking to attract new customers. – Wellness Providers: Businesses offering wellness activities and services, such as spas and meditation centers. – Travelers: Users looking for fitness options while traveling. – Event Organizers: Event organizers and planners offering fitness activities during events. – Virtual Fitness: Users interested in virtual and online fitness classes. – Brands: Collaborating with brands for special promotions and experiences.
Revenue Streams	ClassPass generates revenue through various revenue streams: – Membership Fees: Charging users a monthly subscription fee for access to class credits. – Class Fees: Earning a fee from fitness studios for each booked class through ClassPass. – Corporate Partnerships: Generating revenue from corporate clients offering ClassPass as an employee benefit. – Virtual Classes: Charging for access to virtual and online classes. – Dynamic Pricing: Managing pricing based on demand and availability. – ClassPass Go: Offering premium content and features for a fee. – Event Partnerships: Collaborating with event organizers for fitness activities during events. – Marketing and Promotions: Partnering with brands for promotional opportunities. – Data and Analytics: Providing analytics and insights to fitness studios for a fee.
Distribution Strategy	ClassPass employs a strategic distribution strategy to reach users and fitness studios: – ClassPass App: Providing a user-friendly mobile app as the primary platform for discovering, booking, and attending classes. – Website: Offering a web interface for browsing and booking classes. – Email Marketing: Sending personalized recommendations and promotions to users’ email addresses. – Social Media: Leveraging social media channels to engage with users and promote fitness experiences. – Affiliate Marketing: Collaborating with affiliate partners to expand its reach. – Local Sales Teams: Establishing local sales teams to engage with fitness studios and wellness centers. – Corporate Sales: Engaging with businesses to offer corporate wellness programs. – Partner Studios: Building partnerships with fitness studios, gyms, and wellness providers to expand the network. – Virtual Classes: Expanding the availability of virtual classes for users. – Customer Support: Providing assistance to users and partners.