Earlier this month, VICE published a story on the many ways fitness studio owners believe the billion-dollar company ClassPass is harming the broader fitness industry and “squeezing studios to the point of death,” as one source put it.
In response to the allegations, ClassPass denied that it was “squeezing” anything, saying that the company had created a commission-based business model in which ClassPass had no incentive to drive down prices or harm studio owners. The company has more than 30,000 partners, and CEO Fritz Lanman insisted that the enraged studio owners I spoke with were part of a “vocal minority” who were misdirecting their frustrations at a well-meaning company.
After VICE published its initial piece, ClassPass spokesperson Mandy Menaker said that many studio partners reached out to the company in support, saying they felt the story was not representative of their relationship with the company.
Menaker also asked VICE to note that studio partners Classpass put us in touch with for the previous story said they had gained customers and increased revenue because of their partnership with the company, and argued that many of the studios who had issues with ClassPass appeared to be early adopters of the platform.
“As we’ve discussed before, transitions can be tough,” Menaker said.
The general sentiment from studios who reached out directly to VICE since then was notably less positive. Emails from studio owners across the country contended that ClassPass’s frustrated studio partners should not be dismissed as a misguided few. Rather, they said, the studio owners should be seen as representatives of industry-wide frustrations with the effects of the fitness giant.
Many of those studios agreed to explain how ClassPass has affected their own businesses, and we’ve included 35 responses here. In many cases, VICE granted anonymity to studio partners because they feared retaliation from ClassPass, which requires partners not to disclose “any non-public information” or “make any comparative references to ClassPass.”
Have you ever worked at ClassPass? Or are you a ClassPass partner? We'd love to hear from you. From a non-work device, send an email to firstname.lastname@example.org or email@example.com or reach out on Signal at (310) 614-3752.
In response to a set of questions related to the topics put forward in this story by the studios, Kinsey Livingston, ClassPass VP of Partnerships, provided a statement to VICE—the entirety of which can be found at the bottom of the article—in which she said the company empathized with studio owners who are struggling in a saturated industry, but that most partners chose to remain with the platform because it worked for them.
Livingston added that ClassPass is working to give all of its studio partners a better chance of survival by driving new customers and filling up unused spots, and it is doing so because it now has an economic incentive to do so.
“It is always in our best interest to help a studio maximize their revenue by finding the best price to bring customers through the door,” Livingston said in part. “We’re not perfect, but we’re working relentlessly to serve our customers and our partners as well as we can.”
Where necessary, we have edited the below submissions for clarity and brevity.
“Last month, our rate dropped to $4.60 per class, when our drop-in price is $22”
From Black Cat Yoga in the Chicago area:
I loved the idea of ClassPass at first. We had a contract that paid us a little less than half our drop-in rate, so to fill unsold spots seemed perfect. Then the payment per class started dropping, slowly month by month as the number of users increased 10-fold. Last month, our rate dropped to $4.60 per class, when our drop-in price is $22. I pay my teachers more than that per head and the fact that these changes happened every single time without notice was the worst part. One of my studios was purchased, partially on the understanding of what they were contracted for each month with ClassPass. Once the acquisition was completed, a month in, ClassPass would no longer honor the original rates and set me up on a brand new contract at much lower rates. It’s not the “riled up” few loud studios. The practices truly undercut the viability of business. So we’ve just cancelled our contract and expect to end at the end of March.
"ClassPass dilutes the value of what we offer. It is like the Trojan Horse"
From a Bay Area barre studio:
ClassPass dilutes the value of what we offer. It is like the Trojan Horse. They approached us as a partner but now have gotten access to our studios and are continually devaluing our offering. The rules change all the time and there is no flexibility with their offering. Clients don't understand that they are clients of ClassPass and not our studio which is confusing for them. They don't get why we can't help them sign in when the ClassPass app isn't working or why they can't sign up for one location and show up for another. It has really impacted our ability to provide excellent customer service. I have no choice but to part ways.
I also feel like I have to be a voice and take a stand for all the studios who feel trapped by ClassPass. There are many that are super-dependent to ClassPass, which is a really tricky situation. Damned if they do, damned if they don't. I know our people will pay more.
“My studio and many others felt lied to and stolen from, but it’s hard to leave now”
From the former manager of a Colorado yoga studio:
ClassPass told us they were a service to fill unused capacity and that they would not take actions that would cannibalize our business by targeting our current members. To convince us to sign up, they told us we’d have total control over prices, number of spots available, etc. But once we signed, they removed control, cut prices, started targeting our members with social media ads, and made their reporting tools and account service less transparent. My studio and many others felt lied to and stolen from, but it’s hard to leave now, because ClassPass has taken control of access to a large number of our customers.
“In what world does a business owner not get to decide how much a customer is paying them for a service they are providing?”
From a Denver fitness studio:
ClassPass has completely devalued the fitness industry. We have lost all control of how much ClassPass users pay to attend classes at our studio (thanks to the SmartSpot requirement) AND they can come as often as they like if they have purchased the right amount of credits to do so. In what world does a business owner not get to decide how much a customer is paying them for a service they are providing? That is really the bottomline. The decline in clients paying the full prices we based our business model around is reaching a point of no return. Soon, we will have more ClassPass users attending our classes per week than actual members. Clients who once paid $150 a month for memberships are now coming on ClassPass where we now get $25-$50 a month for those same people visiting the same number of times. As expenses increase (rent, teacher pay, etc.) and revenue decreases, ClassPass is going to kill the boutique fitness industry and at the same time kill themselves, as there will be no more studios on ClassPass for people to go to.
Many ClassPass users don't understand ClassPass’s policies, which puts us in difficult customer service situations every day. They get pissed off at the studio, when really their anger should be directed at ClassPass—specifically concerning late cancellation charges and the lack of customer service the company provides to their customers.
“They are literally selling our own classes back to us at a 40% value”
From a Portland yoga studio:
ClassPass has become a billion-dollar corporate buffer between us and our students. They are literally selling our own classes back to us at a 40 percent value. Students feel guilty for using ClassPass and not paying us directly, but continue to use it anyway because it is hard to say no to almost free [classes]. We have regular students who come to our classes multiple times a week who use ClassPass. Those students would otherwise become members, but because ClassPass allows them to buy classes for so little, there is no reason to invest in a small, local business—all of which degrades our viability financially and as a community. ClassPass is a parasite.
“ClassPass is paying less and less, while studio overhead goes up”
From a NYC studio owner and ClassPass partner since 2012:
Since 2012, we have been partners with ClassPass (then Classtivity) and have seen it slowly shift the mentality of NYC fitness consumers. Initially, I saw the shift when they were offering the unlimited model. They were no longer loyal to one studio and would come in injured, tired, and frustrated because they weren't seeing results, but the draw of low prices was too great.
Over the last two years, it was no longer the mentality of the consumers that was changing; ClassPass was affecting the studios’ revenue and bottom line. ClassPass is paying less and less, while studio overhead goes up. Maybe they are paying $1,000 more a month than they used to, but that same studio used to get paid triple to four times the amount for the same amount of reservations when clients booked directly through the studio.
ClassPass only exists because of the thousands of studio partners and their blood, sweat, and tears in putting out great fitness programing, but they are also the reason that many, many studios will not be able to survive.
“We are now losing about $2,500 per month”
From a South Carolina yoga studio:
The problem with ClassPass is that they determine the per-head amount that they pay you [_Editor’s note: ClassPass claims the rates are mutually determined_]. In our case, the average comes to $5.70 per visit with a range from $4.70 to $10. Our standard drop-in rate is now $10, which we lowered from $18 to compete with ClassPass, and that is the problem: We are competing with ClassPass. More and more of our clientele are using ClassPass as it is cheaper than paying a membership or drop-in rates.
We are now losing about $2,500 per month and will have to close our doors when our lease is up if something doesn’t change. While we are getting a lot of traffic from ClassPass and would like to insist on a higher minimum rate, they push back when we ask.
A big part of the problem is that they keep us in the dark so much. For example, we have no idea what the rate is that other studios in our area have negotiated with them. Are we getting the volume of traffic we get because others have refused the low rates such that we are sucking traffic from other studios? If we insist on a higher rate, will we now not be competitive with other studios and lose traffic to others? We have no control.
“I’m not losing money, but I’m not earning much either”
From a California yoga chain:
It has brought new students to the studios. However, these students are unlikely to convert to paying customers at my studio. The revenue is nice, and because of the way I pay my teachers and the way I actively manage the ClassPass spots that are available, I'm not losing money, but I'm not earning much either. I've been nervous to let go of the revenue, but they have not raised my rate since I signed on with them. I was one of the first Bay Area studios to sign up. I still have an old contract, so I am paid for first visits, but new studios are not. That's another reason I don't want to cancel—if I were to come back, I wouldn't be able to retain payment for new students.
“They have paid us out late, they have broken terms of their own agreement”
From a New York dance studio:
ClassPass has refused to raise rates to where we could even cover costs. We are getting $8 per student. Our normal rate is $18 per student. It is unsustainable. They provided little to no customer service. They have paid us out late, they have broken terms of their own agreement, and they manipulate their fluid terms to their sole benefit and our loss. They have no accessible customer service, so customers take it out on us. They hide under the guise of filling unused spots, but their behavior exhibits that they are increasingly trying to control business practices to their sole benefit. They are underselling and then underpaying for the product.
“We pay the bills, do the work, and lose the sleep, and they make a lot of money”
From a boutique studio in Denver:
As a newer studio, ClassPass was an excellent way to get new students in the door. They helped us grow our base and expand to new clients. We are very grateful for their services. But I wasn't sure who ClassPass serves and what their long-term intentions and goals are. When they stopped sharing emails and phone numbers [of customers], I felt pretty sure that they were not looking to serve their studio-clients, and they don't have a specific concern for each studio's long-term growth.
We are the product. We pay the bills, do the work, and lose the sleep—and they make a lot of money off us. And now, we can't market to our own clients? It just doesn't feel like the right way to support a studio-client. I'd love to hear from CP and collaborate with them, but I don't think they are interested.
“I don’t trust their algorithm for filling classes nor do I believe their explanation for their algorithm”
From a Pilates-based studio in Bethesda, Maryland:
In short, ClassPass has dropped the value and therefore the revenue of each class.
They claim that they help small studios fill empty spots but once the studio is partnered with CP and clients find out, some move over to ClassPass. We have clients that have our packages and ClassPass credits but if there is a CP spot available for the class they want, they use CP's credits.
The fact that this area is saturated with boutique studios does not help this situation. We feel like we need to be partnered with CP because our competitors are. I don't trust their algorithm for filling classes nor do I believe their explanation for their algorithm on their app for finding studios in certain locations. We may have the same number of people in classes as we did a few years ago but we are making less money [per person] so revenue has continued to drop.
“You cannot expect a person who is paying less than $10 a class to see the true value of that class. In their minds, it’s worth $10”
From a Portland area yoga studio:
ClassPass devalues our classes and the hard work our teachers put into each class. They tell studios that they bring students in the door and we have the opportunity to convert students we wouldn’t normally have. But, psychologically, you cannot expect a person who is paying less than $10 a class to see the true value of that class. In their minds, it’s worth $10. We cultivate dedicated students who want to build community in fair and equitable ways. The final decision to break with ClassPass came when they continued to change their pricing models—each time taking more away from the studios.
“At the end of the day, my inability to keep it going will have been highly negatively impacted by ClassPass”
From Vinny Panza of CKO Kickboxing Chelsea in New York City:
I know I run a good gym, even against the local competition. Though I take ultimate responsibility, at the end of the day, my inability to keep it going will have been highly negatively impacted by ClassPass. A year down the road, when people's only options for kickboxing in NYC are some shirtless trainer-led, club-hopping nonsense, or a box-fit class at a national chain led by some guy with a big Instagram following that has a two-hour-long krav-maga certification, ClassPass will be one of the major reasons.
"A low-cost marketing partnership has turned into a nightmare"
From a Chicago yoga studio:
The original intention of the company was to help bring more customers to small businesses. This business practice remained true in the beginning, but over the past two years, that intention has turned to greed. No matter what your rates at your gym/studio, ClassPass users pay $3-$7 per class, and now ClassPass has no intention of cutting ClassPass users off [regardless of how many times they visit]. This $3-$7 needs to be split to cover the studio and instructor expenses. This is very unsustainable for any business who partners with this company. A low-cost marketing partnership has turned into a nightmare.
I believe this company has overstayed its welcome, and it would be best for studios to remove the rose colored glasses, unite, and pull out. We as business owners and instructors have all put countless hours and financial investments into training and remaining certified/licensed to provide the best services for our clients. None of this comes for free, and neither should our services. Health is a commitment. ClassPass needs to step up, provide a sustainable split for both businesses, or go.
“Our main goal for 2020 is to get off the network”
From a Phoenix-based fitness studio:
I have been managing our ClassPass partnership as best as one can with no leverage. In the simplest terms, pricing was the first variable studios gave up. We are in the next phase, where inventory is the next variable. Think about it: Studio owners are losing basically the two only levers that drive revenue—[pricing and inventory]. Game over. Our main goal for 2020 is to get off the network.
“Some account managers have told studio owners to pay their teachers less to make up for the loss in income”
From an East London-based yoga studio:
Not only do they steal your customers by offering your classes for a price you can't compete with, but they have also completely devalued the worth of what people now believe they should be paying. They also just change your deal without telling you, and you have absolutely no control over how much your classes are listed as on the app [_Editor’s note: ClassPass and partners agree to contractual rates, sometimes including a price floor and ceiling_]. One day they just magically dropped loads of studios’ lowest credit price by one, so mine went from six credits to five credits. When I asked why [this happened], they just said [the reason was] so that it was more affordable for their customers. Some account managers have told studio owners to pay their teachers less to make up for the loss in income.
“I started seeing ClassPass users in the classes that I had limited room in”
From a Bay Area boutique fitness owner:
Over the last few years, everything has changed. None of my ClassPass users ever converted. They even flat out told me it was a better deal for them to stay on ClassPass than purchase directly from my studio.
I started seeing ClassPass users in the classes that I had limited room in and, of course, would want my members to have the room when they are paying full price. When I tried to reach out to CP, there was no phone number to call, just an email. Emails went unreturned for a few days. When I tried to get into my partner dashboard my password was not recognized and the request to reset it took a few days as well.
I had an incident with a client who would come in high to class and was a disturbance to my members. When I asked CP to not allow him to use my studio, they said that I should approach the client first. I felt so uncomfortable with no support from CP. My business coach recommended I leave CP for all the reasons I mentioned and more. To leave the platform, it is a three-month process with a phone interview. My last day is coming up in March and I cannot be more thrilled. Yes, it’s additional income, which does not hurt. However, dealing with CP is exhausting.
“You are not allowed to offer similar pricing options, even though that is exactly how they built their business”
From Goodtimes Yoga Studio in Brooklyn:
ClassPass's studio payout is negotiated around the price of their 10 pack. Therefore, many studios must raise their drop-in prices to unreasonable rates in order to get a sustainable payout from ClassPass. Instead of making classes more accessible, this practice is inflating the fitness industry across the board. In their newest contract, they wanted us to attach a link to CP on our own website, redirecting our clients to their website for booking. ClassPass lures in studios with a minimum guaranteed revenue and it prevents businesses from offering pricing plans similar to that of ClassPass, though they have built their entire model on undercutting the studios. The thought of getting into a contract where a third party dictates our pricing options seemed disastrous. When I read the contract I knew that we had to leave the platform, because the new terms insinuated CP's overhaul of our business and our own clients, which is a dangerous business model for studios. Most of our concerns and emails have been ignored by members of their team. ClassPass has no time, staff or respect for small business.
“**After nearly two years on ClassPass as a top-rated studio with hundreds of drop-ins, we gained exactly two new members”**
From a New Orleans strength and conditioning gym:
Gyms since the beginning of time have a bad rep for being "overpriced." We are expensive. However, we are not overpriced. The average consumer cannot possibly understand the depth of costs and overhead this industry requires. ClassPass completely subverts the reputation we've tried to unravel as an industry. When a client pays ClassPass $12 for a class that typically costs $20, [ClassPass is] telling the consumer, "See! You can have this luxury item and for a fraction of what they tell you!" Thereby, convincing our consumer we are less valuable than we are.
On our side, we froth at the mouth for leads [to new students]. This is a competitive industry, and new studios seem to pop-up in our market every month. In our desperate grasp at what we see as a possibility for sustainable income (aka ClassPass users becoming members of our gym) we signed on. After nearly two years on ClassPass as a top-rated studio with hundreds of drop-ins, we gained exactly two new members. One member is still with us today.
“It wasn’t working”
From a long-time Seattle yoga studio:
We signed on with ClassPass originally to aid potential new students in discovering our studio at a low investment—much the way a new student special works. However, after many years of partnering with ClassPass, and utilizing their recommended strategies for increasing attendance, conversion, and growth, we finally terminated our relationship with CP in December 2019 amid growing concerns around why we were partnered with a business so non-aligned with our values and contributing so little to our community's growth. Both management and teachers supported the decision. The succinct main reason is that it wasn't working: conversion rates (to becoming direct studio members) were consistently less than 3 percent, and CP payouts were below profitability for our studio. We already run a low-profit margin intentionally to keep class prices down, and teacher pay up.
“We have recently terminated our toxic partnership with ClassPass”
From Sweat IT in London:
We have recently terminated our toxic partnership with ClassPass. It had become abundantly clear that ClassPass does not value or support their studio partners. They systematically devalued our product by continuing to discount our classes, even though we specifically asked them not to. They masquerade as a partner to your business, but in actual fact they are in direct competition for the same customers. They want complete control of your studio's inventory, to decide how many spots to sell and what price to sell them at. They made continued attempts to undermine and to hinder our business, in order to force us into signing up to new pricing and business terms!
ClassPass has no place in boutique fitness and any studio worth its salt should steer clear! They are the fucking Devil.
“If we could convince our fellow studio owners to disavow ClassPass, we would quit them in a heartbeat”
From a Los Angeles boutique cycling studio:
[Due to everything] from an increasing lack of transparency to a general feeling of disregard by ClassPass (no direct means of partner support by phone, for example), we are continually reevaluating our partnership. ClassPass pays studios like ours pennies on the dollar for our facilities. Clients typically arrive late, entitled, and misinformed about our policies, but are given a platform to "rate" us, yet studios do not have the ability to view a client's rating! We should be given the option to rate clients, not just the feedback option that delivers no confirmation of receipt by ClassPass personnel. If we could convince our fellow studio owners to disavow ClassPass, we would quit them in a heartbeat.
“We've spoken to them about how insanely low they've set the floor on our classes—much lower than other competitors in our marketplace, and they've been unwilling to budge”
From a Boston-based collection of yoga and barre studios:
ClassPass has become increasingly detrimental to our revenue, especially in locations where we have a higher concentration of college students. We are seeing an increasing number of student memberships drop off. We have run the numbers year over year and have seen student membership in one studio alone decline by upwards of 25 percent due to the number of students that have converted to ClassPass within the past several months since signing our new contract. We have noticed many of our studio members have quit their memberships and hopped on the ClassPass platform due to the bargain offered. Because of this, overall studio revenue is down. When we signed the latest contract with them adopting their SmartTools, we were guaranteed a certain amount of revenue monthly, but we were already making that amount, and it hasn't gone up.
Now we are seeing it cannibalize our existing members and negatively impact our overall revenue. Years ago we had a good arrangement, but I don't see how we can afford to carry on. We've also spoken to them about how low they've set the floor on our classes—much lower than other competitors in our marketplace, and they've been unwilling to budge. ClassPass used to help us fill a few extra spots at a reasonable rate. Now it's become like Groupon, which we'd never do business with, and at this point students would be silly to buy directly from us, even when offered our best deals. Because ClassPass is so cheap. It's become a nightmare.
“ClassPass purports to benefit fitness studios but is actually doing the opposite”
From a dance and fitness studio in Philadelphia:
ClassPass purports to benefit fitness studios but is actually doing the opposite by continually changing its policies, refusing to increase payouts to the studio partners, and essentially undercutting us by offering unbeatable deals to hook customers that might otherwise go directly to fitness studios. In January, we informed ClassPass that we would be ending our partnership with them. The customer service with them has been incredibly awful—there's not even a phone number for the studios to call a representative. You have to send multiple emails to get a response.
When the company insisted that everyone use SmartSpot, many studios felt they had no alternative because canceling their contracts would mean losing thousands of dollars of revenue each month, and we already know that marketing to CP users is a bit of a lost cause. Very few convert to direct customers and I don't blame them—why would anyone want to pay more for a membership or package at a specific studio when they can already get the same services for a cheaper rate through ClassPass?
“They will not listen when we fight for credit increases, floor raises, etc”
From a New York City yoga studio:
It is cannibalizing our business, making us compete with their unsustainable pricing and losing our own members and grads to them because it is so cheap and because there is no limit on visits. They will not listen when we fight for credit increases, floor raises, etc.
“This really affected the overall perception of what my programs were worth to new students”
From SOfit SF Inc. in San Francisco:
During the time I was with ClassPass, the value of classes and what I had to offer [to compete] significantly dropped. Because they were pricing their unlimited classes so low, people who came to my classes through ClassPass didn't understand the value of my programs. They showed up late, canceled, and were generally rude or dismissive of the culture and vibe of my space. This really affected the overall perception of what my programs were worth to new students and it was hard to grow. Before I knew it, I had to drop my own rates to keep up with ClassPass's rates before I jumped ship. Once I got off ClassPass, I desperately offered ridiculously low prices for people to stay on board with me for. I had to claw my way out for almost two years to recover from the devaluing that happened during the time I was with them. My programs and company fell to rock bottom prices and I had to dig my way back out.
“ClassPass likes to insist that their customer base is mostly folks who aren’t committed to single studios, but we’ve been hurt the most by long-time supporters who make the switch [to ClassPass]”
From an Oakland yoga studio:
We have lost long-time students to ClassPass simply because it's a cheaper way for them to regularly attend classes (and I should note that we have not had a major price raise in years, and still have some of the lowest prices in the area). ClassPass likes to insist that their customer base is mostly folks who aren't committed to single studios, but we've been hurt the most by long-time supporters who make the switch yet continue to attend our studio just as often as they did before on memberships and class packages purchased directly from us.
“We will never be profitable with ClassPass even if they filled 100% of our classes”
From a Washington D.C. Pilates studio:
We are a newer studio in our second year of operation. ClassPass has helped get people in our studio but it isn't making us profitable. As a matter of fact, we will never be profitable with ClassPass even if they filled 100 percent of our classes. Because we are a new and independent studio, we are in the place of "Can't live with em, can't live without em.” In fact, we have had to pay another third-party vendor that uses an algorithm that determines package offers for ClassPassers based on their studio visit and purchase behavior. It has helped but will not likely solve our issue. Basically, we are likely not to make it past this second year—despite our ClassPass clients loving us, as well as our regular members. ClassPass argues it is not them, but stiffer competition.
“It’s killing our bottom line”
From a San Francisco yoga studio:
[ClassPass has a] monopoly on less expensive classes with little incentive for students to shop directly from studios. We have a $7 reimbursement rate despite trying to negotiate more. It’s killing our bottom line.
“We don’t plan to sign any new agreements with them, but should they insist, we’d drop CP”
From a full-service fitness facility in Southern California:
We were relatively early adopters of CP and understood from analyzing the CP model from the outset that it was an unsustainable model—especially for CP—but we were intrigued by the prospect of adding additional marketing outreach for our facility. And we've enjoyed the incremental revenue that we've received. But the latest iteration of their contract is a non-starter as it is too overreaching, giving CP more control of our business than is appropriate or practical for those of us who are doing the "heavy lifting" of providing the brick-and-mortar facilities of fitness. We don't plan to sign any new agreements with them, but should they insist, we'd drop CP. Would love to see all facilities drop CP and then let us all compete on a level-playing field for those customers!
“They were essentially unilaterally changing the terms of our agreement, without ever asking for consent”
From The Underground Dance Centre in Toronto:
I was one of the first studios using ClassPass when they came to Toronto in 2015. For the first year, everything was fine, and then we started to get the "Product Update" emails. With each "Update" came a fundamental change in the mechanics of how classes were booked by users, and how studios were being paid. They were essentially unilaterally changing the terms of our agreement, without ever asking for consent.
“We have taken such a hit”
From an East Coast studio:
So many of us joined ClassPass under different terms. The terms have evolved so many times over the years there is no benefit to the consumer to purchase direct from the yoga studio anymore. We agree 100 percent with Love Story Yoga, The Pad, etc. ClassPass often pays out $8 a class and when a studio pays teachers $60-100 per class, it is a losing formula. Even spaces that pay $40 to a teacher are in jeopardy with these metrics. And we would love to pay our teachers more and give them more job security, health insurance, etc. But with this change in what ClassPass is doing, it makes it incredibly difficult. We have taken such a hit.
“ClassPass takes our product priced at $30 a class, charges a customer $15, and pays the studio $6-$8”
From a Northern California Megaformer studio:
ClassPass was originally a marketing tool to attract price sensitive “dabblers.” Over time they have become less of a sales acquisition tool and are currently a direct competitor to our studio (hiding as a wolf in sheep’s clothing). On a monthly basis, we are seeing our overall Classpass check increase, but our revenues decrease to the point where it doesn’t make sense to keep our doors open. I opened my business to give myself to the community and clients. There are other much easier ways to make money. I’ve sacrificed nearly everything to build this studio from scratch including my own value and my instructors’ value now by allowing Classpass to come in and take complete control of my available class slots and pricing. ClassPass takes our product priced at $30 a class, charges a customer $15, and pays the studio $6-$8. At a studio like mine with only 10 spots, I can’t even cover the cost of my instructor in some cases, much less rent and other overhead. Classpass has taken complete control over how many spots I can offer on their platform with SmartSpot and pricing.
“We are leaving ClassPass to get our community back”
From a California training studio:
When I first opened, we had a great relationship with ClassPass. Clients paid very close to our introductory package rate, and we could convert those people into members of our community. We agreed to be one of the test studios under the promise that the surge model would increase our cost. We have unfortunately seen the direct opposite. Not only are our classes on a deep discount through their site, their massive marketing for cheaper-than-we-can-afford introductory offers stifles our direct sales as my voice is lost in their constant marketing. Our classes have lost the community feel as clients no longer feel a pull to keep a regular schedule to work out with the same friends and teachers. Now they are just looking for the lowest credits required. My most loved coaches see their regulars go to odd times because that class is half the credits, and they wonder why the following they built can switch so easily. The ClassPass client has been conditioned to seek the lowest credits; not their favorite teacher, their usual workout buddies, and in some cases their preferred studio.
We are leaving classpass to get our community back. Where clients come regularly again, coaches can deepen the relationships, and I can focus on helping clients (not a dashboard).
“After terminating with ClassPass our revenues went up”
From Leo Vassershteyn of Iron Lion Gym in Mill Valley, California:
At first it was great exposure for us and we were converting their customers who wanted to take our classes more than 3 times a month. They paid us half of our 10-pack rate.
The problems began when we raised our rates. First they refused to raise their payout in accordance. Then they lifted the three-class limit they placed on their customers at studios, allowing their customers to take unlimited classes with us, as long as they bought "premium" classes. These premium classes were still undercutting our rates by $10 a class. They also converted network classes to "dynamic pricing,” promising we could get up to 90 percent of our drop-in rate, but we never saw that and the average dropped to $8. Furthermore, I started to see customers that found out we were on ClassPass and switched to booking through them instead because it was cheaper. That was the last straw. I asked ClassPass to pay me out at my 10-pack rate and stop undercutting me and they refused, so I terminated my partnership with them.
In the last few months, our revenues went up, especially in January when we got new customers that wanted to take our classes and would have otherwise gone through ClassPass. We also managed to convert former ClassPass customers to buying from us, because they wanted to continue taking our classes. So if you're thinking of terminating your partnership with them, but are afraid, don't be. Don't let them devalue your services. We have been much better off without them and the more of us that terminate, then the sooner we can take this parasite down.
What ClassPass customers need to understand is that ClassPass is a parasite, using VC money to undercut hard-working businesses, devalue our services, and they are destroying (NOT SAVING) this business. If you truly want love the classes you take and want to support those studios then pay their actual rates. Your discount comes at a cost to the studio where you attend the class.
Here is the full statement from Kinsey Livingston, ClassPass VP of Partnerships, regarding the sentiments and allegations put forth by the fitness studio owners in this article:
We empathize with studio owners who are operating in a far more competitive environment than they were even a year or two ago. In New York alone, there are four zip codes with more than 100 studios in operation. It’s precisely because of this challenge that we designed our model to help studios sell spots they wouldn’t have sold themselves, to customers they wouldn’t have attracted otherwise, at prices that maximize the revenue we send. In support of our partners, we incur material marketing costs to drive new customers in the door. We see that our marketing efforts are working because over 50% of our customers are completely new to studio fitness, and over 80% have never visited the studios they attend before joining ClassPass. For those customers who do end their memberships with us, 60% subsequently purchase a package directly from a studio that they discovered through ClassPass.
Our business model has evolved over time, and earlier iterations weren’t always as aligned with our partners as we strived for them to be. Under our current model, we make a commission on the revenue we send to partners. Therefore, the more money studios make, the more money ClassPass makes. It is always in our best interest to help a studio maximize their revenue by finding the best price to bring customers through the door. Every studio works with ClassPass to identify the minimum amount they will accept per reservation, and we never price below this studio-approved rate. The value that ClassPass drives for our partners is evidenced by our high retention rates, which are above 95%. We’re not perfect, but we’re working relentlessly to serve our customers and our partners as well as we can.