Peloton was accused of “gross profiteering” after its controversial decision to add a $95 “equipment activation fee” to buyers of used bikes.
One-time fee, The company revealed this in a letter to shareholders and a blog post when it released its earnings last week.This is in addition to a $44 monthly subscription to Peloton’s online classes.
People buying new bikes, which are significantly more expensive than used models, do not have to pay the registration fee.
The extra fee infuriated many die-hard fans.
“This is a pretty nasty money-grab and is sure to get a lot of backlash,” wrote one Reddit user.
Another user pointed out: “It’s clear to see that this company is trying to rip you off with all the fees, even though you already pay them every month.”
Peloton did not comment on the backlash.
According to a blog post by the company, the registration fee is to “ensure that new members receive the high-quality onboarding experience Peloton is known for.”
The pandemic darling closed Monday at $4.90 per share, a sharp decline from 2020, when the stock reached a high of $162.
The company last week reported its first quarterly sales increase in two years, albeit just 0.2%, as it tries to bounce back after a tumultuous few years that included the firing of founder John Foley, massive layoffs, product recalls and federal fines.
“Improved profitability reflects our continued focus on aligning costs with the scale of our business,” Peloton said in a letter to shareholders.
The company said used bike sales contributed to a 16% increase in membership in the quarter ended June 30.
The company says the $95 fee includes a “virtual custom fitting to help members get the most out of their first bike,” and that pre-owned bikes also come with a “history summary” of the equipment. New members also get discounts on accessories like cycling shoes, bike mats and spare parts.
The startup, which sells, buys and delivers used Peloton bikes, said the perks don’t seem to be proportionate.
“Simply put, this is like a tax on the used Peloton market,” said Ari Kimmelfeld, co-founder of Trade My Spin, which is offering a $95 rebate to subsidize the fee.
The company, which was founded in March, has sold more than 2,000 Peloton bikes and recently renamed itself Swap my stuff.
The company resells Pelotons for $500 to $700, a bargain compared with the $1,200 to $3,000 a new bike can cost.
Trade My Spin is priced cheaper than Peloton’s refurbished bikes, which start at $1,149.
Of the 4.5 million Peloton bikes and treadmills built since 2019, roughly 25% are sitting unused, according to Trade My Spin research.
Peloton said the startup’s research was not accurate.
“Peloton values entrepreneurial spirit and innovation, but the data provided by Trade My Spin is not accurate. We are unable to provide further details about our sales figures,” the company said in a statement to The Washington Post last month.
