Why Planet Fitness is Surviving When others are filing Bankruptcy

The power of pricing strategy and targeting customers especially during corona-economy

Planet Fitness is a fitness company that has over 2000 clubs with over 15 million people. It is best known for having an inexpensive membership fee, a purple color theme, and a judgment-free zone. Their main target customers are newcomers to fitness and people who want a more relaxed workout atmosphere. Although PF’s members dropped from 15.5M in March to 14M in October, considering the number of months they had to stay closed during the pandemic, the retention is amazing. 24 Hour Gym, Gold’s Gym, and Town Sports filed for bankruptcy during the pandemic.

Three reasons why PF is surviving:

1. Pricing Strategy

I had a monthly membership prior to coronavirus because it was affordable and had the equipment that I needed. Their standard monthly is $10/month and black cards run $20/month, which could bring a guest and access all 2000 clubs. Most of the users are either beginners or not so serious workout members and because of this, they have a low retention rate. This is great for PF. Additionally, people do not cancel their membership even if they don’t go to the club for weeks, thinking that it is only $10 and that they will go back soon. In fact, the majority of their 15 million people keep paying membership without using the gym enough.

2. Target Customers

Planet Fitness is famous for the no target zones and the general atmosphere friendly towards beginner members. Many times, people want to work out but don’t know how, and when they go to an intense gym, they are not comfortable because everyone is so intense in their workouts. Planet Fitness targets beginners and makes plenty of effort to make the atmosphere friendly. Members are not allowed to wear tank tops that reveal their bodies too much. The alarm goes off if members drop heavy equipment to the ground. There are messages on the walls saying “Judgment free zone.” Targetting beginners, PF is able to win over millions of people.

3. Adaptation to Covid Environment

When Planet Fitness had to shut down in March, I received an email some weeks later that they are automatically not charging our membership fees during the shutdown. Proactively approaching their customers and thinking in the customers' shoes was appreciated. Then, PF started to roll out a series of online workout classes to keep giving members the value of their membership. And during when gyms were open with limited capacity, PF could handle them because they are open 24/7. Members could find a time when it is not crowded.

Revenue

Planet Fitness earns revenue from membership fees and because they are only $10/month, most members did not bother to cancel their membership. Even after 1.5 million members dropped during the pandemic, they still have 14 million members paying at least $10/month putting at least $140 million each month to PF. Obviously, they had to waive membership fees during the shutdown, which hurt their P&L but not enough to file bankrupcy.