I own a prosumer stationary bike (a Schwinn) which I purchased for $999 in December 2002.
I’m not complaining about the price tag. I use the thing every day, and it still works, almost twenty years running. Best thousand bucks I ever spent.
I have long had my eye on the high-tech Peloton bike, though. Like millions of exercise aficionados, I’ve been wowed by Peloton’s marketing campaign.
I haven’t pulled the trigger yet. (My 2002 Schwinn is still perfectly serviceable.) But a Peloton bike remains on my wish list.
Not all is well, though, with the 10-year-old fitness company. According to some leaked internal documents, Peloton plans to suspend production on some of its models.
This is not due to a shortage of workers, or the recent supply chain woes. This is because of slackening demand.
This didn’t make sense to me on the surface. After all, the pandemic made home exercise options more attractive than ever. And everyone has seen those Peloton commercials. Product awareness certainly isn’t the problem here.
The problem is the price tag. Depending on which model you get, a Peloton bike will set you back $1,495 to $2,945. Prices are set to increase at the end of January.
Peloton’s pricing is on the steep side, though not exorbitant, for a high-end exercise bike. But that isn’t where the cost of owning a Peloton ends.
The real sales pitch of the Peloton is the online, interactive group classes that go with the bike…so long as you keep paying. The classes will cost you a monthly fee of $39 for the all-access package. That’s almost what I pay per month for my health club here in Ohio.
Oh, and Peloton will also add delivery and setup fees at the end of this month, ranging from $250 to $350.
Perhaps that was the nail in the coffin, that caused demand for Peloton bikes to plummet(?)
What about the i-word, though? Everyone is aware of the inflation that is driving up the cost of everything, from gasoline to automobiles.
Some of this inflation was inevitable, given the Great Shutdown of 2020. Last year, brilliant government minds everywhere decided that the best way to secure healthcare was to cripple the economic activity that actually pays for healthcare. Restarting the stopped economy has proven to be more difficult than anyone imagined.
Some of our inflation is also driven by excessive money-printing (aka “Bidenflation”). The Weimar Republic taught us what happens when governments print and spend money like mad. (In the Weimar Republic, they got hyperinflation and Hitler.) But the current crop of Democratic Party hacks never read that particular chapter of Economics for Dummies.
Some of the recent inflation, though, is simply opportunistic. Otherwise known as “price gouging”. Companies raise prices simply because they can, in an environment in which other companies are raising their prices.
And sometimes it’s a little bit of all of these factors.
Another principle of economics, however, is price elasticity of demand. Basically this means that price increases affect the demand for different products and services to differing degrees, depending on how essential they are, and what substitutes are available.
For some products, demand will remain more or less constant in the face of price increases. This is the stuff that people absolutely need. Food, water, shelter, and heating oil are all inelastic, meaning that demand largely holds steady, even when the prices of these goods increase.
Other products—like expensive exercise bikes, for example—are highly elastic. This is the stuff that people want, but can live without.
This means that while you might long for a $2,800 Peloton, you can make due with something cheaper—like a lower-priced exercise bike, or maybe a pair of sneakers. (Don’t go jogging without a can of bear spray, though, if you live in a big Democrat-run city. Violent crime has soared in these places, since they “defunded the police”—another 2020 stroke of governmental brilliance.)
I still like the Peloton bike. I want to be like the trendy people in the Peloton commercials. The women in these commercials are invariably hot, and the men all look like perfectly fit stockbrokers and hotshot attorneys. Not a single paunch or case of male pattern baldness among them.
But as someone who has been a consumer of fitness equipment since around 1982, the Peloton just doesn’t seem like a great value to me. I remind you: my $999, 2002 Schwinn stationary bike still works. And when I do inevitably replace it, there are many options that provide better value than the Peloton.
Maybe the folks who run Peloton will change that equation before my Schwinn stops running; but the company’s recently announced price increases (and added delivery/setup charges) suggest otherwise.
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