ClassPass’s unequivocal success has built itself a die hard following since its launch in 2013. If you are one of those devotees, you might want to squat down for this one.
“But WHY?” you ask. According to a blog released by ClassPass CEO Payal Kadakia on Wednesday, the unlimited model was never meant to last forever.
What started as a promotion to offer unlimited classes all summer in May 2014 turned into what Kadakia called a move that “helped ignite something truly successful in our community. I was so taken aback by the promotion’s success I focused on nurturing that spark, assuming we’d figure out the business model as the company continued to scale.”
Kadakia explained that while the boost in membership was exciting, they always knew the model was unsustainable based on sheer cost alone.
As any ClassPasser who has canceled within 12 hours knows, the service pays its studios every time a class is taken. Kadakia explained that as more and more classes started to book, “the more we paid. As you can imagine, our business costs increased rapidly. So we raised our plan prices in an effort to compensate – but we tried not to raise them too much. After all, we wanted to remain as accessible as possible. But in some cities, we even had to raise our prices twice in one year, which was awful for our members and painful for my team. We simply couldn’t make the plan work for our business.”
In truth, the idea that an unlimited plan is bad for business shouldn’t really come as a shock. Many of the classes offered by ClassPass cost upward of $30 a pop, so users who took advantage of the unlimited deal made out like bandits.
Those people will now suffer the most from the plan change. Members will be offered a maximum of 10 classes a month for the same amount they currently pay by state. For example, people in New York will continue to pay $135, while those in Los Angeles will pay $115. Those who currently pay for the unlimited plan will also receive an additional 10 classes per month for the first three months after the switch.
ClassPass recently announced its new add-on pack option, which allows users to add three classes to their plan for a one-time fee between $25-$40. It’s a nice perk, but we still sense a lot of angry tweets from scorned ClassPassers on the horizon.