Peloton announces $95 activation fee for used equipment

If you try to save some money by buying a used Peloton, there will now be a fee to activate it.

The exercise company announced it would charge new subscribers a one-time $95 activation fee if the equipment was bought on the secondary market, NBC News reported.

If a new owner of an old bike doesn’t pay, then they won’t have access to the classes or features Peloton offers, Engadget said. They will get a “virtual custom fitting” for the Peloton Bike and Bike Plus, including a log of how often the former owner used the equipment.

“Although these secondary market sales are not from Peloton-owned channels or any of our third-party distribution partners, we want to ensure these new members receive the same high-quality onboarding experience Peloton is known for,” the company said, according to Fox Business.

Peloton said that new members are buying used bikes and treadmills on peer-to-peer markets, for instance on Facebook Marketplace at a growth rate of 16% year over year.

“It’s also worth highlighting that this activation fee will be a source of incremental revenue and gross profit for us, helping to support our investments in improving the fitness experience for our members,” interim co-CEO Christopher Bruzzo told analysts.

The company will also give discounts on accessories and spare parts to the new subscribers, Bruzzo said, according to CNBC.

Ari Kimmelfeld who owns Trade My Stuff and sells used Peloton equipment says there are about a million bikes not being used around the world.

He has worked with Peloton, telling the company that a used piece of equipment he sells could mean $500 a year for Peloton. With the new fee that goes up to $600 the first year.

“We save the customer a lot more than $95,” Kimmelfeld told CNBC. “I don’t think it’ll stop or slow down people from buying secondary equipment … because you can get a bike delivered faster and cheaper on the secondary market, even with the $95, let’s call it a tax, from Peloton.”

Trade My Stuff sells a first-generation bike for $499 instead of the $1,445 a new one costs. Kimmelfeld said he has sold a few thousand bikes since starting the company.

The new $95 fee does not apply to people who buy a refurbished machine from Peloton or one of its partners, The Verge reported.

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