So, how well is Classpass doing in 2017? Well, It really is hard to tell without seeing some key operational metrics that inform the real tale like the cost per acquisition (CPA), the lifetime value of customers (LTV) and an individual churn rate (CR). 15 Million in revenue per month with around 1-1. monthly 5 Mil bookings. While Classpass does generate some additional income from No-show fees and a small commission from add-on classes.
The core of their income comes from monthly memberships. 6 Million net revenue each month after paying studios. per month 24 per consumer. So, is that good? Maybe, it depends on their CPA/LTV/Churn rate metrics again. During the last couple of weeks, they have been running Facebook advertisements for 70% from the first month with the 5-class Base membership.
24 reduction the first month to get a customer. They’d be able to recoup that cost the next month and start earning money from the 3rd month on. So, if the common Classpass user ends up staying with Classpass for 2 months, it could be a big problem. However, if the average length of the membership ends up being 6 months or longer, then the Classpass model becomes financially a lot more interesting.
The important question is whether Classpass is profitable. Let’s make an effort to guesstimate what their other costs are. 2M to hide payroll every month. 1 per class booking to use their API (unless they have a special deal negotiated with the company) . 2 Million range. This means that Classpass should be in the dark.
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40M in their last round in November 2016 plus they likely still have 10-20% from it quit in the lender meaning with this assumed cushioning and the fact that they are likely profitable. Classpass is in a pretty good spot, the key at this stage is to continue to level by growing its user bottom and increasing the lifetime value of its customers.
Startups like Classpass who are endeavor supported technology companies should be growing or they die. Classpass is valuable to consumers if whenever they open the application to book a fitness class, they can find a class that fits their needs in terms of location, type of work out and quality.
Back in 2014-2015, Classpass was very aggressive in conditions on on-boarding new studios especially as they expanded to new cities. They would aggressively court the best studios in town by offering more generous per class rates and even offer subscribe bonuses worth thousands to get exclusivity in their competition against Fitmob (before they finished up acquiring them).