ClassPass, the billion-dollar class-aggregation, "groupon-esque" platform, promises to fill your empty spots with fresh faces. It's tempting to jump on board, but before you sign on the dotted line, let's get granular with the data. After all, they’ve got $300 million in funding and incentives to match.

Revenue & Customer Acquisition

Sure, ClassPass can bring bodies through your door. One Pilates spot in our analysis reported 75-100 new ClassPass users per month. We found, however, that only 10% of those users converted into regular members. That means of those 100 new faces, only 10 stuck around. The rest are serial daters, hopping from studio to studio without committing.

Data from 20 studios across New York, Los Angeles, and San Francisco showed sobering results. On average, payouts from ClassPass are 50-70% lower than standard drop-in rates. Say your rate is $39 (see "Everyone's Classes are $40, Here's How to Double Yours"). ClassPass might reimburse you $17 for that same spot. That's a $22 loss per head. Multiply by the hundreds of ClassPass users coming through your doors, and we're talking serious revenue leakage. But it gets worse. We found studios where up to 90% of their clientele came from ClassPass. Rates were so low, they were barely breaking even. They were essentially subsidizing ClassPass's business model, trapped in a cycle of dependence on a platform that was bleeding them dry. Adding insult to injury, “When ClassPass does free trials and we get nothing” lamented one studio owner. Your customer numbers may race ahead, but your revenue lags behind. 

The "SmartRate" and "SmartSpot" are sold as looking out for the studio bottom line. Not according to our data. These mysterious algorithms, which “optimize” your revenue based on demand, are more foe than friend. We received consistent reports that the rates dictated by these tools often didn't even cover basic costs. You're handing over control of your pricing to prioritize ClassPass's bottom line over yours.

The Community Killer

A surge in low-quality head-count is likely to harm your biggest asset: your community. In our studio owner study, a disturbing pattern emerged. Regular, loyal members are frustrated by the influx of transient ClassPass users. They're struggling to get into their favorite classes, their tight-knit community is being disrupted, and they feel their loyalty is being punished. They're paying premium prices to be part of your tribe, only to fight for mat space with discount drop-ins.  Another studio owner echoed this sentiment: "Classpass has slowly devalued classes over the last few years as well as changed consumer behavior regarding loyalty. Now we are facing a marketplace of customers who value classes at $10 and studios struggling to charge the $40 it takes to pay rent."

Some Words…

For those who still join after reading this: we urge you to get granular with your profit margins. Calculate your cost per head, factoring in everything from instructor pay to towel laundering. Then, run the numbers on ClassPass reimbursement rates. Will you actually turn a profit, or are you subsidizing discount users at the expense of your financial health? 

For those already on the platform: Track your ClassPass conversion rates religiously. How many of those new faces become recurring revenue? Is it enough to offset the potential attrition of your core members? Remember, a revolving door of discount users is no substitute for a stable, committed membership base.

For all of our readers: Take a hard look at your brand identity and community culture. Does the transactional nature of ClassPass align with the ethos you've worked so hard to cultivate? Will catering to drop-in deal-seekers dilute the unique experience that keeps your loyalists coming back?  

Remember, you've poured your heart (not to mention your savings) into creating something special. Don't let the siren song of short-term gains lure you into sacrificing your long-term vision. Crunch the numbers, trust your gut, and make the call that aligns with your studio's DNA. All that glitters is not gold.