Where to find Dan: https://www.instagram.com/danielsan

Where to find Nick: https://www.linkedin.com/in/nick-reyes21

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[00:00] Introduction to ClassPass Controversy

[00:42] What is ClassPass?

[02:17] The Allure and Reality of ClassPass for Gym Owners

[03:09] Breaking Down the Issues with ClassPass

[04:02] Revenue Concerns and ClassPass

[05:53] ClassPass Pricing and Focus Issues

[09:59] Ideal Customer Profile and ClassPass

[11:40] ClassPass and Gym Economics

[13:53] Conclusion and Call to Action

Dan Uyemura: [00:00:00] ClassPass is truly TrashPass. Like it serves two people. It serves ClassPass as an organization, and it serves the gym member who does not want to join a gym. You are now listening to The PushPress podcast, helping gym owners succeed one episode at a time. The PushPress podcast is brought to you by Poppy, prebiotic soda with no sugar.

Nick Reyes: You know what? The people listening to this are going to buy Poppy, almost like they're going to subscribe to ClassPass. 

Dan Uyemura: Oh, here we go. And on today's episode of The PushPress podcast, we're going to talk about trash. I mean, ClassPass. TrashPass. I love it. So for those of you who don't know I don't know why does anyone not know well that's covered anyways, but those of you who don't know ClassPass is a system a tech system that has been built and bought by Mindbody that [00:01:00] Basically allows fitness goers from any in the world to like download their app, pay TrashPass a bunch of money or, you know, a monthly fee.

Dan Uyemura: And then they can go to your gym or random gyms throughout the month. Kind of like as they wish. 

Nick Reyes: Yeah. Yeah. So there's different levels. It's essentially would be, you know, I buy a membership for a hundred dollars a month and I get, you know, 10 visits at any tier two gym. Throughout that month, and it allows me to kind of explore and try different fitness modalities and maybe do a Pilates class in one and a CrossFit class in another.

Nick Reyes: That's the value prop that they try to present. And today I want to shed a little bit of light on how the backend really works and how things really function. 

Dan Uyemura: And, you know, just to put a little bit of market research on it, just look this up. According to comparably. com, ClassPass NPS negative 4.[00:02:00] 

Nick Reyes: Negative 4. Negative 4 is not a good number. You do not want a negative NPS. It's better than negative 100. Which is 

Dan Uyemura: possible. It is possible. But it's not great. Okay, cool. So, we've kind of set the bar for what ClassPass is. Why do a lot of gym owners want to use ClassPass? Well, why. It's because of the allure of like new people coming and discovering your gym through this network that, you know, they're controlling the distribution, they're controlling the people and people are kind of like working their way in your gym.

Dan Uyemura: And for some reason, I don't know if it's been sold to them this way or if this is just the delusion of the gym owners, but they think that these people that are coming to the gym are going to be like, Oh, this is the best gym I've ever been to. I will join this gym. 

Nick Reyes: And the data shows that it just doesn't happen.

Nick Reyes: Ever. People do not join the gym, but that's the allure, right? Is when you get all these leads, these people are interested in exploring these new [00:03:00] fitness options and it just never actually manifests. Yeah. Right. Yep. We made a list.  

Dan Uyemura: So we made a list. Let's go down that list and talk about why class pass might not be as good as what everyone thinks.

Dan Uyemura: Number one. You want me to take that one? I want you to take that one. Okay, cool. So, as we know, most gym owners, look at the entirety of the problem of their gym as leads. Inflow of leads, new members, I need more people coming to my gym. And that is the very thing ClassPass promises. We will deliver you new faces, new people, variety of people, ongoing, forever.

Dan Uyemura: And that sounds really sexy, right? And the reality is It's just they're selling to the emotional fear and the emotional bias that these gym runners are going through when in reality, that's just not what they really need. They need to take care of their members that are in the gym, paying their membership fees, and, you know, actually buying into the type of fitness that they're selling in their gym.[00:04:00] 

Dan Uyemura: Couldn't agree more. 

Nick Reyes: Number two, the revenue is shit. Revenue is totally shit. And this one made the list because it's the revenue that the gym gets paid per class, per visitor, right? So, like a CrossFit gym or even buying a punch card at a yoga studio, you're gonna get anywhere, I think maybe on the low end, from 20 all the way up to maybe 50 in some markets for a visit into a group fitness session, for a one hour session.

Nick Reyes: And Are you looking up data on what ClassPass pays? Oh, you know what? I should though. I thought you were. So, while Dan looks that up, I'm going to take a guess. Let's see how close I am. I'm going to say that ClassPass pays on average $11. 

Dan Uyemura: I would take the under on that. Oh, wow. Uh, let me caveat that, this by saying this is by, from ChatGBT, who is sending me references on where this is coming from.

Dan Uyemura: Um, [00:05:00] but according to Jay Soriano fitness, who wrote an article on December 13th, 2021. So this is a little bit dated. Uh, gym owners typically receive approximately $4 per check-in. Wow. 

Nick Reyes: Wow. That's so low. I almost can't believe it. That is insanely low. I think when you put number one and two together, Dan, what just hit me is it's one of these, like if it's too good to be true, it probably is things.

Nick Reyes: So if they're promising you a bunch of leads. And you're going to get paid for them. There's not very many. And I can't think of any off the top of my head ventures. You can go down where you get paid to also get qualified leads. Like, it's just not true. You know what I mean? Like that's the pot of gold at the end of the rainbow.

Nick Reyes: And you can never find the end of the fucking rainbow. So it wouldn't surprise me if it's 5 and it wouldn't surprise me if they're promising leads. 

Dan Uyemura: Yeah. Yeah. So, you know, looking at ClassPass, the way they structure their plans, it's a variable based Package where depending on what you're [00:06:00] doing, it gets more expensive.

Dan Uyemura: It looks like, you know, bootcamp, CrossFit, yoga fits towards the cheaper end of their spectrum and massage Pilates nails because they're doing spa stuff to, are on the, on the more expensive end. So, it's a little difficult to tell right directly from their websites. A little, it's not really transparent, which is another flag to me about exactly what you get from this.

Dan Uyemura: But it looks like I can do the math. If you, if you keep rambling, I'll figure it out because it's 8 credits per strength training class. 

Nick Reyes: Which is a, so then you can see how many credits are in the plan while Dan looks that up, I want to go to the next one, which is that it zaps your focus. So as a gym owner, you only have so much bandwidth, you only have so many things that can, that you can divert your attention to in any given day.

Nick Reyes: And we all know that you're going to get pulled in a lot of different directions and that running a business is hard if your focus isn't on the [00:07:00] clients that are in your business paying you money. Every single day for a membership for the services for the accountability that you promised them to deliver the, to align on expectations that, you know, if you're, if your focus is not there, your business is not going to succeed.

Nick Reyes: And so when you look at, we can get you more leads, and now all of a sudden your focus goes on, let me try to get these new people into the gym, then that clearly means that your focus is not on. The other people and you're also not making money off of this group. That's coming in. Yeah. It's like a double edged sword.

Nick Reyes: You're just getting absolutely destroyed on both ends of the steel. 

Dan Uyemura: Yeah. And I think the, the, the thing to really be concerned about here is you're going to be placing equal amount of energy. Like if I came into your gym as a interested lead, who wants to work with you as a gym, you're going to invariably give me just as much as attention as you would give.

Dan Uyemura: A ClassPass person, because in your eyes, that's a lead, [00:08:00] they're equal. But in the reality is like, what we see is the person that comes in from ClassPass is a, is a tire kicker. So you're going to be giving tire kicker, a lot of attention relative to the amount of intent they have for actually joining your gym.

Dan Uyemura: So, you know, looking this up again, the pricing on ClassPass, very, variable, meaning even depending on what city you live in, the price has changed. And. Interestingly enough, depending on what city you're in, the packages change. So I just looked right now, like the cheapest plan in Phoenix for 13 credits is 30 bucks.

Dan Uyemura: Okay. So 8 credits per strength and conditioning class. Let's just round up. You get two strength and conditioning classes for $30. That means ClassPass is making $15 per class, but they have to have at least a 50 percent profit margin. Well, let's just ballpark, right? Somewhere 40 to 60 percent profit margins call 50.

Dan Uyemura: So I don't do hard math. I mean, you're going to get paid $7.50 per class as a gym owner for a ClassPass drop in. Now in Vegas, [00:09:00] it was 20 credits for, I don't remember, $60 bucks. Something like that. Like it, the numbers just completely changed. So it's all there. It's going to be completely variable based on where you live.

Dan Uyemura: And it was interesting to me that the credits changed too, which means like. They're playing gaming pricing games on the, that end of it too. On the market level. Yeah. So yeah, it was 20 credits, but so you couldn't even go to three, you can go to like two and a half classes. Or, you know, it was, I think it was like almost $20 bucks per class.

Dan Uyemura: So you might get like $10 to $12 as your owner, I would guess. Yeah. If you're in Vegas. Yeah. That's it. That's a guess. It's probably, you know, depends on the demand of the city and you know what the interests are in the city. So, you know, to double back, like you were going to be spending at least equal amount of time and energy on this person that's paying you $7.50 a class or $10 a class, $12 a class.

Dan Uyemura: As you are, somebody is paying you $20, $25, $30 a class. And it's just inequitable. 

Nick Reyes: A hundred percent. [00:10:00] Next one, wrong ICP. And so wrong ICP, these are typically going to be people who want to explore various options and want to do. I know what's an ICP ideal customer profile. This is someone who's interested in joining your gym.

Nick Reyes: You should be looking for someone very specific. If we run a CrossFit affiliate, maybe you're looking for busy dads from the ages of 35 to 40, right? The people that will be coming in on ClassPass might be the 25 year old who wants to do a bootcamp class on a Monday, a yoga class on a Wednesday, a boxing class on a Friday.

Dan Uyemura: Like, yeah, like, like really think about it. Who is the ClassPass model ideal for who is the ideal client of a ClassPass model? Someone who is transient, someone who is exploratory, someone who has commitment issues. So, you know, like there, there's a number of things that make up this person. What it is not a 100 percent is not is someone who wants to [00:11:00] Learn how to do jujitsu and is willing to come four times a week, right?

Dan Uyemura: Or someone who wants to run a marathon and is willing to work on their running game for the next three months. 

Nick Reyes: Yeah, so there's like a, if, if your variety of fitness that you teach at your facility requires a depth and focus of, you know, like of learning. At some point, like these people, they're just not going to mix.

Nick Reyes: It's not going to align. Right. And at least for a big chunk of our audience or CrossFit affiliates, I would say completely missed the mark there. Martial arts, completely going to miss the mark there. And I'm sure we can go down that list. Several other ways to exactly. 

Dan Uyemura: All right. Point number five. And this is the one that really pisses me off to, you know, honestly is it's basically stealing the economics from gyms.

Dan Uyemura: And what do I mean by that? I mean, when we open gyms and we sell a membership, you come into my gym and you pay me, well, I don't know, $150 bucks for 30 check ins. Let's just make the math simple. And, and so [00:12:00] you can come every day of a month for $150 bucks. And if you only come 20 times, I still make the $150.

Dan Uyemura: My obligation to you is to let, you know, give you access and space to come all those times. If you don't come, that money has been captured by me, my gym, as part of the agreement that we have. The problem with ClassPass is they are now playing that middleman. They are capturing the revenue up front and they are only paying the gyms that they, that the people visit when the visit happens.

Dan Uyemura: So if nobody, if, if somebody pays for ClassPass and comes once a month to whatever it is, that gym is going to get paid some percentage of the actual value that they should get, but they're not going to get a hundred percent of that ClassPass. Contract. You see what I'm saying? And so they're basically taking the leverage of the economics of an actual membership for themselves and then distributing the crumbs to the gym owners because they're not even paying, like, the true fair share of what each check in should be.

Nick Reyes: They are capturing the arbitrage of not showing up. 

Dan Uyemura: Yes. So they're basically yes. Yes, exactly. And I [00:13:00] mean, they win two ways. They went on the margin, which means, Hey, I'm only, I can only pay you 60 percent of what they paid us because we have, you know, cost to build this platform, which is fair and valid, but you're putting a middleman between you and the customer.

Dan Uyemura: And on top of that, they're, they're capturing all of the excess arbitrage that is left over on the plate, which I'm just not okay with. 

Nick Reyes: Yeah. I'm not either. And especially when you stack all these things together, We get to see on the push press side and hear the stories of the gym owners who are in dire straits And they they're they're chasing their tails.

Nick Reyes: It's I still want the leads. Oh, but I'm not making the money Oh, but I can't fix the stuff in order to get higher quality leads And then it's just this this never ending spiral until the business closes down, which is why You know, stealing the economics pisses us off to be quite honest, right? And why, that's why we're recording this damn episode in the first place.

Nick Reyes: Exactly. 

Dan Uyemura: Yeah. So I guess to recap the whole picture, and this is why I think ClassPass is truly TrashPass. Like this is why I [00:14:00] think it doesn't really do it's, you know, it serves one, one person, one person only. Well, it serves two people. It serves ClassPass as an organization and it serves the gym member who does not want to join a gym, but we represent gym owners, right?

Dan Uyemura: We represent gym owners and we want people to join our gyms because we believe the gyms that we're building actually can change lives. And so what, I mean, what it does is like, it takes the economies away from the gyms because it's taking away the membership actually itself. It's forcing a split down to the gyms.

Dan Uyemura: That isn't. really enough to pay for the, even the time that the person comes to the gym, it's making the gym owner, the staff, everyone around recognize a new person, deal with the new person on board, basically onboard a new person in one day who probably will never come back. Right. Doesn't pay him very well for that energy.

Dan Uyemura: And it keeps them thinking on, they keep them like addicted to this drug of leads. Because they're continually shifting their focus back over to the lead that's coming in and losing a member that is, you know, a great member out the [00:15:00] back door because they're just sick and tired of watching you pay attention to this new person who hops in for one day and not pay attention to that.

Nick Reyes: Well wrapped. Well wrapped. So I'm going to ask a question as we close it out. And that is. Are we wrong on this? Are we wrong? Have you found success in winning over leads from ClassPass in your gym? If you have email us, tell us the story, prove Dan and I wrong on this. Probably isn't going to happen.

Nick Reyes: Email us podcast@pushpress.com. 

Dan Uyemura: Especially if you work at Mindbody and you have the data, let us know. I would love to know. Let us know if we're wrong. Thanks guys. Thanks for listening to another episode of the push press podcast, where we help gym owners, entrepreneurs, and fitness enthusiasts thrive with actionable insights, inspiring stories and strategies for growth.

Nick Reyes: Don't forget to follow the show to stay updated on new episodes. And if you're ready for more, join our free Facebook community for gym owners, check the show notes for the link, and we'll see you next time. Keep raising the bar for your business and community.