Pricing and Profit at ClassPass

In January 2015, subscription-based health club service ClassPass appeared to embody the attributes it aimed to bring out in its customers: It looked strong and healthy. The company had just closed on its $40 million Series B funding, after securing $12 million in Series A only three months earlier. Since launching in 2013, ClassPass had placed 1.5 million reservations for fitness classes and now offered its services in 20 cities, with both staff and office space expanding. But behind the scenes at the company, monthly profit margins were weak—and occasionally nonexistent.