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The Peloton Business Model: How Do They Make Money?


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In this article, we will examine the business model of a fitness industry giant you may have heard mentioned lately, Peloton.

We’ll tell you everything you need to know about what Peloton is, how Peloton makes money, whether or not Peloton is profitable, and more.

What Is Peloton?

Peloton is a US-based exercise equipment and fitness media company known primarily for its flagship products, the Peloton Bike and the Peloton Tread.

Peloton equipment

Though it was founded a decade ago, Peloton has really made a name for itself over the past few years, especially as the COVID-19 pandemic forced gyms to close and people began looking for more ways to work out efficiently at home.

You may be wondering what makes Peloton so different from all the other fitness and wellness brands out there to make it worth looking at the Peloton business model as a case study.

Well, what really sets Peloton apart is the company’s first-of-its-kind subscription platform, which allows users to stream fitness classes that they can take part in from home using their Peloton hardware or other exercise equipment.

For example, anyone who owns a Peloton Bike can subscribe to the service and take part in Peloton-exclusive indoor biking classes. Similarly, anyone with a Peloton Tread can attend live or on-demand indoor running training sessions.

Peloton subscription

A Brief History of Peloton

John Foley, ex-CEO and co-founder of Peloton, came up with the idea for Peloton in 2011 when he was the president of e-commerce at bookseller Barnes & Noble.

During this time, Foley was increasingly unable to attend fitness classes due to the demands of his job and children.

This was also right around the time that branded, in-person fitness classes, such as SoulCycle, were rising in popularity.

These factors contributed to Foley’s idea for an at-home bike with an attached screen, which would allow users to “attend” indoor cycling classes from the comfort of their own homes or anywhere else they had access to a Peloton bike.

To start Peloton, Foley found his first co-founder, Tom Cortese, and used his Harvard Business School and executive experience to raise an initial $350,000 in funding from a seed round, to which he added $50,000 of his own.

After this initial fundraising round, three more co-founders joined Peloton. They were Graham Stanton, Hisao Kushi, and Yony Feng.

The company went on to raise $3.5 million more from a Series A round by the end of 2012, and they were off and running (or cycling).

Over the next few years, Peloton continued to raise funding and opened its first in-person studios, as well as selling its bikes in several retail locations and to businesses like gyms and hotels.

In 2017, Peloton achieved unicorn status, as it was still privately held and valued at $1.25 billion.

Alongside all this success relatively early on, Peloton was also experiencing setbacks. These included a $300-million lawsuit related to the unlicensed usage of music in their classes, as well as some scandal over a controversial advertisement that many considered to be sexist.

Even so, Peloton managed to go public in September of 2019, and debuted on the Nasdaq at $29 a share.

Peloton IPO

Just a few months later, the global COVID-19 pandemic hit, propelling Peloton’s valuation to incredible new heights as the pandemic locked much of the world down and home workouts became more popular than ever.

Fast forward to today, and Peloton’s growth is slowing, and its valuation is nowhere near what it was during the pandemic, as we’ll discuss further down in this case study.

How Does Peloton Make Money?

There are three main direct-to-consumer sales channels through which Peloton makes money. These are Peloton’s connected fitness products, fitness class subscription services, and apparel and accessories.

Connected Fitness Products

Peloton’s connected fitness products are the main pieces of hardware and equipment the company sells, primarily the Peloton Bike and Tread.

The Peloton Bike is an indoor stationary cycle with a touchscreen monitor. Pricing for the Peloton Bike starts at $1,445 for the cheaper model Peloton offers and goes up to $2,495 for the Bike+ model.

It’s hard to tell the difference between the Peloton Bike and the Bike+ at a glance, but the Bike+ has a slightly bigger touchscreen that rotates, as opposed to just shifting up and down, and has much higher quality audio. 

The Peloton Bike+ also has an auto-resistance option that automatically changes the stationary bike’s resistance according to instructions from the class you’re taking part in.

Peloton’s other main piece of fitness hardware, the Peloton Tread, is a stationary indoor treadmill with a touchscreen monitor and a starting price tag of $3,495.

Both the Bike and the Tread are available in different bundles that come with various combinations of additional Peloton fitness equipment and accessories, such as weights, water bottles, and fitness mats.

In addition to the Bike and Tread, Peloton also offers something called the Peloton Guide, which is basically a camera that attaches to your TV and tracks your movements during home workouts, such as yoga or strength training sessions. The Peloton Guide costs $295.

Peloton Guide

To make its connected fitness products more accessible, Peloton offers financing plans starting at 0% APR with $0 down. This allows customers to pay for the Bike or Tread over a period of 12 months.

Alternatively, customers can opt for financing with 14.99% APR and 0$ down and pay their Peloton equipment off over 24, 39, or 43 months.

Fitness Class Subscription Services

Peloton offers a digital subscription to fitness classes through the Peloton App, which costs $16.99 per month. Users can access the app from any of their devices, including their mobile smartphones, tablets, TVs, and/or computers.

Classes available through the Peloton App include boxing, running, strength training, cycling, yoga, stretching, Pilates, barre, and more. As you can see, many of these courses do not require a Peloton Bike or Tread to take part.

In addition to Peloton App subscriptions, Peloton also offers an All-Access Membership subscription, which gives customers access to courses that are exclusively for the Peloton Bike, Bike+, and Tread. 

In other words, you can only access this content via a piece of Peloton hardware, although the All-Access Membership does include access to the Peloton App, as well.

A Peloton All-Access Membership will set you back $59 a month (up from $39 in April of 2022). Note that this includes access to pre-recorded, on-demand classes and live training sessions.

Apparel & Accessories

The final way Peloton makes money is through selling Peloton-branded apparel and accessories. We already mentioned that Peloton exercise equipment is available bundled with things like weights, mats, and water bottles — these are also available to buy separately.

Other accessories that Peloton sells include heart rate bands, heart rate monitors, earbuds, resistance bands, yoga blocks, yoga straps, alternative Bike pedals, Bike cleats, and more.

In terms of apparel, Peloton offers all your standard workout clothing, from shorts and leggings to tank tops and long-sleeved shirts. They also sell cycling shoes designed to be used with a Peloton Bike.

Peloton apparel

Of course, the pricing for Peloton’s apparel and accessories varies from product to product, but one could easily spend a few hundred dollars (or more) on branded extras to go with their Peloton Bike or Tread.

As an example, Peloton tank tops start at around $38 and bike shorts start at about $54.

Peloton has also released apparel in collaboration with multinational sportswear titan Adidas. The Adidas x Peloton clothing features the logos of both brands, as well as variations of the classic Adidas stripes in the designs.

How Much Money Does Peloton Make?

Peloton made $4.02 billion in 2021. This is more than double what the company made in 2020, when it reportedly earned $1.83 billion. 

Looking at other previous years, we can see that Peloton has basically doubled its revenue each year since at least 2017, when the company made just $219 million.

According to Investopedia, Peloton’s sales of physical fitness products, including the Bike, Tread, and accessories and apparel, accounted for approximately 70% of this revenue. Subscription memberships accounted for the other 30%.

Peloton revenue

How Much Do Peloton Instructors Make?

Peloton does not publicly disclose how much its instructors make, but the highly-coveted position is believed to pay quite well, to say the least.

Some estimates put the sum paid to instructors for a single course between $500 and $750. Considering the fact that some of Peloton’s biggest instructors may give 10-15 classes a week, they could earn more than $500K annually.

Not only that, but many Peloton instructors have built up quite a following on Instagram and other social media platforms, allowing them to become influencers. This could provide them with even more opportunities to earn money through sponsorships and the like.

Is Peloton Making a Profit?

Peloton is not currently making a profit, in Q4 2023 the company reported a net loss of $241.8 million, or 68 cents per share.

The last time Peloton was profitable was during the peak of the pandemic, when the company reported a positive net income of $89.1 million for the second quarter of 2020.

So, if Peloton has consistently doubled its revenue year over year for at least the past five years, why isn’t the company profitable?

Peloton does not explicitly disclose its overhead cost structure, but there are a number of factors that make it an expensive business to run. These include manufacturing, research and development, promotion, and instructors’ salaries.

Peloton has also been dealing with supply chain issues that have resulted in increased business costs related to shipping. 

In order to combat these supply chain problems, Peloton recently acquired US-based fitness machine production company Precor for $420 million. 

With Precor’s significant US manufacturing presence, Peloton aims to control the entire production process and deliver products faster.

Peloton also announced some other significant changes to its business structure in 2022, including leadership changes, a reduction in the global workforce by 2,800 employees, and an overall reduction in its global manufacturing and production footprints.

How Much Money Has Peloton Raised?

As recorded on Peloton’s Crunchbase profile, Peloton has raised a total of $1.9 billion in funding over nine rounds.

The company’s most recent funding round took place on February 9, 2021, during which Peloton raised $875 million from investors including NBCUniversal and Wellington Management.

Other notable investors in Peloton are Winslow Capital, Tiger Global Management, G Squared, Kleiner Perkins, Balyasny Asset Management, TCV, Felix Capital, and QuestMark Partners.

When Did Peloton Go Public?

Peloton went public on September 26, 2019. At the time of the company’s IPO, shares were valued at $29 each, but they dropped down to $27 a share for the opening trade. This gave Peloton a valuation of $7.2 billion, about 11% lower than its initial valuation of $8.1 billion.

What Is Peloton’s Ownership Structure?

Peloton is a publicly-traded company, with institutional investors owning more than 50% of the company. Individual investors from the general public own approximately 12% of Peloton, a number that is rising.

Peloton’s current CEO is Barry McCarthy, who replaced co-founder John Foley when he stepped down in early 2022. McCarthy formerly served as CFO of Spotify from 2015 to 2020, and CFO of Netflix from 1999 to 2010.

Even after stepping down from the CEO position and selling $50 million worth of Peloton stock in 2022, co-founder Foley still owns a big enough stake in the company to maintain effective control of Peloton.

It is not clear exactly how much of Peloton is owned by co-founders and executives in total, but Foley and other company insiders are said to control about 60% of the company’s voting stock.

How Much Is Peloton Worth?

Despite Peloton shares going up a whopping 440% in 2020 to nearly $152 per share at the end of the year (a $50 billion market valuation), the company’s valuation has steadily declined since the height of the pandemic. 

Peloton is currently valued at around $2.1 billion, with shares hovering around $6 a piece. This is far below what Peloton was trading at when it first went public.

Who Are Peloton’s Competitors?

Some of Peloton’s biggest competitors are Life Fitness, SoulCycle, NordicTrack, Echelon, and Bowflex.

Life Fitness

Founded in 1977, Life Fitness was one of the first companies to produce and sell stationary bikes. In the 90s, the company went on to introduce treadmills to their line of fitness equipment.

Life Fitness

As one of the oldest and largest designers and manufacturers of exercise bikes and treadmills in the US, Life Fitness is still a huge competitor to Peloton.

In recent years, Life Fitness has made its equipment compatible with Apple Watch and Galaxy Watch for fitness tracking.


SoulCycle was founded in 2006 and is a subsidiary of Equinox Fitness. Prior to the pandemic in 2020, SoulCycle operated 99 indoor cycling studios across the US. Their main source of revenue was the in-person classes, as well as apparel and accessories sold at the studios.


The pandemic forced SoulCycle to shut down all of its studios, but the company created an at-home bike and opened some outdoor studios in an effort to keep competing with Peloton during the pandemic.

SoulCycle has since reopened 83 of its studios, but in August of 2022, the company announced plans to close 20 of them due to changes in demand.


NordicTrack is another decades-old manufacturer of exercise equipment, especially its world-renowned treadmills.


Like the Peloton Tread, NordicTrack’s modern treadmills have an interactive screen attached. Users can access virtual trainers via these built-in screens. 

NordicTrack also offers bikes, ellipticals, rowers, and other training equipment. Their hardware is a little cheaper than Peloton’s, with a treadmill starting at $1,999 and a bike starting at $1,899.

Customers can get a free piece of equipment with the purchase of a four-year subscription to NordicTrack’s iFIT training program.


Echelon was founded in 2011 with the goal of providing more affordable stationary bikes for everyone. The company offers bikes and other fitness products, including treadmills and rowers, that cost from $100 to $1600.


Similarly to Peloton and NordicTrack, Echelon offers a membership program that provides access to their fitness app, which includes live and on-demand classes. 

Like NordicTrack, customers can earn a free piece of equipment by committing to a two-year membership subscription.


You may be familiar with Bowflex from the early 2000s, when TVs everywhere were full of the company’s infomercials.


In addition to their proprietary Bowflex strength training and exercise machine, Bowflex also sells bikes, treadmills, ellipticals, and a full range of other fitness equipment.

Additionally, Bowflex offers the JRNY Digital Fitness membership program, providing access to trainer-led classes and videos, fitness tracking, adaptive workouts, and more.

Final Words

Peloton is a company that experienced a drastic rise and fall in terms of profitability and valuation since the COVID-19 pandemic hit.

Despite Peloton’s struggles and setbacks, it remains a growing company that has steadily increased revenue year over year and will continue to be a major player in the fitness equipment and media space.


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