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Published Feb 14, 2018

How to price your product to scale, w/ClassPass' Payal Kadakia

Payal Kadakia, founder of ClassPass, discusses the pivotal role of pricing strategies in scaling a business, detailing how iterative innovation and strategic pivots transformed ClassPass into a successful platform that resonates with fitness enthusiasts worldwide.
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  • Product Evolution

    ClassPass began as Classtivity, a platform designed to aggregate various classes, from fitness to arts, into a single online hub. envisioned it as an "OpenTable for classes," but soon realized the model needed evolution to truly impact users' lives 1. Transitioning to a subscription model, ClassPass offered a $99 monthly membership for ten classes, which quickly surpassed previous revenue models and transformed user experiences 2.

    Three months into the subscription, the revenues of ClassPass overtook the revenue from the passport.

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    This shift not only increased retention but also fulfilled Payal's goal of continuously changing lives through fitness.

       

    Iterative Learning

    The journey of ClassPass was marked by iterative learning, where trials and errors provided crucial insights. Initially, Classtivity struggled with low engagement, prompting to experiment with user interface changes, a phase she humorously termed the "summer of buttons" 3. However, she realized that technology alone couldn't solve foundational business issues and began focusing on customer engagement and manual reservations.

    I think the other thing I've realized over time is that technology actually wasn't going to solve everything for me.

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    This hands-on approach helped refine the business model, ultimately leading to the successful subscription service.

       

    Fitness Innovation

    Innovation in fitness classes was pivotal for ClassPass's success. identified the power of offering free classes as a way to attract users, a strategy akin to Silicon Valley's use of freebies to scale 4. By bundling these free classes into a "passport" package, she created a compelling offer that encouraged users to explore various studios, leading to increased engagement and eventual subscription conversions.

    We had this idea of packaging it together into one product called a passport.

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    This innovative approach not only brought users through the door but also laid the groundwork for the subscription model that would define ClassPass.

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