Gym-sharing business model struggling to turn a profit
Sharing economy platform, ClassPass, which gives members access to hundreds of gym classes across the US, has sparked outrage from members by increasing its monthly rate from $125 to $200. This increase is obviously considerable, especially as the rate was only $99 per month in July last year. Apparently the firm has had no choice but to increase membership due to the large costs associated with membership with so many gyms: “They’ve experienced negative gross margins for a while, and that won’t sit well with investors forever,” said one tech insider, according to the New York Post.

ClassPass is burning cash faster than its fitness-freak clients burn fat.

The popular gym-hopping app drastically hiked its monthly rate to $200 for access to hundreds of the city’s hottest workout spots — sparking outrage from customers who last July were stuck with an increase to $125 from $99.

The surprise move on Wednesday came as the New York tech startup — whose high-profile backers include Google Ventures, David Tisch and Josh Kushner’s Thrive Capital — has been scrambling to find a path toward profitability, sources told The Post.

“They’ve experienced negative gross margins for a while, and that won’t sit well with investors forever,” said one tech insider, explaining that ClassPass has been hard-pressed to stop paying out more cash to gyms each month than it collects from its members.

One key hangup: Too many ClassPass customers are rushing to sign up for too many high-cost, popular classes at brand-name gyms, yoga haunts and dance studios.

As a result, ClassPass, on average, is paying the studios per member more than the monthly fee.

The start-up then has to eat the added cost or limit class availability.

In an interview with The Post, ClassPass co-founder and Chief Executive Payal Kadakia and Executive Chairman Fritz Lanman declined to specifically discuss the startup’s margins.

“We feel very good about the sustainability of the business,” Lanman said, adding, “Investors are really happy with the product — there are a lot of investors who want to give this company more money.”

Google Ventures, which plowed $30 million into the venture last November, reportedly valuing it at $400 million, declined comment.

Instead of raising prices gradually, ClassPass “figured it was better to [rip off] the Band-Aid and be really transparent,” Lanman said, noting the introduction of lower-priced à la carte packages beginning in May.

Still, the steep hike left scores of gym rats feeling sore and taking to social media to air their gripes.

“What I’m thinking now is to just get off ClassPass completely,” said 31-year-old Kara Blitstein, who complained that the service has been offering fewer classes at convenient times — even after the increase in the summer.

“Now, more than ever, it’s hard to get classes if you don’t’ sign up at noon,” Blitstein said, adding she’s thinking of joining a gym.

Lauren Imparato, owner of the I.AM.YOU yoga studio in Soho, said she got a heads-up about the price jump in a meeting with ClassPass execs earlier this week. The company didn’t say anything about increasing reimbursements to studios, she said.

“ClassPass has done to the fitness industry what Spotify did to the music industry,” Imparato said. “Unless you’re Taylor Swift or Kanye, you get on board.”

SoulCycle and Equinox are among fitness names that have played the Swift and Kanye roles, refusing to work with ClassPass.

CityRow, which has locations in Union Square and on the Upper East Side, only gives ClassPass access to its off-peak rowing classes, owner Helaine Knapp said.