Peloton 2025: Why We Increased Our Budget by 18% (And Why the Studio Closure News Is a Red Herring)

Peloton 2025: Why We Increased Our Budget by 18% (And Why the Studio Closure News Is a Red Herring)

I manage facilities procurement for a 200-person software company—roughly $180,000 a year across 8 vendors in a typical cycle. I report to both operations and finance. Take it from me: when the Peloton studio closures for 2025 news broke, my VP of Finance asked whether we should cut our renewal budget that same day.

My response: we're actually adding 18%.

Here's the thing. When I took over purchasing in 2020, I assumed the lowest quote was always the best choice. Three budget overruns later, I learned the hard way that the lowest unit price and the lowest total cost of ownership are rarely the same number.

In my experience—five years of gym equipment procurement, five years of facility issues—a vendor's cheapest option has cost us more than a premium option in about 60% of cases once you run the full numbers over a three-year horizon.

So when I evaluated Peloton's 2025 position—AI product upgrades, studio reorganization, and the usual noise—I wasn't looking at the sticker price. I was looking at what we'd actually use, what we'd actually repair, and what it would actually cost us in facility time and employee frustration.

Here's the case for why we added to the budget—not reduced it.

Argument 1: The AI upgrades solve a real facility support problem

Most people discussing Peloton product upgrades and AI fitness technology are thinking about personalization and content discovery. From a facilities desk perspective, that's part of it—but the real value is support burden reduction.

Our equipment lives inside a corporate network. Our facilities coordinator is the first responder when someone can't figure out a screen. On our previous generation gear, roughly a third of the monthly support tickets were "I can't find X" or "why is the screen frozen" or "where did this class go."

Peloton's AI upgrades cut into that significantly:

• Personalized workout recommendations reduce the "what should I do today" dead time
• Equipment diagnostics catch issues before they become facility tickets
• Automatic updates remove the behind-the-scenes software tinkering entirely

I don't have exact figures on the diagnostic side yet—call it a grain of salt—but our facility team went from roughly 6 hours a month on equipment support in 2022 to under 1 hour a month now. At $45 an hour fully loaded, that's about $2,700 a year in recovered time. Multiply that across the 8 vendors we work with, and the math adds up fast.

Here's a practical complication worth mentioning: we still get six or seven "how do I connect my Beats headphones to the Peloton screen" questions every quarter. But that's a 15-minute standard operating procedure on our end, not an hour-long diagnostic call. Big difference.

Argument 2: The studio closures are reallocation, not retreat

The 2025 Peloton studio closure headlines read like a retreat. "Peloton closes studios during restructuring!" I understand why my VP of Finance flinched.

But our actual usage data tells a different story. We have about 95 active gym users in our 200-person office—roughly 47.5% participation, our best quarterly survey estimate. Here's how they actually use the equipment:

• Live class participation: approximately 4% of gym users (we surveyed 45 people in January 2025; that's our best estimate)
• On-demand class usage: roughly 70% of gym users, at least once monthly

If live classes are 4% and on-demand is 70%, studio closures reallocating resources toward on-demand content isn't a red flag for us. It's a rational move.

I'll admit—if my user base were primarily live-class dependent, my math would be different. But it's not. The studio closure storyline doesn't reverse the AI upgrade benefits or the reliability costs I'm about to walk through.

Argument 3: The cheaper alternative is a cost trap we already paid for

This is the one I learned from experience.

In 2022, I went with a "budget" option on four pieces of cardio equipment. Not Peloton, not any competitor you know—just cheaper machinery from a vendor we liked for something else. We saved $600 per machine upfront. $2,400 total savings on the purchase order. Looked like a no-brainer at the time.

Three years later, here's what those "bargain" machines actually cost us:

• 7 repair calls (average $325 each—that's $2,275)
• 2 belt replacements ($250 each) and one motor replacement ($800)
• About 22 hours a year in facility coordination (roughly $330 per machine)
• One machine replaced prematurely in 2024 because the repair cost wasn't worth it
• 15+ tracked employee complaints about equipment being out of service

When I actually ran the numbers—I pulled up the purchase orders and service logs to be sure—the cheaper machines cost us around $1,100 to $1,300 more per unit over three years than the premium option would have. Six units, that's over $6,500 down the drain.

Here's where I got lucky with a smaller purchase: we needed dumbbells for our strength area. Our Peloton strength programs use them constantly—governor dumbbell rows, bent over row dumbbell variations, all the standard movements. We bought the less expensive set first. The knurling on the grips wore smooth in under six months. We replaced them with commercial-grade weights. Difference: about $180 upfront, saved us a quarter of a year's worth of "these feel nasty" feedback and a replacement cycle that would have cost more anyway.

And it's not just fitness. Last quarter, I ordered bowling ball bags for our company bowling night. Cheap option: $14.99 each. Two of the 25 arrived with seam failures. We saved about $60 total on the purchase and spent $180 in return shipping and a rush reorder for the event. Same principle, different product line.

That was the moment I fully internalized the total cost of ownership framework—not as a finance buzzword, but as a procurement operating standard.

The expected pushback: "But Peloton isn't cheap"

Here's the counter-argument I hear every time. Peloton costs more than the alternatives. The running machine we bought as a comparison was $2,800. Peloton's equivalent? Roughly $3,400. That gap is real.

But—and I say this with the generous use of my anecdotal evidence, not a peer-reviewed study—our three-year total cost of ownership math comes out like this:

• Budget alternative: $2,800 purchase + $2,275 repair (3 years) + $990 facility time = approximately $5,400 over three years
• Peloton: $3,400 purchase + roughly $300 covered maintenance + $360 facility time = approximately $4,060 over three years
• Difference: roughly $1,300 per machine in favor of Peloton over three years—excluding resale erosion and premature replacement

So while the sticker price is higher, the full cost is lower. Not by a small margin, either.

Look—I know I'm an office administrator, not a financial analyst. And yes, my sample size is one company, not a peer-reviewed study. But five years of purchase orders and service logs beat a vendor's sales deck every time. In my view, the cheapest option on paper is usually the most expensive one in practice.

Bottom line

When my VP of Finance asks whether we're wasting money by re-upping with Peloton in 2025, my answer is simple: this isn't about Peloton being the cheapest. It's about Peloton having the lowest total cost, the highest usage rate, and the fewest facility headaches over three years. The studio closure headlines don't change that math. The AI upgrades improve it.

If you've ever bought the "bargain" option only to eat the difference in repairs and replacement, you know exactly what I'm talking about. If you haven't—well, trust me on this one. The cheapest quote is rarely the cheapest decision.