The FitOn Business Model – How Does FitOn Make Money?

Executive Summary:

FitOn is a personalized fitness application on which trainees can find workout and meal plans as well as guided meditations.

FitOn makes money via subscription fees, a corporate wellness program, as well as from selling its own branded fitness gear. It operates under a freemium business model.

Founded in 2018, FitOn has quickly grown into one of the most popular online fitness apps. It now counts over 10 million members.

How FitOn Works

FitOn is a personalized fitness application on which trainees can find workout and meal plans as well as guided meditations.

The platform sets itself apart by working together with “the world’s greatest trainers and top celebrities” including Halle Berry, Julianne Hough, and Gabrielle Union, among many others.

Workouts are available for trainees of all levels and can be accessed for free. Whether it’s cardio, strength, HIIT, dance, yoga, or Pilates – FitOn will likely feature it. Length also varies between 5 to 60 minutes, providing users with enough flexibility to only hit certain body parts if time is an issue.

Both the workouts as well as meal plans can be customized to fit the trainee’s current status, circumstances, and ultimate goals.

Another key differentiator of FitOn is that it allows you to invite family members and friends to your workouts and subsequently share the progress you make.  

Trainees, apart from workouts and meal plans, can access meditation content as well. FitOn offers dozens of videos to help reduce stress and anxiety.

The majority of the classes on FitOn are conducted online. However, certain gyms and studio partners can also be accessed via the firm’s corporate wellness program.

FitOn, furthermore, sells its workout gear, namely yoga mats, resistance bands, as well as water bottles. 

The content FitOn produces can be accessed from a multitude of devices including smartphones (Android and iOS), desktops, tablets, and smart TVs.

FitOn Company History

FitOn, which is headquartered in Los Angeles, California, was founded by husband-and-wife duo Lindsay and Russell Cook.

Both started their career at Microsoft back in 2004, which is likely the place they wound up meeting each other.

Russell, in 2010, went on to launch AllTrails, a digital network focused on outdoor enthusiasts. After around $2 million in raised funding, we sold the business to Spectrum Equity for $80 million in October 2018.

Lindsay, on the other hand, was making a name for herself in the consumer goods industry. She eventually rose to become the VP of Consumer Devices & Product Marketing at Fitbit, which she joined in 2012.

Fitbit’s focus on community, which, for example, involved launching leaderboards and social sharing capabilities, taught her a great deal about how to build fitness devices for consumers – and keep them engaged.

Meanwhile, life ended up catching up to her. A mom of two, she reminisced about her troubles working out and what ultimately led her to launch FitOn in a 2019 Forbes interview:

As a busy working mom, I realized that making it to my favorite studio classes had become seemingly impossible. When I searched online for more accessible and practical workouts, I was disappointed in the quality and lack of motivation that existed. Hence the inspiration behind FitOn. Now, no matter what challenges life throws your way, our world-class trainers, rich content and engaging social tools will help you reach your fitness goals—all in the palm of your hand, literally.”

Lindsay and her husband, with over 20 years of collective experience in both the fitness and tech industry, certainly had the necessary background to make it work. Luckily, investors shared that same belief.

In November 2018, right before launching FitOn, they managed to raise $4.8 million in seed funding from Accel as well as Crosscut Ventures.

The app’s immediate appeal lies in the fact that FitOn worked together with some of the world’s best trainers. FitOn also banked on the popularity of its trainers. Cassey Ho, one of the platform’s first instructors, had over 1.4 million Instagram followers at the time of the launch.

Additionally, FitOn’s videos were studio-produced and thus of extremely high quality – an approach that was popularized by startups such as MasterClass. Lastly, FitOn launched with dozens of different videos, thus providing trainees with a great selection to choose from.

FitOn, throughout the remainder of 2018 as well as the entirety of 2019, grew at a steady pace without much noise. In January 2020, the founders managed to raise another $7 million in Series A funding – capital that would aid them in one of the biggest headwinds the tech industry had ever experienced.

Two months after the fundraise, the Covid pandemic broke out, forcing billions of people to abide by quarantine orders. As a result, many digital workout providers, such as Peloton, were able to exponentially increase their user base.

FitOn, from March to July, grew by an eye-popping 200 percent. The team was, furthermore, able to onboard celebrities such as The Chainsmokers, Halle Berry, and Gabrielle Union. By the end of 2020, six million users were registered on FitOn.

The immense growth was rewarded with another round of funding (Series B) in October 2021. FitOn’s founders managed to add an additional $18 million to the firm’s balance sheet. It passed the inaugural mark of 10 million members that same month.

And just a mere four months later, in February 2022, FitOn raised another $40 million in funding and simultaneously acquired Tampa-based corporate wellness platform Peerfit for an undisclosed sum.

How Does FitOn Make Money?

FitOn makes money via subscription fees, a corporate wellness program, as well as from selling its own branded fitness gear.

Moreover, FitOn operates on a freemium business model. This means that a significant portion of the platform (in this case: content) can be accessed without paying.

FitOn lures users in by offering them free access to world-class trainers, and extremely well-produced videos, all while engaging in a community of like-minded individuals.

Once they build a habit of using the product and want to advance their training, they can do so by conveniently subscribing to the firm’s premium offering.

This, in all likeliness, means that users are also likelier to stick around and stay subscribed, which was confirmed by Lindsay Cook in an interview with Forbes.

There, she said that fitness apps normally retain 15 percent of their users in their first 30 days. FitOn’s retention, on the other hand, is four times higher than the industry average.

So, without further ado, let’s take a closer look at how FitOn makes money.

Subscriptions

The bulk of the revenue that FitOn generates comes from the subscription fees it charges for its PRO version.

As of the time of this writing, trainees either pay $2.49 per month or $29.99 on an annual basis to receive access to PRO.

The premium version grants users access to a variety of perks such as premium music during workouts, personalized meal plans, 500+ exclusive recipes, unlimited offline downloads, and real-time heart rate monitoring.

Monetizing a free platform with premium features is certainly nothing groundbreaking. After all, fitness startups such as Strava or even Russell Cook’s former startup AllTrails sell similarly-priced plans.

FitOn, much like Netflix, also lets users (on the monthly plans) cancel at any time they want. Similarly, extensive money return periods are granted for annual plans as well.

Wellness Program

FitOn, since February 2022, also offers a corporate wellness program that businesses can purchase for their employees.

The firm established that revenue stream when it acquired Peerfit, a corporate wellness platform, for an undisclosed sum.

FitOn can now leverage its existing traffic (10+ million users are currently a part of FitOn) to attract more lucrative and higher-margin business clients.

It will thereby compete with the likes of Gympass, which themselves have extensive networks. In this case, FitOn can differentiate itself via a bottom-up strategy.

Employees first discover the tool themselves and use it, whether free or paid, for private purposes. They get accustomed to the product and start prompting their employer to subscribe to the wellness program.

Going bottom-up is a fairly common strategy among software startups like Slack. FitOn, with the acquisition of Peerfit, simply accelerated the time it takes to build a competitive network of partner gyms.

E-Commerce

The last, and most likely smallest, income stream of FitOn is the workout equipment it sells via its own online store.

As previously stated, trainees can purchase yoga mats, resistance bands, as well as water bottles. It can be expected that FitOn is going to add new products later on.

Interestingly, monetizing the user’s attention on the platform and their admiration for the brand via clothing and gear has been adopted by other SportsTech companies as well.

Bike maker Peloton, for example, has been selling various workout-related clothing lines, such as t-shirts or leggings, for years now. In the case of Peloton, trainees grow attached to the instructors who became celebrities in their own right.

Being a beloved brand will, in all likeliness, enable FitOn to charge premium prices for its workout gear. As a result, margins on each product are substantially higher.

FitOn Funding, Revenue & Valuation

FitOn, according to Pitchbook, has raised a total of $70 million across five rounds of venture capital funding.

Notable investors are Accel, Telstra Ventures, Delta-v Capital, UTA Ventures, Second Avenue Partners, and many others.

Since FitOn remains in private ownership, it is not obligated to disclose revenue or valuation figures. It may do so during a future funding round or whenever it goes public.

Hi folks, Viktor checking in! Years of experience in various tech-related roles have led me to start this blog, which I hope provides you with as much enjoyment to read as I have writing the content.