Unbelievable Exercise Machine Business- Can You Make Any Money With an Ultra High End Pricing Strategy?

I was flipping through a Kiplinger’s magazine, when I came across an ad for an exercise machine promising a full workout in only four minutes.

I don’t normally pay much attention, since I generally believe that most exercise machines, like most diet pills and diet plans, are simply a way to take money from people looking for an easy way out of what is otherwise hard work. Most don’t live up to their promises of amazing results with hardly any effort, and so they sit unused.

Meanwhile, the sellers have taken their profits to the bank. That’s fine, it’s a free country and as long as they don’t violate any FTC rules on advertising or product claims, then gullible people are always going to provide a market for these kinds of products.

This particular ad caught my attention, however, because the machine was priced at $14,615. Plus, it looked like a medieval torture device, or possibly the result of an explosion in a metal shop.

Now, normally in these types of ads the price is either not shown, or shown in small type, and broken into some number of “easy” payments. But this ad glaringly displayed in large type the full price. Then most of the rest of the ad goes on to explain how no one believes their four minute claim, even though it is true.

I was interested enough in trying to discover the business plan behind this product to check out the website, to see if I could make sense of it. On the site, the founder explains how they hadn’t even turned a profit until 2001, despite launching in 1990, and then goes on to explain the high cost in terms of two people using it over 30 years, plus their offspring using it, etc. He also goes into something about how reducing the price when there isn’t a “ready market” won’t increase sales, and then compares it the price of a Boeing 747.

Clearly, he lost me. I don’t want to wait for my children to start using something before I start to see a reasonable payoff on my investment- at least not when we are talking about exercise equipment. I also don’t expect the cost to be compared to a jetliner, or even a small car. I don’t want to have to use it thousands of times for the cost per use to be under a dollar, or even under five dollars.

So is this business making any money? Well, I would guess that they only have to sell one to make back the cost of their ad in Kiplinger’s. And I would guess, even manufactured in low volume the machine itself only costs a few thousand dollars to produce. Therefore, if they could do any kind of volume at all, there would be a lot of profit in the sales.

But, how many people can spend that kind of money on exercise equipment? Very, very few. The website doesn’t even mention any financing options. And then of the people who do have the cash, how many are willing to spend it on this? An even tinier percentage, at which point I can certainly believe that they made no money with this product for the first twelve years.

For that kind of money, you can buy any exercise you want, including membership at a high end gym and a personal trainer for every workout session.

This product has two serious objections to overcome, which I think is one too many. First, you have to believe that it will do what it says, and then you have to believe that the promise if delivered is worth the extremely high asking price. That is going to be too high a hurdle for nearly every person that sees it- probably more than will ever allow this to become a viable product at this price.

A high price, or even an ultra high priced product with only one objection to overcome has a fighting chance of success. A Ferrari is a very expensive car, but it goes much faster and looks much different than your average car, so if you decide to buy it, no one has to convince you that you are getting something of value for your money. They only have to convince you to drop that much money in the first place. People may be jealous of your Ferrari, but you won’t have to convince them that you got something good for your cash.

The problem with the exercise machine is that if you ever tell anyone how much you spent on it, they will think, and probably say out loud, that you are an idiot. And that is a stigma that no product should have to overcome if you want it to be successful.

So is it making any money? Well, they wouldn’t still be selling it if no one was buying… but is it the best strategy for the most sales? Maybe not.