from pay-extra-for-seat-belts department
If you’re a publicly traded company, it’s not enough to make a decent profit selling products that people love. You have to make endless improvements from quarter to quarter to please investors. So countless companies engage in an act of self-cannibalization, where they begin to cut things like customer service (see: US Telecom), or annoy their customers with obnoxious cash grabs.
Case in point: companies like BMW really can’t give up on their dream of turning everyday basics into subscription services. Service charges can consistently and mysteriously push ever higher. In several countries, this has taken the form of charging customers more than $18 per month as little as to take advantage of heated seats that they technically already have:
As cynical as it sounds, Korean owners aren’t required to pay monthly for heated seats, or any of BMW’s other available options, but monthly payments can be made to try them out. Heated seats, for example, cost ₩24,000 (about $18) per month. But you can also pay for a one-year subscription ($176), a three-year subscription ($283), or you can buy the heated seats permanently ($406).
Heated seat subscription option is part of the company’s offerings « Reader connectedand is already happening in Korea, UK, New Zealand, Germany and South Africa. It hasn’t arrived in the US yet, but it’s pretty obvious that it probably will eventually.
In this case, the technological capability for heated seats already exists in the car. The manufacturer has already taken these costs into account in the base price. And they’re effectively charging you a premium just for activating technology that already exists and, frankly, you’ve probably already paid:
This opens the door to an arms race with hackers and modders, with the debate over the right to fix (something you already own) waiting on the periphery. And the FTC is watching you like a hawk, waiting to see if companies make activating something you already own a breach of warranty.
As cars get smarter and more complicated, the potential to nickel and dime your customers for services that should be part of standard packages will only increase. If done sensibly, the company would simply be shifting costs from a premium plan to a subscription service.
But the need for quarterly returns means they have an incentive to never stop trying their luck. So what you end up getting is dumber, more boring price hikes until regulators or consumers say they’ve had enough. And even then, Wall Street still gets what Wall Street wants.
Filed Under: business as a service, fees, heated seats, nickel and dime, scam, subscription