Subscription services are definitely not a new phenomenon to those of us who have a smartphone or any device, however, it's become more obvious that these types of services will become a real part of our everyday lives — even when we're driving. More automotive brands have silently introduced subscription-based amenities to their vehicles – conveniences that used to be an expected perk of buying a new car.
Heated seats, for example, have become one of the newest monthly fees added to the cost of a new BMW vehicle in some countries such as Canada and the U.K. Other experiences such as park assist and traffic alerts have also become subscription-based fees customers will need to pay to benefit from.
Why are subscription services gaining so much momentum?
Instead of receiving only a one-time purchase of a service with unlimited future use, the idea behind subscription services is that it provides the provider of the software with a steady stream of revenue for as long as the end-user continues to require the service. So, as long as the subscription is needed to enjoy the perk included with it, they will continue to pay. It's a major benefit for the service provider, but for the customer, according to C+R Research, 42% of people forget they're even paying for a subscription.
CBC describes the rise in subscriptions by businesses to customers as "Pay once, own forever becomes pay forever, own never."
Whereas the average consumer estimates $86 as their monthly subscription spend, that actual amount is in the range of $212. That's over $2,500 a year. The rising number of services traditionally charged as a one-time payment now becoming a recurring expense has led to subscription-based companies, including SaaS (software as a service), receiving plenty of heartfelt sighs from those already weighed down by the effects of inflation.
Are in-car subscription services the new normal?
Unlike other subscription models that provide a regular product over a period of time, in-car subscription services are access-based, meaning that as long as customers continue to pay every month, they will gain access to those special perks or products. Many car brands are continuing to add subscription-based services to new vehicles as a way to gain a more predictable revenue stream after the initial, albeit sometimes very large, investment. It's also a strategic way to turn people into life-long customers. Mercedes Me Connect, for example, charges subscribers a monthly fee to use services some other vehicle brands still offer as part of the purchase price. These include:
- Remote diagnostics.
- Smartphone compatibility.
- Remote engine start.
- Remote door lock/unlock.
- Access to apps like Yelp.
Drawbacks to subscription services in the automotive industry include the backlash that some companies have received because car owners believe many of these services that are built into the car should come with the initial cost of the vehicle. There are some consumers who believe a low subscription price today could lead to an increase in price later or lead to customers being charged monthly for essential safety services. To try and avoid this Consumer Report's manager of safety policy says "We're going to need clear rules on the books for safety, energy efficiency, and fair treatment of consumers to make sure that however the marketplace evolves, consumers benefit from the changes."
It's also important that brands continue to adapt, update, and add more value to the services they're providing to ensure that customers don't lose interest in them. The rise in competition as many more companies choose to include subscription-based services could mean having to think more out-of-the-box to invent a new method of optimizing subscriptions to distract customers from choosing other brands.
Although consumers may not be fully aware of just how much they spend each month on subscriptions, we will definitely not see this trend change in the opposite direction. Instead, software companies will need to discover new and effective ways to introduce services that won't cause hard-felt emotions in customers. We want to promote the ability and accessibility of these services as well as the benefits involved with subscribing.
For many consumers, unsubscribing from some of the services we signed up for years ago and never use could be beneficial in terms of saving money for those services we do use on a daily basis. For some services, such as the luxury of a heated steering wheel in the dead of winter, we can't turn our hands away from that warmth — even if it's going to cost us $20 a month to get it.
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