Show notes
Car manufacturers like BMW and Mercedes are getting aggressive in charging customers subscriptions for features that are already built into the car itself.I want to talk about the outrage this has caused and where the line actually should be from a product pricing perspective. We'll also talk about the history of where it came from.Related article - https://adguard.com/en/blog/subscriptions-cars-mercedes-netflix.htmlIf you want to reach product-market fit faster, sign up for my free 5 day email course here - https://nxtstep.io/fit/Episode TranscriptHey, folks, Sean here.And today what I want to talk to youabout is a developing trend in pricing in theautomotive industry, where car manufacturers are charging you forfeatures that your car already has via subscription andthe outrage that that's causing.So if you're unfamiliar with what's going on here, automotivemanufacturers like BMW are charging people for heated seats tothe tune of $18 a month, an extra $10 amonth to access the heated seats steering wheel.Again, both of those features already in the car.And car manufacturers like Mercedes are charging well over$1,000 in order to make the car faster.Now, these transactions are relativelynew for the automotive industry.Previously, especially when it comes to featuresand hardware your car already had, youwould be charged extra for that.I mean, they might be in the baseprice, so the pricing might be handled differently.But car prices also haven't gone down.What they're doing is they're still increasingthe prices of the base vehicle itself,plus all the features, and then they'readding subscription fees on top of that.And that's really adding some serious insult toindustry, especially given the current economic conditions.So I want to talk about how this isa strategy has led to pretty significant backlash fromconsumers thus far, but at the same time, peoplestill appear to be paying it.I want to talk about the history in terms ofwhere this came from, what this means for the futureof the industry and what we can learn from itfrom a product pricing perspective, in terms of what's fair.Like, where would we draw the linewhen it comes to something like this.Because in certain instances, I might be able tosee it, but in others it seems pretty outrageous.Like charging you for features your car already has.Plus we can talk about the historyin terms of where it came from.I know I've been beating them up a lot in anumber of my videos, but Tesla in the early 2010s createdan infrastructure and network for Ota, which is an acronym thatstands for over the Air updates, which actually add quite abit of convenience to the consumer experience.And a lot of people rave about this.It's where they have the ability toessentially kind of update your vehicle.But over the air, as in receiving an updatelike your phone or your computer might, doesn't requireyou have to take the car to the dealership,which I would argue improves the consumer ownership experience.Now, I might be willing to paymore for that, but in reality, that'ssomething they're doing to upgrade their fleet.So perhaps that should justbe built into the experience.Now, in addition to that, and around that time frame,tesla was also providing people with the opportunity to purchaseextended range for several of their models, which meant thatyou'd be able to drive further in a tesla modelbecause you've unlocked some additional range.Now, similarly so to what I've already described about whatBMW and Mercedes and other companies like that are doing,the car already had that functionality, but you needed tounlock it in order to access it.So this has been going on for a while,and I should say Tesla somewhat kind of popularizedthis model, or tested it, if you will, andother manufacturers have taken note of that.Plus, add to that the advantage from afinancial perspective in terms of setting up andestablishing recurring revenue has been very attractive andmade popular by SaaS applications and a numberof other largely successful businesses well tooth.And these manufacturers have taken note of that, triedto figure out how they can leverage it intotheir model and add it to their world.This is where this stuff has comefrom, and that's the history on it.Now, despite the fact thatit works for certain businesses.The question here for me is really, doesit apply in this industry or should it?Because there's been a lot of backlash from consumerstalking about, I'll never buy BMW, I'll never buya Mercedes, because they are doing these things.Unfortunately for them at the moment, people are payinga number of these different fees to these manufacturers,which is likely to mean that they're going tocontinue with them, at least to a certain extent.But what I want to talk about is what the futureof that might look like and how they may be ableto modify it to a certain extent and figure out abetter line in terms of what's fair and what isn't.I'm also curious to get feedbackfrom you on it as well.So I want to talk a little bit about where the lineis here in terms of what might be fair and what isn't.Now, when it comes to certain research and developmentthat these automotive manufacturers have had to incorporate interms of improving the ownership experience and giving yourcar advanced functionality, I could understand in certain instanceswhat that might look like.And I'll give you an example from mine.So I own a Jeep, and there's two ways in whichyou can actually start the Jeep, some Jeep vehicles remotely.There is the ability to do so from yourkey fob as, and you've just pressed the mechanicalbutton on your key fob that will start it.But you need to be in physical proximityof the vehicle, probably like up to 100ftaway, probably no more than that.And in addition to that, they have a you connectapplication that I can operate from my smartphone, which sendsa signal over the telecom network, which ultimately will goto my vehicle as well, too, meaning that I canstart it from much further away.So if I was a mile away from mycar, I can start it via that technology.Now, in the case of Jeep, they're chargingyou for the latter, not the former.So my key fob will work.I can use the remote start, but I need to bein certain proximity with my vehicle if I want to usethat You Connect app, I have to pay for that.That comes as an annual subscription.And remote start is not the only thing that it offers.Now, in this case, I hadit when I purchased my vehicle.It came with it as an incentive, but it expired andI haven't renewed it because I haven't really needed it.It's not something that I use all that regularly.As such, I didn't see aneed to spend that additional fee.And also because if I need remote start,I'm probably in close enough proximity to theextent where I can just use the Fob....