Subscription as a Dis-service (SAAD)
Any good idea becomes a bad idea when taken too far.
“My mum had 'Cosmopolitan' magazine as a subscription and 'Vogue,' and every month I would be like, 'I wanna be that girl in that ad.’ - Jeffree Star
Just imagine for a moment that you live in your dream house, in an upmarket community, surrounded by a lush green golf course and many fine-dining restaurants. Take a moment to visualize everything in your favorite room e.g. your home office. It will have a nice oakwood table, an ergonomically designed chair, your laptop, mobile, chargers, coffee maker, a view of the golf course, a lovely painting on the wall, and the works.
Ideal. Wow !!! You aspired to live this life, you worked your ass off for getting here and you finally made it.
Now that’s what you are thinking.
But that's not what every single company, whose product has found its way to your home office, is thinking. They are busy coming up with strategies and products to make you spend more on maintenance, upgrades, and experiences. They have a fiduciary responsibility to their shareholders and increasing the topline and bottom line becomes their major focus. You can’t blame them. They ain’t here solely to make your life better ;)
Before I get to the creativity of brands on your oakwood table, let’s look at what’s been happening in many purchase decisions of ours.
Ever shopped for supplements on Amazon? If yes, then you would have sighted the monthly subscription for your bottle of Vitamin C (as shown below) -
Of course, you're getting a discount of 10%, but the brand is generating 3 times more Sales from the same client if you subscribed for the option. That means you are locked in with the brand for 3 months, which means the brand stays on top of your mind for additional 60 days, which increases the likelihood of you continuing your consumption of the brand for months/ years after the 3-month subscription ends.
In the absence of a Subscription service, you might have tried another brand, but that’s not what any brand wants you to do. Everyone wants you to get locked in. Even I would want the same if I owned Himalaya. For now, let me take solace in owning a Wellness supplement bottle from Himalaya ;)
Let’s look at Microsoft software. I remember buying MS Word & Excel as one-time downloads for USD 100 each and I have used them for over 5 years now. But that isn’t the option that was shown to me on the website. I had to dig through various links on the site to figure out an option for making a one-time payment and getting done with it.
What gets highlighted on the website, is their subscription model for USD 119 p.a. for a family or USD 79.99 for a one-time user. If I would have opted for a personal option, then my cash outflow would have been almost USD 400 for the last 5 years, instead of the USD 200 that I paid in 2017. That’s a saving of USD 200 and the downloaded software works just fine meeting all my requirements. I don’t care what I’m missing out on in terms of upgrades and other fancy add-ons. All I care for is the utility of the software and one time download was enough for that.
Don’t get me wrong here. I am not a power user of these software products and hence didn’t need the full shebang. Maybe others do need these. But the point I’m trying to highlight is that the digital age provides an ideal environment for brands to hook you onto subscription services wherein they can cement the brand in your mind forever while taking a bigger wallet share of yours along with meeting your requirements at a reasonable price point.
Let’s get back to your home office -
What if every single brand in your room is thinking the same. In fact, they are. Apple is working on a hardware subscription service for phones. All reputed coffee labels allow you to buy coffee on a subscription basis on their websites. Even Asian Paints, India’s premier Home Decor company, has entered into the hygiene domain via their San Assure brand of services.
These are just 3 examples of subscriptions being designed for you i.e. mobiles, coffee, and sanitization. These are multi-billion dollar brands with massive brand recall in their respective segments, and they are committed to creeping into your lives, bit by bit. And launching subscription models is their next innovation to deal with competition in this dog-eat-dog world. They cannot risk losing their customer’s mindshare and inducing repeat consumption is scoring a home run of sorts.
That’s great if your subscription offers are limited to products or services that need monthly consumption eg. newspapers, journals, cleaning services, etc. But if one-time purchases are also sold on a subscription basis, then we are in for a painful ride laced with lifestyle creep and expenses.
Let’s look at some crazy things happening in the subscription world -
I thought heated seats were an additional feature that I could pay for at the time of buying the car, and then I get to enjoy this luxury whenever required. But NO !!! BMW would like you to pay for it on a subscription basis. I’m in Dubai and I won’t be needing this feature for sure. But for those in countries with colder climates, BMW would like to take a higher share of your hard-earned income. They are coming for you, soon. How dare you pay only once and get away with heated seats ;)
The last time I read anything on star signs, was in 2005 when Majorie Orr or Bejan Daruwala would provide predictions in Indian news publications. It was a time killer and kinda fun to read. And it was free !!! But it came as a surprise when I came across a paid service for daily personal horoscopes. Reminds of an ad in India that goes like “What an idea !!”
How come I don’t come up with these ingenious business ideas that could provide a service that will be paid for, irrespective of its efficacy or credibility. I need to do a full moon reading of my horoscope soon ;)
This one is a classic i.e. B-A-A-S = Bagels as a Service ;)
At this rate, anything and everything is being looked at as being turned into a subscription model.
There are many more crazy ideas out there and they all have a primary target i.e. your wallet-share. You either get better at distinguishing what’s important and what’s not. Or you get to contribute to mankind by draining your own financial resources, one subscription at a time.
Warren Buffett has a classic story to illustrate this tragedy -
“A man was traveling abroad when he received a call from his sister informing him that their father had died unexpectedly. It was physically impossible for the brother to get back home for the funeral, but he told his sister to take care of the funeral arrangements and to send the bill to him. After returning home he received a bill for several thousand dollars, which he promptly paid. The following month another bill came along for $ 15, and he paid that too. Another month followed, with a similar bill. When, in the next month, a third bill for $15 was presented, he called his sister to ask what was going on. “Oh”, she said. “I forgot to tell you. We buried Dad in a rented suit.”
😃
This realization hit me hard and I took time out yesterday to stop subscriptions to many newsletters I have -
And each one of them had a standard email reply which said - Was it a mistake?
Not it wasn’t.
My time and attention are both limited and hence I need to be prudent with where my valuable resources get spent. I need to retain high-value high-signal services and let go of others that ain’t useful to me or my goals. In no way does it reflect on these newsletters or their creators, it’s just that they don’t serve my objectives today. And hence the decision to unsubscribe.
I gotto be careful with what I subscribe to. I invite you to get your guard rails up too. Else it’s heading towards (financial) death by 1000 cuts. Trust me, you don’t want that !!!
Recommendations for the week #
Our options are infinite, but our time is quite finite, making time the world's most scarce asset. How do you decide where to commit your precious time? What opportunities are worth this scarce asset? Well that's the million-hour question, isn't it? This piece by Jack Raines delves exactly into that question. This will surely make you think.
Morgan Housel comes up with yet another home run. This time his piece talks about instances where money develops a tendency to be a liability masquerading as an asset, controlling you more than you use it to live a better life. Highly recommended !!!
My cousins are in town and just couldn’t manage to finish the piece yesterday. But was determined to post the newsletter today and feels good to have stolen time to do so.
I am also very excited to receive the news that my application for FLAME Investment Lab With The Masters has been accepted. It’s a 5-day on-campus workshop and begins on 29th June in Pune, India. I soo look forward to spending time with the best teachers in the Investment space in India, learning from them, and also making new friends within the community of Business Analysts.
Wishing you all a fantastic day ahead.
Stay Safe & God Bless.
Manish