Are Subscriptions Hard To Sell? Maybe Not These Days…

I spotted something in the news last week that was most interesting.

In the UK, Volkswagen is introducing a subscription service for one if it’s car models.

Here’s the deal. On one of it’s electric cars, owners can choose to increase the power of the engine for £16.50 a month or £165 a year or £650 for “lifetime” (that is the lifetime of the vehicle and passes on when the vehicle is sold).

Mercedes do something similar (but, typically, a lot more expensively).

While I was waiting for my car to have it’s annual service recently, I noticed that new models now have a “connect” app so you can do stuff like lock or unlock the car from wherever you are, locate your car in a big car park and some other completely useless stuff.

Free for the first year and then a subscription afterwards.

BMW even had a monthly subscription for heated seats and steering wheel although it was discontinued as not enough people subscribed.

I think that this is a good move – both for the car company and for the consumer.

You don’t actually need heated seats in the summer. You can up the power of your car for a time when you are on vacation and driving a lot. But for the commute to work? Maybe not.

But many people think it amounts to “nickle and diming” and get angry about it. If they own the car and the seats have heating elements in them, they should be able to use them, for god’s sake!!!

But it does allow flexibility. Remember the blanked out bits in a car that would have a button there on a higher specified model? They were a constant, niggling reminder of your relative poverty.

Jeremy Clarkson once pointed to one on Top Gear and said “There would be a button there if you had concentrated more at school and got a better job”

The point was, you chose the spec of your car at point of purchase according to your budget and a lot of stuff was forever denied to you.

If you couldn’t quite afford the model with the bigger, more powerful engine, you had to work through the gears on the hills and just get on with it.

Now you can add power when you want (or when you can afford to). Even if you have bought the car second hand.

But the point of telling you all of this is that, many people think that selling a subscription based product is a tough thing to do.

It was. But consumers are now more used to subscription based products and services. We are used to paying a small charge every month or year for all sorts of different things. And it is increasing.

Market research firm Juniper Research estimated in 2024 that the global subscription economy would reach nearly $1tn (£740bn) in value by 2028.

So, maybe it is time to start thinking creatively about offering subscription products in your business. And if you already are, start thinking of how you can expand that a bit.

As always, I would like to know what you think.