BMW Is Giving Up on Heated Seat Subscriptions Because People Hated Them::The blowback worked—but subscriptions for software-based new car features will continue, according to a BMW board member.
BMW Is Giving Up on Heated Seat Subscriptions Because People Hated Them::The blowback worked—but subscriptions for software-based new car features will continue, according to a BMW board member.
Yes, and no. Imagine it costs $20/car to install seat heating in every car, but by making two assembly lines, one for with and one without it every car becomes $25 more expensive. Software disabling costs $1/car. In this scenario it would cost more to make a car without physical seat heating than one with. This is just an extreme example to show the problem, with other costs it can be more complicated, but the principle stands.
Why disable at all?
You’ve determined that it’s cheaper to include it in every car Vs provide an option, so include the feature in every car. Why not make your customers happy Vs pissing them off?
“Yes, I buy BMW because you get all the creature comforts like heated seats as standard.” Premium brands don’t nickel and dime their customers.
Premium brands invented this, centuries ago.
Look at you thinking they put components you haven’t paid for in your vehicle. Sweet summer child. You do know what profit is right? That’s the money after everything is paid for, they don’t sell them without making a profit.
I never said that. Of course you pay for everything that’s in your car, but it’s certainly possible it would cost you more not to have them put it in there, that’s the crux of the matter.
Pretty sure ‘cheaper’ is a misnomer when profit exists.
The issue is that it’s not that people express do not want the option, it’s just that if it is cheaper, they might go without.
In other products I’ve been involved with, the dilemma crops up. 90% of our customers pay for a premium feature, or else the feature has become so cheap it hardly saves us anything, we decide “guess everybody gets the feature”.
The argument that I might be willing to accept is when a feature carries a very large development expense, and you want to defray the cost among those that demanded it, both as a different model for funding the development and for keeping track of waning interest to discontinue that effort. Related are things like patent royalties and licensing fees.
However, we are taking about some resistive heating elements in a chair, hardly an engineering marvel and not really subject to a limited set of demanding supplier nor an area to run afoul of active patents. Once safety regulations got to the point where manufacturers had to run wiring to the seats anyway for the airbag modules, the hearing elements become negligible cost. A lot of budget models even shrugged and just tossed the feature in at that point. In that context, is crazy that a premium brand would think to pull such an obnoxious move.
I feel like price discrimination is more of a factor here. To maximize revenue you want to charge an individual the maximum amount that particular individual is willing to pay. Which is going to be a different price for different people. You still make profit from everyone but make more some from than you do others. But how can you charge some people more and some people less for the same product? Well you have to come up with some arbitrary reason that seems fair. Well you’re paying more because you get heated seats, that’s fair right?
But when it’s cost effective install heated seats in every vehicle, how can they use this as a way to achieve price discrimination? “Hey you got some money and can afford it pay this subscription fee to enable the heated seats!”
Sure fixed costs are a factor, but distributing that cost equally over all vehicles sold is simpler and makes more sense. I mean in the end we are talking about different methods for a company to recover the costs of doing the R&D and product development, integration with an an assembly line, etc. after all. The cost is obviously paid upfront, the per unit costs isn’t a factor since it’s being put into every vehicle. So if unit costs are factored out this is entirely about implementing price discrimination when recovering fixed costs.
And price discrimination is always just shenanigans that only work when a company gets away with it. In this case they didn’t.
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