Fed up with subscriptions? The latest expense to push consumers to their financial limits is heated car seats

BMW will not impose a monthly fee for the feature in Canada, despite the fact that companies adore subscriptions. Many BMW owners picture their driving experience on a chilly winter road as comfortable leather seats in a luxury vehicle.

However, those drivers might have to pay a monthly fee if they reside in South Korea or the United Kingdom in order to enjoy features like heated buttocks, among others.

To activate heated seats and other features like traffic camera alerts or driving assistance, the luxury car manufacturer has instituted monthly fees in those markets. BMW is not currently bringing the practice of heated seats to Canada or the United States, but it has raised concerns about whether the business model for how consumers pay for goods that were previously one-time purchases is changing.

Pay once and own forever changes to Pay always and own never.

According to Yann Cornil, an assistant professor at the UBC Sauder School of Business, "businesses love subscription-based services."

According to him, the practice smooths out a company's revenues over time. Instead of receiving large sums of money whenever a purchase is made, an organization can anticipate a steady stream of more predictable income. "Future revenue can be predicted much more easily. It lessens revenue volatility, "said he.

According to marketing and behavioural scientist Cornil, companies and their investors value this predictability. After trying out a service, customers might decide they don't want to discontinue it, which would ensure a steady stream of monthly revenue for the business.

The "endowment effect," which refers to the idea that once you feel like you have something, like, say, heated seats, it's difficult to lose access even if that means you keep paying for it, is what Cornil describes this as being a part of "People adjust to the greater level of comfort quickly. I predict that stopping this subscription and adjusting to a lower level of comfort will be much more difficult going forward "said he.

In the auto sector, the idea is not new.

BMW has previously floated the idea of charging monthly fees for features found in other vehicles.

The business received some flak in 2019 for charging a subscription fee for the Apple CarPlay feature in automobiles. Later, it dropped the accusation. In some markets, Tesla has also introduced subscription plans for features like automatic parking and self-driving vehicles. BMW does offer software downloads that enable Canadian customers to add new features after their initial purchase, but heated seat systems are not included in this service. In an email to CBC News, Barb Pitblado of BMW Group Canada said, "We do not have a subscription-based business model in Canada, but like the U.S., we give customers the possibility to add new software-based functionality to their vehicle through software upload using hardware already in their car." Pitblado also emphasized that the majority of the company's Canadian models come standard with heated seats and steering wheels.

Customers might shop elsewhere, an auto expert warns

Lauren Fix, a writer for the automotive industry, warns that if features that were once purchased permanently start to be offered as subscriptions, consumers may look elsewhere. "The switch is already there, but this car has heated seats that cost extra to purchase. People become unhappy and uneasy because of it "said Fix, who serves as the publication's chief editor. The fact that a feature, such as heated seats, is physically present in a car but doesn't function because of a financial decision, according to Fix, can irritate customers and harm business. The rationale, according to her, is that if you start nickel-and-diming customers, they'll go somewhere else.

Are subscriptions going to be like enduring purchases?

However, marketing experts assert that despite the fact that the concept of subscribing for physical features and goods may occasionally frustrate customers and feel novel, it is here to stay. It's a fundamentally different way of thinking about devices, according to Joanne McNeish, an associate professor at Toronto Metropolitan University's Ted Rogers School of Management.

According to McNeish, whose research examines how people react to new technologies, consumers are, in some ways, already accustomed to the idea of subscribing for full functionality.

"If I don't have access to the internet, my phone won't function. I can still type a little bit. However, if I don't pay for it or it isn't working, the full functionality isn't available ""McNeish said." Considering that leasing entire motor vehicles is not unusual in and of itself, McNeish thinks that consumers have been primed over the last two decades to move away from traditional ownership and toward more of a rental model for many products.

"When we own something, we have control over how we use it, how long we keep it, and what we do with it after we're done. According to the new paradigm, since you no longer own anything, you are not in control of these decisions. But you'll have to pay for them if you want to use them."

Although BMW does not currently charge monthly fees for heated seats in Canada, experts like McNeish anticipate a backlash should the business model catch on. Consumers are currently accustomed to receiving many products, such as heated seats, "for free" with their purchases, so she predicted that they would protest it. It will be challenging to stop acquiring those things.

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