BMW is selling a subscription to the heated seats in new BMWs in several countries. The price is $18/month; $180/year; $300 for 3 years; or $415 for unlimited.
My first reaction was this won’t go over well. People will see this as a loss. They used to get the heated seats as an option, no monthly fee. Now they have to buy a subscription? Mind you, BMW could position this as heated seats are $415, but if you’d rather subscribe here are some options. That looks less like a loss.
It’s also interesting that BMW offers subscriptions to a heated steering wheel and the ability to record video from the car’s cameras. These feel more reasonable. Why? Probably because I’m not used to buying either of these items so it doesn’t feel like they are taking anything away. However, the heated steering wheel option feels a lot like the heated seats.
I especially like the subscription for the recording feature. This is something that consumers believe, as they use it month after month, will cost BMW more money to provide it. Yes, we pricing professionals know that costs don’t drive pricing, but our customers don’t know that. This is about what customers will perceive as fair.
Another strike against this new pricing strategy for heated seats is the dollar value of the offer. A new BMW costs around $50,000. That means the $415 is less than 1% of the value of the car. This feels exploitative. I would recommend heated seats be bundled with several other features (like a heated steering wheel) and price the add-on bundle at several thousand dollars. Options should be valuable to some buyers but not all and should be relatively expensive. If they are inexpensive, you look cheap when you don’t include them and it adds to the complexity of running your business with another SKU to manage and sell.
It feels funny that when you buy something, like a new car, you have to pay a subscription to use certain features in it. This could be because we’ve always grown up owning the whole car. But my 10-year-old Lexus has a Sirius XM subscription. I could have subscribed to automated map updates, but I didn’t. These are services from outside the car. That feels different from buying permission to use something that is already there.
This is a fun one to think about because I can see both sides. What do you think?
Now, go make an Impact!Tags: pricing, subscription pricing