A nicely warmed leather seat in a luxury automobile is how many BMW owners imagine their driving experience on a cold winter road.
But if those drivers live in the United Kingdom or South Korea, they may have to pay monthly for the experience of heated buttocks — among other features.
The luxury car manufacturer has introduced monthly charges in those markets to activate heated seats in their vehicles, along with features such as traffic camera alerts or driving assistance.
While BMW is not bringing the practice to Canada or the United States for heated seats yet, it’s sparked questions about whether the business model is changing for how consumers pay for goods that were traditionally one-time purchases.
Pay once, own forever becomes pay forever, own never
“Businesses love subscription-based services,” said Yann Cornil, an assistant professor at the UBC Sauder School of Business.
The practice helps smooth out a company’s revenues over time, he said. A company can expect a steady stream of more predictable income, rather than large bursts of money whenever a purchase is made.
“It’s much easier to predict future revenue. It reduces volatility in revenues,” he said.
Businesses and their investors value that predictability, according to Cornil, who specializes in marketing and behavioral science.
Another potential business boon is that consumers may not want to cancel the service once they’ve tried it out, guaranteeing a lifetime source of monthly revenue for a company.
Cornil describes this as part of what behavioral scientists call the “endowment effect,” or the idea that once you feel like you’ve owned something — like, say, heated seats — it’s difficult to lose access even if that means you keep paying for it.
“People quickly adapt to the increased level of comfort … I suspect it will become much harder to stop this subscription, much harder to adapt to a lower level of comfort by stopping the subscription,” he said.
Not a new concept in the automotive industry
Floating the idea of charging monthly for features that are built into other vehicles is not a new concept for BMW.
Tesla has also launched subscription packages in some markets for features such as self-driving or automatic parking.
BMW does allow Canadian consumers to add new features after they’ve initially purchased through a software download, but said systems such as heated seats aren’t a part of this offering.
“We do not have a subscription-based business model in Canada, but like the US, we give customers the possibility of adding new software-based functionality to their vehicle through software upload using hardware already in their car,” said BMW Group Canada’s Barb Pitblado in an emailed statement to CBC News.
Pitblado also pointed out that heated seats and steering wheels are offered as standard in most Canadian models offered by the company.
Auto expert says customers may go elsewhere
According to automotive industry writer Lauren Fix, car shoppers may go elsewhere if subscribing to features that used to be permanent purchases take hold.
“This vehicle has heated seats, which you have to pay extra for, and the switch is already there? It makes people unhappy, uncomfortable,” said Fix, who is the editor-in-chief of Car Coach Reports.
Fix said the knowledge that a feature like heated seats is physically present in a vehicle, but just doesn’t work due to a financial choice, can be aggravating to customers and may drive away business.
“The idea is that you want repeat customers and if you start nickel-and-diming customers, they’ll go elsewhere,” she said.
Will subscriptions be like permanent purchases?
However, marketing experts say while the idea of subscribing for physical features and items may feel new and frustrating to consumers in some contexts — it’s not going anywhere.
“It’s a fundamentally different way of thinking about devices,” said Joanne McNeish, an associate professor with the Ted Rogers School of Management at Toronto Metropolitan University.
McNeish’s research focuses on how people respond to new technologies, and they pointed out consumers are, in some ways, already used to the concept of subscribing for full functionality.
“My phone doesn’t work if I don’t have the internet … I can still type some things. However, the full functionality isn’t available if I don’t pay for it or it’s not working,” said McNeish.
McNeish believes 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, pointing out that leasing entire motor vehicles is, in itself, not uncommon.
“Owning physical things implies control in their use, how long we keep them, and what we do with them when we’re done. This new model says you don’t own things anymore, therefore you don’t get to decide all of these things. But if you want access to them, you will have to pay for them.”
Even though BMW is not charging monthly fees for heated seats in Canada at this point, the business model should become more popular, experts such as McNeish expect an initial backlash.
“Consumers will rail against it,” she said, adding that right now people are used to receiving many products — like heated seats — “for free” with their purchase.
“It’s going to be rather difficult to stop getting those things.”