Y’all are going to hate this, but IMO a more viable solution is a subscription model. The more reliable an appliance is, the less you spend on it in the long run, so less profit for the manufacturer. With a subscription, the more reliable they make it, the more profit they get. Then you just need sufficient competition to keep the subscription prices low.
Then you’d run into the same problem you have with insurance where they refuse to fix/replace your appliance because of “misuse” or something like that.
The problem here is the for-profit model that drives mass (over-)production and planned obsolescence.
We can do away with this if a company embraces a completely different model. Instead of doing the usual thing, go 100% on-demand with pre-orders, and only build what people want to buy. Then, keep moving horizontally into other product lines, following the demand and manufacturing need. Once pre-orders hit a given theshold, manufacturing starts for a given product. This eliminates all kinds of overhead and allows the company to survive by investing in multiple revenue streams. As a bonus: it’s a lot less wasteful since you never make more units than you can sell.
Subscriptions are like insurance and gym memberships. They’re profitable only if they represent value that is never fully realized by the consumer. They’re a really bad tax, and people dislike them for good reason. I want to buy a thing from a company, and that’s all; it’s not my responsibility to keep them afloat after that transaction.
Subscriptions are like insurance and gym memberships. They’re profitable only if they represent value that is never fully realized by the consumer.
Think of your monthly spending as a probability distribution. They provide value by reducing variance of that distribution at the cost of increasing the mean.
Consider at a more concrete example. You’re provided with two options:
You get $100 a month guaranteed
Flip a coin each month. On head, you get $200. On tail, you get nothing.
The expected value for both are the same, but option #1 is predictable. It’s the better option of the two unless you’re in a situation where getting $0 is effectively equivalent to getting $100. You would need to increase the amount you get in option #2 to make it worthwhile. Similarly, you can decrease the amount you get in option #1 and still have it be the better option.
By default, life is like option #2. The value proposition of insurance and the like is to give you option #1 with an amount lower than the expected value of #2, and in exchange, they get the difference as profit.
Y’all are going to hate this, but IMO a more viable solution is a subscription model. The more reliable an appliance is, the less you spend on it in the long run, so less profit for the manufacturer. With a subscription, the more reliable they make it, the more profit they get. Then you just need sufficient competition to keep the subscription prices low.
Then you’d run into the same problem you have with insurance where they refuse to fix/replace your appliance because of “misuse” or something like that.
The problem here is the for-profit model that drives mass (over-)production and planned obsolescence.
We can do away with this if a company embraces a completely different model. Instead of doing the usual thing, go 100% on-demand with pre-orders, and only build what people want to buy. Then, keep moving horizontally into other product lines, following the demand and manufacturing need. Once pre-orders hit a given theshold, manufacturing starts for a given product. This eliminates all kinds of overhead and allows the company to survive by investing in multiple revenue streams. As a bonus: it’s a lot less wasteful since you never make more units than you can sell.
Subscriptions are like insurance and gym memberships. They’re profitable only if they represent value that is never fully realized by the consumer. They’re a really bad tax, and people dislike them for good reason. I want to buy a thing from a company, and that’s all; it’s not my responsibility to keep them afloat after that transaction.
Think of your monthly spending as a probability distribution. They provide value by reducing variance of that distribution at the cost of increasing the mean.
Consider at a more concrete example. You’re provided with two options:
The expected value for both are the same, but option #1 is predictable. It’s the better option of the two unless you’re in a situation where getting $0 is effectively equivalent to getting $100. You would need to increase the amount you get in option #2 to make it worthwhile. Similarly, you can decrease the amount you get in option #1 and still have it be the better option.
By default, life is like option #2. The value proposition of insurance and the like is to give you option #1 with an amount lower than the expected value of #2, and in exchange, they get the difference as profit.