Subscribing for Services VS Owning of Assets – A Clive Angel Blogpost

Subscribing for Services VS Owning of Assets – A Clive Angel Blogpost It’s not a secret that many businesses are gradually gravitating towards the subscription business model. Lured by changing consumer buying habits who seemingly prefer the benefits of a simple, cost effective and hassle-free experience, more companies are exploring launching subscription based services. The impact of this as we shift from a product based economy to a services centric economy is that the products will transform from being once off purchases into ongoing annuity based services. Subscription services offer customers an all-inclusive, reliable and fully cost transparent offering. In return for a fixed monthly payment the customer is guaranteed ongoing use of the product or service offering. For the customer who chooses “paid for usage” over outright asset ownership this presents a markedly different risk profile and funding proposition. Ownership comes with the hidden and often exaggerated costs of usage in the form of maintenance, insurance and general upkeep. An asset procured on a subscription basis provides the consumer real time access to the latest technology, services and product updates. If and when the owner of an asset wishes to upgrade the product or service it often involves having to sell the original version to purchase the new and updated version. This results not only in an increased and measurable cost of ownership but also having to wait, often a significant time between disposing of the one product and acquiring the upgraded version. Tailored subscription services allow the user to select flexible products customised to their specific needs as opposed to purchasing a product fit for a specific purpose. This allows personalisation and provides customers the opportunity to ”get exactly what they paying for.” A further benefit of subscription services is the structured payment plans specifically to align the customers costs with the benefits derived from usage. For customers this provides a far greater value proposition then incurring an upfront initial payment with the assumed benefits to follow over the life of the asset. The opportunity to align cash outflows with the benefits obtained from usage creates a “win-win” proposition for both the user and the provider of the services. Finally the ongoing nature of subscription services means that the customer is in control and therefore in a position to provide meaningful input and feedback . Customer feedback can have a positive impact on improving the offering, this in turn creates further value for new users. On the contrary when purchasing an asset once payment has taken place and ownership is transferred control shifts from the customer to supplier and with it the impact of customer feedback becomes less relevant. January 11, 2019

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Financial and Commercial Executive
Head of Product