The Age of the Monthly Fee
It dawned on me recently that everything “as a service” has turned these times in to the “Age of the Monthly Fee”. My dad always taught me not to borrow money to buy things, learn to save up to buy it outright. Don’t pay interest or “owe” people. My dad was very successful and has never been a payment buyer.
This made me think a little more about that philosophy relative to how our personal and business lives run on a daily basis in 2015. Could my Dad start and run his business successfully and competitively with that same philosophy right now? I don’t think so. The competitive edge with cloud, monthly services, and access to technology is too great to overcome.
Consumers have been on the “As a Service” train for a while now. Leasing cars, cable bills, cell phone bills, Netflix, gym memberships. The goal of the business is to get you on the hook and keep you there. The name of the game is Monthly Recurring Revenue (MRR). It is highly valued and sought after by many modern businesses. It offers predictability in their sales revenue and doesn’t require constant reselling to maintain the momentum.
The best part is if they can make it hard to cancel then they have a much higher opportunity to keep that MRR even if you’re an unhappy or at least apathetic customer. I had the same 3 DVD rentals at my house for 14 months while paying for Netflix. I only used it for streaming. What does that tell you? The good news is Netflix made it very easy to downgrade my subscription, unlike the gym that shames you like Game of Thrones if you want to cancel. And that’s the rub. Which services still care about you as a customer? Make sure you know what you’re getting into, and most importantly, how to get out of it if you don’t like or it doesn’t work. And know how to get your data back. How will my cloud or Managed Services provider handle the situation if I want to cancel. If they have integrity then they will help you. Try to figure this out first.
I’m not on my soapbox here, we offer a monthly service for SharePoint support with a fixed price. This is not about a positive or negative viewpoint, but more about the changing trends and philosophies that have shifted and our relative “newness” to trying to figure it all out. It was not that long ago that it would be unheard of to outsource your datacenter to a 3rd party. Rent your copy of Microsoft Office or instance of Project Server? Personally, these services have allowed me and our small business to have access to capabilities that would been out of reach as much as 5 years ago. Wow.
On the flipside, I have found myself making monthly payments on services that I don’t really use much anymore, or don’t really use effectively. One of my Dad’s points was that payment buying makes you feel like you can afford something that you might not actually be able to, but it also makes the barrier to the initial purchase so much smaller that you might buy and keep services you don’t really need while you continue to pay for them.
My main point is that we recognize what’s happening, evaluate your specific situation for value, ensure the companies you deal with are honest and reputable, and do the math on it. Know your exit strategy, and monitor it for ongoing value at regular intervals.