Well, those sneaky marketers are at it again…
As you may recall, we recently bought a new car. Included amongst the many bells and whistles was a Sirius/XM satellite radio system.
To entice us to use their service, the system was pre-activated with a free, three month trial subscription. Thankfully, it didn’t auto-renew, but Sirius/XM has certainly been working to convert us into paying customers.
Subscribe and save?
Their latest advance was a mailing promising that, if we signed up today, we’d “get up to 5 months free.” Wow, great. Five free months. Great deal, huh? Well…
Here are the terms of the deal:
|Billing Cycle||Price||Your Savings|
|6-Month||$29.94||4 Months FREE|
|1-Year||$99.00||5 Months FREE|
Quiz: What’s wrong with that offer?
That’s right. While signing up for a year give you an extra month for free (five vs. four), the annual plan is significantly more costly on per-month basis than the six month plan. Yes, even after factoring in the extra “free” month.
Run the numbers. The base price is $15/month. You can get six months for $30. That works out to $30/6 = $5/month. Or you can get a year for $99. That works out to $99/12 = $8.25/month. So you’ll wind up paying 65% more per month in return for what is supposedly an extra “free” month.
Note: My advice would be to save even more money by skipping satellite radio entirely, but this is still a great example of the games that marketers play.
The lesson here is that you need to run the numbers and not just assume that signing up for a longer term is a better deal, even if it’s presented by the marketing gurus as such. Of course, the same goes for places like the grocery store, where the per unit price might actually be higher on larger packages. And on and on…
Actually, this reminds me a bit of the flea market we used to frequent when our kids were young and we were just starting out. We attended both as buyers (mostly of baby clothes) and sellers (of whatever junk we wanted to unload). I used to joke with my wife that we should price stuff at $0.25/each or 3 for a dollar just to see how many people would go for the volume “discount.”
Oh, and don’t forget to read the fine print. The prices above are actually subject to a “US Music Royalty Fee” that adds 12.5% to the stated price. Really? A separate royalty fee for the content? When you subscribe to a radio service, shouldn’t the cost of the programming be included by the subscription fee?