We Are All Renters… And, Maybe That’s a Good Thing.
I hear it all the time. I don’t want to pay Microsoft $10 a month forever to use Office. I don’t want to pay $.99 a month to Apple to increase my iCloud storage. And I get it, paying x amount of dollars per month for every item adds up particularly in the long run. However, this is the world we live in now. It’s called the Netflix model.
I want to sell you a service and have you pay me a monthly fee. There are pros and cons of renting services and products. Renting software guarantees that you always have the latest updates and it’s usually cross-platform and cross-device. Additionally, your account can be managed online from any device and oftentimes you can share this product or service with others whether it be friends or family members.
Buying the software or service outright has its own benefits. Namely, a one-time fee and the right to do with the software what you want so long as it does not violate the terms of the license.
This scenario has got me thinking about the Netflix model and what it means to us as consumers. A thought occurred to me that even if we buy a service or product outright, in a sense we are still renting it. For example, if I buy a $1000 computer and get five years of use out of it before it failed or I upgraded to a newer model. it could be argued that I rented the computer for that period of time. The math is pretty simple. $1000 divided by 60 months equals $16.66 a month that I effectively paid for the use of the computer over that period of time.
So from this perspective, it appears as though I did in fact rent the computer. The same argument applies to services as well as software and hardware. We are all renters. We are renting our bodies, our cars, our houses, etc.
So the next time you think about renting a product or service versus purchasing it outright think about the actual transaction that’s going on.
- What is my total investment?
- How long do I expect to get benefit out of this product or service?
I challenge you to run the numbers on both scenarios and then the best option will likely stand out from those results. It may in fact turn out over the long run that renting is better for me. However, purchasing outright may be better for you. Or even some combination of both. Just some thoughts from a guy with 16+ years in the consumer electronics business.