Yeah but in this case, it’s a one time fee for a recurring expense. And the amount of money that comes in has to keep increasing over time semi-exponentially to be sustainable, or the costs need to be cut (you get worse service).
This is worse than cross subsidization which is doable if managed right.
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Which I see that you recognize here. This model works _realy_ well to make offering products sustainable. Distribution is the right word I suppose.
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> Yeah but in this case, it’s a one time fee for a recurring expense
Yeah it hides the actual cost of offering a service. Appealing to user's ideals, which in some cases is useful.
As someone who prefers one-time costs over reoccurring costs, I also understand that unless you can accurately bill me, its not a true model. While it's nice to save money when purchasing bulk, I prefer up-front costs for a sense of "freedom" and "completeness". I still think it's possible to sell accurately priced products with longer time frames.
The same distribution still occurs right, if I pay you up front, you have access to more capital, which can be more valuable compared to minimum short term payments. Therefore a tax is added to short term payment plans and/or a discount applied to initial payments/contracts.