With the launch of Tesla’s Autopilot Full Self-Drive feature subscription service coming by the end of 2020, this could be the start of a shift in the way the automotive industry does business.
Elon Musk, Tesla CEO and Co-Founder, has topped lists including Forbes Most Innovative Leaders and Forbes World’s Most Powerful People. He is renowned as a forward thinker and visionary, one who people trust to know what the future will look like.
“I'm interested in things that change the world or that affect the future and wondrous, new technology where you see it, and you're like, 'Wow, how did that even happen? How is that possible?'" said Musk.
According to Musk, the future gives consumers options around subscription billing, allowing them to try new things with limited financial risk by allowing them to pay as they use. Tesla is already known as a leader in automotive vehicles and always being on the forefront of impressive, edgy technology, but this new feature-gating model might be the push the automotive industry needs to align their need for constant revenue with the consumers desire for more power over their finances.
Subscription based billing is not new to consumers, everyone from Spotify to Netflix to gyms have been using this model for a number of years. This allows customers to pay on a monthly basis for tools and services. This works well for businesses as well as consumers because it allows flexibility while allowing a growing customer base who are looking to try things with reduced risk.
An innovative spin on the subscription billing model is events-based billing. This is the next generation of billing for B2B SaaS companies, enabling customer-centric pricing. This allows customers to only pay for the specific actions taken, allowing businesses to bill based on any defined aspect of their data including videos watched, miles driven, or messages sent. Thus far, subscription billing models have not crossed over into the automotive industry.
Consumers have not seen much change in the automotive industry over the years. This has meant that as the economy crashes, so does the automotive industry, succumbing recessions and needing bailouts from the government over time. Without a strategic monthly revenue plan, car manufactures are susceptible to the ebbs and flows of the economy, but Elon Musk may have found a way around that. As the history of subscription billing has shown, this can be an extremely successful model for companies.
Events-based billing is something consumers have seen in their electricity and water bill, but the transition of this billing model into their everyday lives is something that SaaS companies are making a reality. Amazon Web Services (AWS) was revolutionary in events-based billing, allowing customers to pay for specific events. Companies like Twillio have taken this technology and improved the opportunities around billing. This technology has been available to larger companies, but now it is available to smaller platforms through the use of data analytic companies who use event metrics to bill. Events-based billing continues to solve problems some businesses didn’t realize they needed to solve, and it’s leading a change in the way people do business globally.
"The smartest people are constantly revising their understanding, reconsidering a problem they thought they'd already solved. They're open to new points of view, new information, new ideas, contradictions, and challenges to their own way of thinking," said Jeff Bezos, founder and CEO of Amazon.
As many leaders across the world are beginning to understand, events-based billing is the way of the future and the possibilities are endless. There are many ways things people use every day can be billed on an event by event basis:
- Consider the expensive Nike’s you have had your eye on for months. What if you only paid for every step you took in them? At that rate, there is little risk with the purchase and a solid company like Nike knows how to make a product you will enjoy and use often. For Nike, they have not only gained a customer, but they have likely gained more revenue than the shoe would have cost previously.
- The gym is another great use of events-based billing, imagine only paying for every time you used the treadmill or your workout machine of choice. This would drive consumers to the gym in droves because they are only paying for what they are using. The reduces risks for consumers and increases opportunity for revenue for businesses
- An outside the box events-based billing model is a comedy club that charges per laugh, assisted by facial recognition. This is something that already exists and has driven increased traffic to the comedy club and a higher value to their customers because the performers are held to a higher standard
- Pay per mile car insurance is an option that many people take advantage of, this puts the power in the customers hands while ultimately increasing revenue based on interest in customer-centric pricing
- Uber is an example of events-based billing that many are familiar with, paying per mile to get to a destination has been widely received by users globally
The true innovators are the ones who think outside the box. Subscription based billing is what is happening now, but events-based billing is the way of the future. Just ask Elon Musk.