Cash is a call option with no expiration date, an option on every asset class, with no strike price. A person's willingness to give up that optionality by signing a contract requiring a stream of future payments (a subscription) is inversely correlated with their wealth.
A person of limited means will pay more on a unit basis to maintain the optionality of cash. Examples of that at work are prepaid phones and dollar stores. Prepaid mobile plans were invented because significant numbers of people did not pass credit/valued the optionality of cash.
Convincing a wealthy person to commit to a subscription and give up optionality has a cost that is part of the customer acqusition cost. That cost can be part of sales and marketing and/or increased cost of goods sold. Subscription models can work, but they come with tradeoffs.
If you are wealthy there can be convenience benefits for a subscription and there can be other benefits like a hidden loan for something like a mobile phone subsidy. A subscriber can also get more on a unit cost basis since the provider can plan better for the future. It depends.
A business can pay too much to acquire any customer, whether or not it is a subscription. Bill Gurley wrote an essay on this point years ago that is still on the money today. abovethecrowd.com/2012/09/04/the… Getting customer acquisition cost tradeoffs right is both a science and an art.
"MoviePass Proves Great for Customers, Disastrous for Investors" wsj.com/articles/movie… "The company lost $107M, earning just over $1M from marketing deals and $47M from subscriptions." bloomberg.com/news/features/…
