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Selling Products Without Optional Safety Equipment

BY Larry E. Coben
October 01, 2016

The American consumer is bombarded with TV, Internet and print advertisements extolling the features of thousands of products ranging from motor vehicles to smartphones. Today's marketing practices focus on the most distinct features of each product and barely mention that many of these features can only be acquired if the consumer selects the most expensive version of the product.

In marketing parlance, some have referred to this as the “freemium” business model (a combination of “free” and “premium,” Kumar, V., “Making 'Freemium' Work,” Harvard Business Review, May 2014). Sellers manufacture a base product and then offer add-ons or optional features that jack up the purchase price by a significant margin.

Here is one such example taken from Subaru's current website: “'EyesSight' is an extra set of eyes on the road, and if need be, an extra foot on the brake when you drive. When equipped with Subaru EyeSight, the Forester, Impreza, Legacy, Outback, Crosstrek and WRX received the highest rating.” The base price of the Legacy is $21,745, but it does not come with EyeSight. To acquire a Legacy with EyeSight, the purchaser must buy the Legacy 36R Limited model at a base price of $29,945, and then purchase the EyeSight option, which adds $3,090. Thus, the total price for a Legacy with EyeSight is $33,830 ' $12,000 more than the base price.

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