More pricing tidbits

Posted on Thursday, March 9, 2006 by MegaZone

I said I’d post things as I pick them up, and I’ve been reading slogging through hundreds of posts over at TiVoCommunity.com were TiVo reps have been fielding many questions. From that I’ve picked up some more info:
- Current subscribers are unaffected. Payments continue as is.
- The new pricing will roll out next Wednesday, the 15th. Lifetime will go away on the 15th, or soon there after. Don’t expect it to be around after the 15th.
- If you sign-up for one of the new 1,2,3 year plans, when the plan expires you will continue to be billed at the same rate month to month. Or you can call and change your subscription to whatever the then current ‘service-only’ rate is, which will probably be less. (That’s the $12.95 rate today.) Personally I think that’s a little sneaky – it should auto-drop to the lower rate. This way it is a tax on the lazy or ignorant who don’t call, or know to call, to switch.
- You can still activate monthly service-only for $6.95 if you have an existing full priced subscription.
- The new pricing plans count as full priced subscriptions, so if you have one you can add another box at the $6.95 rate. (This is different from the trial last fall.)
- Service-only pricing will remain $12.95. Sometime soon there will be three new pre-paid options for 1, 2, and 3 year service-only plans added as well.

Note that if prices don’t change, you’d be better off going with one year then dropping down over a longer period if you plan to pay monthly:
2 years: 12 x $19.95 + 12 x $12.95 = $394.80 vs. 24 x $18.95 = $454.80 — $60 more!
3 years: 12 x $19.95 + 24 x $12.95 = $550.20 vs. 36 x $16.95 = $610.20 — $60 more!

Pre-paid up front works out:
2 years: $224 + 12 x $12.95 = $379 vs. $369 — save $10
3 years: $224 + 24 x $12.95 = $534.80 vs. $496 — save $65.80

Of course, there will also be pre-paid service-only plans, not yet announced, which could shift things around even more.

I hope that helps. Feel free to ask questions.

About MegaZone

MegaZone is the Editor of Gizmo Lovers and the chief contributor. He's been online since 1989 and active in several generations of 'social media' - mailing lists, USENet groups, web forums, and since 2003, blogging.    MegaZone has a presence on several social platforms: Google+ / Facebook / Twitter / LinkedIn / LiveJournal / Web.    You can also follow Gizmo Lovers on other sites: Blog / Google+ / Facebook / Twitter.
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  • tmesser
  • velvet_frogg

    Ok, question… How do we get our lifetime back?? I think if you’ve purchased lifetime in the past, then you should still be allowed to do that in the future.

  • megazone

    Very unlikely to happen. And if it does come back it will DEFINITELY cost a great deal more. They got rid of it because it was too good a deal, and they considered keeping it at a higher price – but decided the higher price was too unttractive and not worth offering for the few people they felt would pay it. (They won’t reveal the price, but I’d bet it was at least $499, and probably higher, based on the new pricing curve.)

  • velvet_frogg

    Well if I paid 450ish for 3 years and then 450ish again after the 3 years are over, that’s 900 for 6 years. 1200 for 9 years. I do not think so. I can tell you right now, I wouldn’t buy another unit. That’s too expensive in my eyes for something that shouldn’t have ever been that high to begin with. Some things shouldn’t be a “service” and I’ve always thought so. Season pass should just come with it. The guide itself, should be the only thing that someone should have to have a service for, IMO and that isn’t worth what people are paying for a service. It’s a glorified VCR and with VCRs you don’t pay monthly. You buy it and it does what it’s supposed to do. You should be able to buy a TiVo and it just do what it’s supposed to do. You shouldn’t be continusly raped in the ass to use it. I mean, with these new plans you’re paying for the service and not the TiVo, what happens if after 3 years, you don’t sign up for the service anymore, do the TiVo police come and take your unit away? Or are you able to keep it or then purchase the box somehow? The more I thought about this, the more I got upset. heh. Maybe I’m just too sick and anything could upset at this moment. I need more dayquil I think.

  • unteins

    Well, there are options out there that don’t require service. Currently, those items are PCs with various Media Center softwares, some free, some not.

    What Tivo does is no different from say a cell phone company or even a video game console maker. They lose money on the device and make it up with services and add-ons

  • unteins

    If you sign-up for one of the new 1,2,3 year plans, when the plan expires you will continue to be billed at the same rate month to month. Or you can call and change your subscription to whatever the then current ‘service-only’ rate is, which will probably be less. (That’s the $12.95 rate today.) Personally I think that’s a little sneaky – it should auto-drop to the lower rate. This way it is a tax on the lazy or ignorant who don’t call, or know to call, to switch.

    If this is true then I won’t be buying a new Tivo through their service plan. I don’t sign up for anything that I have to cancel, modify, whatever a year later. Its ridiculous and sleazy. It puts Tivo in the same category as any one of those you get a free whatever if you sign up for our 30 day trial if after 30 days you hate it call and cancel companies.

    They need a visit from Google to have their Don’t Be Evil motto beaten into them.

  • velvet_frogg

    Well… I don’t play video games and everyone at work laughs at me because my cell phone is “bulky”. It’s only about three years old. lol.

  • rogueonion_8

    With the new pricing structure I believe you own the box after paying the higher monthly fee for whatever length of contract chosen. If you pay the highest price for 1 year, the box is yours afterwards. If I’m wrong please let me know.

  • brakusjs

    In other words, you’re just too lazy to call. They will tell you up front you need to call to cancel within the first 30 days, and they tell you this up front. I really don’t get why customers call companies “ridiculous and sleazy” when it is totally the customer’s responsibility to cancel — and was told to do so up front. If the customer forgets to cancel it’s their own fault for not paying attention.

  • klia

    So, in theory, if you’re an established month-to-month customer, and you bought a used box off eBay or a friend, or something, you’d still be able to add that box at the current $6.95/mo. price?

  • aizjanika

    Service-only pricing will remain $12.95. Sometime soon there will be three new pre-paid options for 1, 2, and 3 year service-only plans added as well.

    That’s what I was wondering. And if we get a second, will it still be only $6.95 for each additional unit?

  • unteins

    No, if the company offers a “30 day trial” that automatically renews, then the inital offer is predicated on a falsehood.

    Therefore, I am well within my rights to see them as sleazy and ridiculous.

    If I sign a 1, 2 or 3 year contract, the contract expires and a new contract is in order. A sleazy company offers me the same pricing I’ve always had, even if they offer the same product at a lower rate if I ask. That is scummy no matter how you look at it. How would you feel if you paid for LJ and then they decided not to charge new members for the same features you get by paying, but they keopt billing you.

  • megazone

    It wouldn’t be the same price to renew. The bundle pricing includes the box, and you own the box. After the first term is over you’d need just the ‘service-only’ subscription – the $12.95/month, or the to-be-announced 1, 2, or 3 year pre-paid agreements for service-only. The box is always yours, it just isn’t going to be doing much of anything without a subscription. Just like a cell phone. I can buy a phone, but unless I pay for service I just have a paperweight.

    TiVo loses money on every box they sell. Going from their latest figures, everytime they sell a box it costs them about $160 overall to acquire that customer. And it has been higher than that. It costs them approximately $2.25/month to provide the service. And then there is all the overhead involved in running the company, developing new products and features, etc. Take the 80 hour box and lifetime, total revenue is about $368 for TiVo. The value is amortized over four years. With the cost of acquisition and 4 years of operational expense, that’s $268. TiVo is left with $100 operational profit – minus the shipping costs, since shipping is free. What’s left goes toward the overhead of the company – and that’s just not enough to be financially viable. And if the box lasts more than 4 years, that supposed operational profit shrinks – and my first S2 is still running after 4 years, my second S2 is close to 4 years, and my S1 is well past 4 years – all with lifetime. (All in other homes now, I’ve sold them.)

    To *not* have a subscription model the units would have to cost hundreds of dollars more than they do. Consider the Sony standalone DVRs (non-TiVo), they don’t have most of the features of TiVo, have a basic programming guide (when it works), and the lowest MSRP I recall was $500. The old unit+lifetime total value was too low to be viable, even if you rounded it to $400. They’d need to charge at least $500 or $600 to make it worth while.

    If you really want just a ‘glorified VCR’, then TiVo isn’t the best option. There are many simple DVRs, and even more DVD Recorders with built-in DVR, which work just like glorified VCRs. You set them to record by time & date, or use VCRPlus+. Some of them use the simple TVGuide/Gemstar programming guide that is carried in broadcast signals – if your provider doesn’t block it – and it goes out 3 days. You can also buy the Toshiba or Pioneer DVD-RW TiVos and use TiVo Basic without paying for any subscription.

    TiVo is a premium product where the real value *is* the service – the extended Guide Data, the software features, networking features, HME, TTG, etc. They’re not pursuing the basic DVR market, at least not at this time. That market is too glutted with cheap, basic products – TiVo’s market approach is to differentiate themselves with their features.

  • megazone

    That’s correct. The box is yours once you’re met the commitment you’ve signed up for.

  • megazone

    Yeah. I understand the business aspect. It is very similar to rebates – a lot of people forget, or just don’t bother, to send in a rebate. Every rebate that goes unredeemed is added revenue to the company. With this anyone who doesn’t notice their initial contract is up starts getting billed at the old monthly rate, and until they notice and do something about it they pay more. I think that is sneaky and dishonest. The old contract is up, the user has paid for the box under that contract, they are effectively now ‘service-only’ and the honorable thing to do is to start billing them at the current ‘service-only’ rate.

    Now, I could bend a bit if there was proactive notification when the original contract is expiring. “Your TiVo service contract expires in 30 days. If you take no action you will be billed monthly at the contract rate of $xx.xx. If you wish to sign up for a new service contract, please call 1-xxx-xxx-xxxx or visit us online at http://www.tivo.com/xxxx”

    But if the user is just expected to rememember when their year, or two, or three is up – that’s not cool.

    Of course, if they prepay for three years, there are good odds their credit card won’t work when they go to start charging monthly anyway. :-)

  • megazone

    I don’t think it is so bad when a company makes it just as easy to cancel as it is to sign up. And when there is some notice – “Your trial expires in 2 days. If you take no action it will auto-renew at the monthly rate of…”. But I’ve seen too many companies that make it very, very easy to sign up – then a pain in the ass to cancel. You can sign up online in minutes – but to cancel you have to call, during business hours, navigate a phone maze, and then have to argue with some dipshit who is paid to keep you using the service and won’t just cancel your account without hard selling you. That’s sleazy.

    For real short-term trials it isn’t so bad to remember the cancel. But when something goes on for a year, or two, or three – then yeah, there really should be a reminder to the user that it is about to expire and they’re about to be billed, because it isn’t fair or reasonable to expect someone to mark their calendars out that far and just remember that’s going to happen.

    It is just good customer relations and the difference between doing what’s minimally required and trying to maximize revenue, and being a vendor that treats their customers as their most important asset. A little goes a long way.

  • megazone

    Correct.

  • megazone

    Yes, the multi-unit discount will still be available.

  • tmesser

    I’m guessing you don’t have a cell phone then, since every cell phone company would fall into your definition of “sleazy.” When your one- or two-year cell phone contract is up, you keep that price, number of minutes, features, etc. unless you call them to ask for something different. You’re not tied into a commitment anymore, but if you don’t call to change, you’re stuck with what you’ve got.

    It’s only sleazy if you don’t read the fine print. “Buyer beware,” and all that.

  • unteins

    No, this is not totally true.

    In the world of cell phones, your old plan may be better than any new offerings. So it isn’t necesarrily the case that getting a new plan is better.

    In the Tivo case, the only difference between the service under contract and the service after it expires is the price, and that’s what makes it a dirty, nasty, dishonest thing to do.

    Especially if you take the case of someone who buys 2 Tivos under the contract scheme and then in a year is paying $19.95 x 2 instead of $12.95 + $6.95

  • megazone

    I have one – I don’t have to like the way they handle the contracts. I do think it is sleazy if they don’t notify the user than the contract is up. I certainly understand why a company wouldn’t, but I think that’s a bad way to do business. It is deliberately preying on your customers and hoping they miss the expiration.

  • klia

    Thanks for clarifying.

  • aizjanika

    Thanks. That’s good to know. I’ve almost got my husband talked into getting a Tivo for upstairs. (It’s the TV he and my son use the most.)