Avoid Car Rental Terms when Signing up for Cloud Services

cloud servicesWhile continuously trying to differentiate between service quality and product choices, car rental companies have mastered pricing schemes for their optimal gain.

One no brainer scheme they have successfully used is the unlimited mileage option. It gives peace of mind to the consumer. And it is easy math for the rental company. Agencies know opportunity cost of their fleet being out of the rental lot hence unavailable for others to rent. Additionally, they figure the maximum mileage one can put on a rental per day, and rely on the fact that most consumers will average much less - as evidenced by the historic data they aggregate. They then carefully apply the right heuristics to pick daily/weekly rates to assure handsome profits.

It does not stop there. They ask the customer whether he would opt to return the car with a full or empty tank. While the customer may think he was given a choice, this always turns out to be a no-win proposition for him. Those who opt to return the rental with a full tank are likely to be late to catch their flight or simply too tired, or lazy to fill up before pulling into the return lot. Others who know they will drive long enough thus opting for returning empty for a pre-agreed surcharge are likely to have some gas left in that tank. Either way, this translates to more profits for the rental car companies.

We see similar pricing schemes adopted in Video Conferencing / Visual Collaboration / Teamwork like offerings from the cloud nowadays. The package bundles may seem like a deal because they lure the customer in with unlimited hours of usage per host coupled with excessively large numbers of maximum participants. The trick is to get the consumer to buy up capacity that is quite unlikely to be fully utilized. You think you got a bargain, but it is not!

Taking advantage of the trained minds of the consumer with car rental terms when selling cloud services? No, we do not think this will last especially when the service is coming from the cloud, with all the elasticity the cloud brings to actual cost of goods it is only a matter of time before the consumer catches on. In the cloud, resources are consumed to the extent they are utilized. They are not pre-manufactured like the cars in a rental car fleet would be. No cost of manufacturing. No cost of storage. No opportunity cost of renting or not renting. Unlimited inventory is just waiting to be spawned at any time - yet only when needed.

Benefits of the cloud can only be reaped by the end user to the extent that they are passed to the consumer by the service provider. This is only possible by charging customers for their real usage, instead of forcing them to bundle capacity that they will only end up using a portion of.

Written by Osman Duman

Osman Duman

Osman Duman joined eZuce as Chief Product and Operating Officer in 2014 after serving four years on its board of directors. At eZuce, Duman oversees all aspects of product innovations, business enablemenet, customer satisfaction and investor relations. Duman was with Karel Electronics from 2009 through 2014 as executive vice president & CMO responsible for Karel’s telecommunications business worldwide. Duman also served for six years as Ulticom’s senior vice president and CMO, where he led sales and marketing, earning the company the #1 spot in worldwide telecommunications signaling market. Previously, he was an area vice president and general manager at Lucent Technologies, responsible for softswitch based VoIP solutions. His earlier career history included executive positions in two successful U.S. telecom startups, MassMedia Communications and NewNet, as well as lead engineering positions at Motorola, GTE and ITT Telecom. Duman earned BSEE and MSCS degrees from M.E.T.U. in Ankara, and completed Executive MBA program at M.I.T. Sloan School in Cambridge, Massachusetts

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