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Havish Gupta

Figuring Out • 9m

How Memberships are Indirectly Profitable! If you look at any membership in any industry, you might think the company is losing money because of the perks they offer! But that's not true. Let’s take airline memberships as an example. Imagine you have two similar flight options, say Indigo for ₹4000 and Vistara for ₹4500. Without any perks, you’d most likely choose Indigo. But since Vistara offers perks like membership points and complimentary food, you might prefer Vistara. For you, it’s just an extra ₹500, but for the airline, not offering those perks could make them losse ₹4500 in revenue. Now, for an airline operating a 70 ton plane, carrying one more person doesn’t significantly increase costs. So, while Vistara might make a smaller profit (or even a loss) on a single ticket due to the perks, they still earn more on a per-plane basis. This same concept in some ways (not every time) applies to memberships across all sectors and also help increase customer loyalty and revenue.

8 Replies

Replies (8)

Arcane

Hey, I'm on Medial • 9m

Nice explanation Havish

1 Reply

Anonymous 3

Hey I am on Medial • 9m

I would go for Vistara in that case for sure but only if they were as punctual and great at their jobs as indigo. Sometimes no amount of benefit would make you continue using a service or product that you didn't feel happy with, the core offering i mean.

1 Reply

Anonymous 2

Hey I am on Medial • 9m

Yeah true, if the expense is already gonna happen then paying a little more just in case you might need those perks or could share it with your loved ones, it would help.

1 Reply

Anonymous 1

Hey I am on Medial • 9m

True and a good example too but not every company needs a membership thing. I mean take lenskart for example. How mnay breaks are you going to experience to use their membership to the fullest? How mnay broken chashmas to validate that expense in your mind?

1 Reply

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