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Havish Gupta
Figuring Out • 8m
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.
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