Are you familiar with "bundling"? If not, you soon will be. Intuit is going to "bundle" QuickBooks Basic Bill Pay into every Simple Start, Essentials, Plus, and Advanced subscription of QuickBooks Online.
Depending on where you are located in the U.S., you may or may not be familiar with 'Sonic' Drive-in. In 1953, Troy Smith purchased an old Root Beer Drive-in called the The Top Hat on North Harrison in Shawnee, Oklahoma. In 1959, he opened, a mile south of the original location, a flashy new Sonic Drive-in with a speaker system to take orders and carhops on roller-skates. The Drive-in's slogan was "Service with the Speed of Sound." Before he died in 2009, Sonic Corporation owned or operated more than 1300 locations across much of the United States. My dad and Troy were lifelong friends, but the last time I saw him was at my father's memorial service in 2000.
When I was growing up, Sonic Drive-in offered four different 'hamburgers', each differentiated by what spread and toppings they had on them. The only difference between a #1 and a #2 burger was whether it had mustard or mayonnaise on it. If you wanted a cheeseburger, then you ordered a #1 or #2 Cheeseburger, and as you might expect, there was an 'up-charge' for the cheese, as there was at most restaurants serving burgers.
I tell this story to explain the concept of "bundling." In the case of Sonic burgers, long after Troy Smith passed away, the definitions of a #1 and # 2 changed using the concept of bundling. The days of a #1 or #2 burger were gone, they became a #1 or #2 cheeseburger, and of course, that came at the higher price of the cheeseburger. If you didn't want, or like cheese, on your burger, you had to begin ordering a #1 or #2 cheeseburger, "hold the cheese." But even though you let Sonic 'keep the cheese', they still charged you the full price of the Cheeseburger. That, my friends, is "bundling".
More and more, we are seeing vendors 'bundle this and that' into a package at a rate that includes the cost of everything together. Even if you don't want a specific component, even if you can't use it, or won't use it, your price remains the same.
Intuit has just announced an example of 'Bundling.' Rather than their QuickBooks Online subscribers opting to add 'QuickBooks Bill Pay' to their QBO, Intuit is now going to 'bundle' it into every future subscription of QBO Simple Start, Essentials, Plus and Advanced. While it is true that QuickBooks Bill Pay 'Basic' has had a $0.00/month subscription price, and Intuit has not said that their inclusion will add an extra penny to the various QBO subscription prices, what they are likely counting on is that if users don't have to choose to add Bill Pay, they will more easily choose to 'use it.'
Therein comes the additional revenues from 'bundling.' Back to the burger comparison. A lot of people never chose to 'add cheese' to their Sonic #1 or #2 burgers, but the added revenue of turning the burger into a cheeseburger 'by default' meant most people would pay for the cheese without complaining, and if they don't want the cheese, then that's the best 'revenue option of all'. They still get charged for the cost of the cheese, but Sonic doesn't have to pay for the cost of the cheese. Can you say 'higher profit margin!
It seems Intuit is counting on the convenience of having Bill Payment through QBO will increase the use of their Bill Payment feature and perhaps return some users of other Bill Payment options, 'like Bill or Melio' back to QBO alone. And when you get used to having that convenience, you are likely to use it more and more. Soon you realize the cost of the $0.50 charge for each ACH bank transfer over the 5 free included in 'Basic' when you are issuing more than 25 additional payments per month, so you might as well upgrade to "Premium".
Lo and behold, it's the 'Burger Basket' concept, bundle the burger (cheeseburger) with some fries and a soft drink, and charge just enough less than the total of each thing individually, and you hook your customers on the "Meal Deal." And then, give them the option to size up, from a small fry to a large, or a small soda to a Jumbo-44-ounce, and that's the impact of "bundling." Before long, those 'Super-sized Meal Deal Cheeseburger Basket consumers find themselves at the top of the bill pay offering, ordering up the 'Elite' option.
I have nothing against "Intuit Bill Pay". We've had bill payment options in QuickBooks for a long time. Intuit first entered into an arrangement with 'Bill' (aka: Bill.com) to offer bill payment functionality in QBO, then they switched deals and offered 'Melio' as their bill payment feature.
Of course, the natural assumption is that 'everyone' wants to pay their bills electronically, I mean, when is the last time you placed a check order through Intuit for QuickBooks compatible checks? Oh, just a few weeks ago, in my own case.
I still like checks, I like to sign checks, I like to go to the post office and see the staff I have been letting handle my mail for the last 50 years (even if some of them have passed on), and yes, I love the idea of paying the Post Office another 5 or 10 cents to mail a check to a vendor, because it helps insure all those P.O. workers get their retirements.
So, when your new QBO clients ask you, "What's this Bill Pay thing that Intuit is telling me is now 'part of my subscription' at no extra cost," you can ask them if they want you to help set it up... "with or without cheese?"
And if you are saying, "I'm glad we don't have Sonic Drive-ins in my area," I rest confident that some other fast food restaurant in your area has already done similar bundling, even if you didn't realize it.
By the way, I'm sure that some of our readers will tell me that I'm just too old and not with "what is happening in the techno world of today." A few will shake their heads in silence, saying, "Murph's right." And maybe, just maybe, one or two of you will post a comment to this feature at the bottom of the article, either in agreement or disagreement. The option is yours, but either way, let me know what you think about "bundling". And also if 'you prefer cheese on your burger or not.'
Disclosures:
Content (including graphic images) based on Intuit source materials, including media source content from Intuit websites and the QuickBooks Online 'help'. Intuit content adapted by Insightful Accountant from Intuit sources is furnished for educational purposes only.
As used herein, QuickBooks Online (and all related SKUs), and QuickBooks Bill Pay refer to one or more registered trademarks of Intuit® Inc., a publicly-traded corporation headquartered in Mountain View, California.
Sonic, Sonic Drive-In(s), and "Service with the Speed of Sound" are registered and copyrighted trademarks of Sonic America's Drive-in Brand Properties, LLC, a subsidiary of Sonic, Inc., whose parent is Insipre Brands, headquartered in Atlanta, GA, with majority ownership Roark Capital Group.
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