The real cost of ownership and how South Africans can subscribe to a better life

You own your phone, you own your TV, you own your fridge, and pretty much every appliance and piece of tech in your home. But have you calculated how much debt and hardship you had to incur to call yourself an owner of these products? Have you ever wondered how much value you actually get out of these products before you upgrade to the next best thing?

As we cycle through all our appliances and devices and incur even more debt to stay ahead of the technology curve, there comes a point where it is simply not financially sustainable to continuously own all these products. Not only that, the barrier to entry for this lifestyle is so high that most South Africans cannot enjoy the luxury and convenience of these products.

According to Mishaan Ratan, CMO at on-demand subscription platform Rentoza, ownership is like a north star for people in South Africa. “What people don't completely understand is that ownership really is not the endpoint, ownership actually opens the doors to a multitude of other factors that come with owning an asset. These could be factors such as insurance, maintenance, as well as depreciation.”

As one of South Africa’s fastest-growing e-commerce businesses, Rentoza developed a model to drive access at affordable rates and flexible terms to essential items, such as consumer electronics, appliances, and baby goods. By simply paying a subscription fee, these products can arrive at your door and into your life with insurance cover and maintenance costs built into the subscription

Why is subscription better than ownership? Ratan believes subscription is pure utility and real flexibility. “You access what you want for the time in which you need it to deliver the outcomes you require. The real benefit comes in when your needs change. Either you need something different or no longer need the product. This is where the flexibility of subscription really impacts your life. You have total freedom to change, upgrade, downgrade, or if you really want to return the product. Access is underpinned by pure flexibility. No long-term commitment or financial burden.”

Ratan also points out that a subscription eliminates much of the hassle associated with traditional credit. As a non-credit model, he says, “The benefit to consumers is that there is another option for people to access products without having to borrow money to afford something that really can’t fit in the household budget.”

According to the latest data from First National Bank, it takes an average of five days for a middle-income consumer to spend up to 80% of their monthly salary. With the prices rising exponentially, Ratan questions who has the income to spare on necessary quality of life-improving consumer goods anymore.

It was revealed recently that even tech giants like Apple are looking to implement a hardware subscription service for the iPhone and select Apple products, which Ratan says provides more proof that the concept is a consumption game changer.

For Ratan, this is a concept that has the potential to completely revolutionise the way South Africans consume products. However, he notes that education is the biggest hurdle. “People think subscription payments are like instalment payments. They completely aren't, so you pay a lower cost of access, but you never pay for the product, you always change or upgrade. The model truly doesn't exist in the market, so we have some convincing to do and some bubbles to pop,” says Ratan.

In the next five years, he believes subscription will be the most common route to access services and products in the market. According to a 2021 report by Telecoming, a digital service monetisation technology firm, the subscription economy will grow 14% each year and exceed $820 million in 2025. In 2021, South Africa accounted for 11% of the market for subscriptions in Africa and the Middle East.

For Ratan, the growth of this financial model is obvious because the benefits are so clear. “You get a product in your hand for a tenth of the price and can immediately start using it to deliver the outcomes you desire. The flexibility allows you to decide if you want to keep the product, upgrade it to something better or downgrade when you need to while still maintaining your lifestyle.”

The subscription model has expanded to a range of categories including some which are unexpected like home dinners and even cars. Pretty soon, Ratan says South African consumers will be able to subscribe to the lifestyle they want. “Ownership as we know it is a thing of the past. To be completely honest there is nothing you shouldn't subscribe to.”