Are "Free" Upgrades Fair?

How do clients react to being automatically moved to something for which they have not asked. If this is a ploy to charge more later, then I suspect the companies utilizing these strategies are going to have at least come customers follow closely the evolution of prices....


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I am writing this article from the perspective of being a customer and a pricing consultant. Sometimes the two sides are at conflict as outlined below. I have had two companies with whom I have done business with for several years come forward with similar pricing tactics. One of the companies is a credit card company and the other provides car insurance. Yesterday, I opened my bills to find that both companies were apparently giving me something for nothing. The credit card company is providing a series of upgrades to their travel insurance and loss damage waiver for rental cars. They are not charging me for this and are automatically upgrading me to the new card with these added benefits. If I do not want this new card then I had until June 20th to let them know otherwise (I did not open the letter until June 29th). The insurance company moved me to a deluxe offer in which I have access to certain benefits that I previously did not have access too (i.e. replacement car if mine is in for repairs). In both cases I was suspicious and a little perturbed. I felt that I was being moved to something that had benefits that I had not requested. My suspicion is that I will end up paying for these benefits but not until my next renewal. In other words what is free today will be charged for tomorrow. As a pricer, I have mixed feelings about these tactics. On the one hand, I suspect they will work and that the companies will make more money by deploying these tactics. Not enough people are paying attention to notice this sleight of hand. On the other hand, I question the impact on the relationship of automatically moving customers to something for which they have not asked. If indeed this is a ploy to charge more later, then I suspect the companies utilizing these strategies are going to have at least come customers watching carefully to see if indeed that is the case. One cable company deployed this strategy several years ago and it blew up causing them great embarassment and a lot of business. They moved customers to an upgraded offering "free" of charge, but then 3 months later started charging for the formerly free offering. Even before a customer assesses the value of the offering, they want to be certain they are being treated fairly. Fairness is vital to pricing. Pricers are walking the razors edge with free upgrades with the intention to charge more later and better be sure they understand the ramifications. Speaking strictly as a customer here.....I will be watching....and if I feel ripped off, then I will be moving my business......I've been considering some other credit cards for a while....maybe this will give me the impetus to move!