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Flat Rate Plans for Burgers to Books Appeal to Customers

Posted on: Monday, 25 July 2005, 18:00 CDT

Jul. 25--A few years ago, retailers took Burger King's lead and let consumers "have it their way." But now a growing number want something simpler.

Many retailers are switching to flat-rate plans, saying that busy consumers have complained that custom-fit plans are hard to figure out. Some companies are hoping for a gym membership effect -- where they continue to collect fees after interest wanes.

A few examples:

--Amazon this year introduced a flat-rate shipping plan called Amazon Prime. Pay $79 for the year and get unlimited two-day shipping and discounted $3.99 overnight shipping. Usually, two-day delivery costs $9.48 and overnight costs $16.48.

--Blockbuster offers flat-rate fees for in-store video and game rentals and its online rental service. Customers pay anywhere from $14.99 to $37.49 a month, depending on how many movies they want at once and whether they rent in the store or online.

--Cellular companies have long offered pay-as-you-go options and flat-rate unlimited plans. Now other phone providers offer similar packages. For instance, Time Warner Cable's digital phone package can be as low as $39.95 for unlimited calls. And as a way to further simplify cell phone bills, Verizon Wireless has stopped charging customers for a partial month when they sign up. New customers get their regular number of minutes for the month in which they sign up, regardless of when they start their service.

The trend is even extending into the service sector. Local day-care chain Righttime Kids has simplified payments by offering people a flat $7.50 an hour pay-as-you-go plan or upfront blocks of time that can be as cheap as $4.50 an hour. Customers can use their time whenever they want. There are five Righttime Kids locations: in Wake Forest, Huntersville, Cary and two in Raleigh. Additional locations will be coming in Raleigh, Cary and Durham.

Don't the companies lose money?

"It's no secret that Wall Street is not a fan of that," said Amazon spokeswoman Patty Smith. "But our customers are, and we feel that by doing what's right for the customers, it will pay out for the company in the long term."

Do the plans work?

Blockbuster spokeswoman Jerianne Thomas said Blockbuster's flat-rate online service has already signed up 750,000 subscribers.

Why is this shift happening?

"It's got to be a reflection of the competitive issues that are out there and trying to be the first brand people choose," said International Council of Shopping Centers spokeswoman Patrice Duker. "Make it easy, make it fast."

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Source: The News & Observer

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