Fuel Rod swaps now $3 at WDW

tribbleorlfl

tribbleorlfl

Well-Known Member
flynnibus said:
Your use case is fine.. it just isn't the main one driving the business model... but it is why the business model suffers at a location with frequent return visitors. When you keep returning with the same prior purchase... you buck the model. When it's a place like WDW with a lot of locals and repeat APs who do exactly what you did.. the company then faces long term recurring costs with no new revenue. You always assume a portion of the customer base is motivated enough to do that... but as long as its within your target % range.. you've accounted for it.

The product strategy assumes users will buy and use the device only a short period of time.. and the refill 'feature' is intended to justify the higher initial selling price (and defeat concerns over quality and capacity). It allows them to boost their ASP, reduce their product cost, and provides a marketing angle vs the alternative solutions.

I bring all this up because the above use case doesn't go away just because their are alternatives people can bring their own. That alternative has always been there... this product's strategy has always been driven by 'immediate need'. The problem is they lose the big "FREE" tag which buyers really latch onto. This change is the simplest to implement.. but I do think there are better hybrid solutions that wouldn't have hurt their marketing to the main use case as much.
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In my opinion, their business model actually IS dependent on repeat users, as getting a steady supply of FuelRods back, batteries that were completely paid for by the customer, limits the amount of units the company has to pay for just to have an adequate supply of swaps available.

From a pricing perspective, I also think it would be relatively easy to model in future swap costs into the up-front price to achieve required profitability. FuelRods have an estimated 1000 mAH battery capacity. With a standard 5v charger and my local utility rates, we're literaly talking a fraction of a penny in energy cost per charge. And how much labor cost are we talking, per charge, to collect spent and load charged FuelRods into the dispensers and then plug the spent rods into a USB charger? A given FuelRod would likely hit its useable cycle life before recharge costs would blow away profitability.

The only threat to their model would be the land holder who contracts with FuelRod to allow their machines to demand a higher piece of the pie. Honestly, this seems like their vendor contract was up for renewal and Disney wanted more out if the arrangement. Timing checks out with all of the other pricing increases we've been seeing on property.
 
flynnibus

flynnibus

Premium Member
tribbleorlfl said:
In my opinion, their business model actually IS dependent on repeat users, as getting a steady supply of FuelRods back, batteries that were completely paid for by the customer, limits the amount of units the company has to pay for just to have an adequate supply of swaps available.
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And that's why they use the cheapest crappiest battery packs. They are intentionally 'throw away'. You can't count on a high return rate, and that's why they don't use high capacity, high cost battery packs 'that don't even need to be swapped in a day's use'.

The 'throw away' (no recycling/battery tangents plz..) aspect is built into the model.

tribbleorlfl said:
From a pricing perspective, I also think it would be relatively easy to model in future swap costs into the up-front price to achieve required profitability. FuelRods have an estimated 1000 mAH battery capacity. With a standard 5v charger and my local utility rates, we're literaly talking a fraction of a penny in energy cost per charge. And how much labor cost are we talking, per charge, to collect spent and load charged FuelRods into the dispensers and then plug the spent rods into a USB charger? A given FuelRod would likely hit its useable cycle life before recharge costs would blow away profitability.
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You're looking at the wrong end of the stick. The issue isn't the ongoing cost. The issue is always revenue first. Selling 10,000 fuel rods and having 10,000 happy customers and very low costs is all fine... but if you did that once, and couldn't sell any new ones.. you'd still be broke and out of business. They always need new customers... they can't survive on margin of a single sale that lasts for years. They want single sales that people likely need to repeat buy at a later date.

Every business now is driven by the idea of 'recurring revenue' not gross margin. It's why everything under the sun is offered as a subscription instead of just single purchase you use longer, etc.

Fuel rods had the model of a simple, low barrier of entry, disposable product. The whole convenience factor is the the spice behind the sale.. not the quality, not the longevity, etc.. It's all about scratching an itch. The cheap, "can afford to just replace it" unit is what enables them to maintain a simple low barrier.. and not require things like deposits, burden the user with returns, etc.
 
SoFloMagic

SoFloMagic

Well-Known Member
The entire point of a fuel rod is that you can swap it... this means that it doesn't matter if the Anker one has 10000 mah or whatever. You don't need the big battery - you can just swap this out out four times instead! I don't understand how people miss the point on this. You aren't buying a ty battery for $30. You're buying a ty battery that can be swapped out (read:instantly recharged) in any disney park, at any time. You're paying for the service, not the product. I think Disney understands this and realized they'll lose the lawsuits (you can't say "free unlimited swaps" at time of purchase then start charging $3).
 
flynnibus

flynnibus

Premium Member
If they want to charge the answer is easy. They discontinue the fuel rod program and simply replace them with "fuel rod+" program with a new ToS.

Nothing says disney has to keep running the old product and program.
 
Indy_UK

Indy_UK

Well-Known Member
They reverse course of these stupid fuel rods but not replacing photopass photographers with automated machines. Stupid
 
O

orion54

Active Member
SoFloMagic said:
Exactly, it's the old backlash/$$ equation.

The headaches were not worth the dollars in this case, especially given the lawsuit having the potential to throw a y into the formula!
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I think the lost of $$ since most people who own FuelRods would just throw them away and buy better ones also was a big factor. I think the lawsuit alone wasn't enough. The fact that Disney wouldn't make any more money was the bigger factor.
 
SoFloMagic

SoFloMagic

Well-Known Member
orion54 said:
I think the lost of $$ since most people who own FuelRods would just throw them away and buy better ones also was a big factor. I think the lawsuit alone wasn't enough. The fact that Disney wouldn't make any more money was the bigger factor.
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Disney wouldn't lose any money from people throwing their fuel rod away. The sale already happened and they have their money. If anything, throwing them away would save Disney/FuelRod money, as they'd have to service the machine less often.
Between the lawsuits and the ed off fans, it was a no-brainer to stop the fee change.
Long-term, I wonder why they don't put a rfid chip on/in rods and give you 10 exchanges when you buy it - then sell 5 more for $10 or something - the rod changes, but it knows who has that one checked out (like Netflix dvds). Maybe the management of that would cost more than it would make.
 
Tom P.

Tom P.

Well-Known Member
SoFloMagic said:
Disney wouldn't lose any money from people throwing their fuel rod away. The sale already happened and they have their money. If anything, throwing them away would save Disney/FuelRod money, as they'd have to service the machine less often.
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But if people return the Fuel Rods, Disney can recharge them for a fraction of a cent instead of actually having to continue to place newly manufactured units in the kiosks. Seems like that would be a major savings for them.
 
Phil12

Phil12

Well-Known Member
I've never needed fuel rods at WDW:
422699
 
SoFloMagic

SoFloMagic

Well-Known Member
Tom P. said:
But if people return the Fuel Rods, Disney can recharge them for a fraction of a cent instead of actually having to continue to place newly manufactured units in the kiosks. Seems like that would be a major savings for them.
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maybe, but there is no "return", only exchange, so it'll always be an even trade - except they have to charge/clean/fill.
 
FoozieBear

FoozieBear

Well-Known Member
SoFloMagic said:
The entire point of a fuel rod is that you can swap it... this means that it doesn't matter if the Anker one has 10000 mah or whatever. You don't need the big battery - you can just swap this out out four times instead! I don't understand how people miss the point on this. You aren't buying a ****ty battery for $30. You're buying a ****ty battery that can be swapped out (read:instantly recharged) in any disney park, at any time. You're paying for the service, not the product. I think Disney understands this and realized they'll lose the lawsuits (you can't say "free unlimited swaps" at time of purchase then start charging $3).
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Exactly. The chargers were garbage but what made it worthwhile was the ability to switch it in the park any time. I didn't really care much if the charger didn't do much at a single time since stations were always somewhere within walking distance. If I had to pay $3 for each swap, I'd probably be paying at least $9-$12 a day on top of the initial cost. It was an odd example of where the product itself is bad but the service that came with it was excellent.
 

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