Ever purchased an annual subscription instead of monthly, because that’s economical?
Yes, annual subscriptions are always discounted.
Well, the trick here is a simple concept of inflation.
Inflation is a pain that hurts everyone equally.
In simple words Inflation is something that reduces your buying power every second in any economy like India.
Therefore, Inflation & opportunity cost is considered while pricing a product or service.
This is why annual subscriptions always look cost efficient.
So, inflation is good.
Wait
Remember, buying Cadbury eclairs for Re 1/-, now it costs Rs 2/-.
Why are you paying double for the same thing?
Again Inflation.
So Inflation is bad.
Well it’s a topic of debate but in a stable economy, a positive steady inflation is required for growth of the economy.
Disclaimer: I am not giving away any money.
1 lakh today = 1.06 lakh next year, adjusted to inflation at 6%p.a.