Or the equipment is otherwise expensive up-front to a small clinic. Ophthalmology, for example. The subscription feature is cheaper than becoming a financier.

I don’t think I have ever even once been in a product design session where the stated reason for going with a subscription model was, “So the customer can pay us less money.”

Of course the customer is going to pay more in the long term.

Even if the TCO for the clinic were exactly the same over X number of years, the manufacturer that sells subscriptions still comes out ahead because they're effectively in the financing business, too. Why tell a customer to go borrow money from somebody else when you can make them borrow from you?

Arguably the customer gains the option of not paying, which has some value. Whether that option value is close to the extra they pay through the subscription is left as an exercise for the reader.

How?

I was far from it, but ophthalmic firms didn’t know how often this diagnostic would be used. A high up-front would make it difficult to compare to the alternative (contracting per-use with a rival). So we offered a low up-front with a known, guaranteed per-use subscription.

Getting a loan from a bank would be cheaper than subscription pricing.

There are two reasons to use subscription pricing:

1) Price discrimination: You want to charge a large customer more for the same device

2) Lowering the capital expenditure by hiding the true price in operating costs

You could argue that (1) is good for small clinics, because they get access to the same machines as big clinics for a smaller cost. But I believe it's just a way to remove opportunities for competitors and results in everyone paying higher prices, even smaller clinics.

It also creates a HARD dependency on internet access.