Smart Home Subscription Fees and The True Cost of “Free” Services

By: Kirby Smith, Smart Homes Made Simple project consultant, and founder of SunKirb Ideas, LLC

Person sitting at a desk with a tablet and smart phone. Behind the desk is a TV and a smart speaker.
Image: Person sitting at a desk with a tablet and smart phone. Behind the desk is a TV and a smart speaker.

This article is written in response to popular smart home platform Wink’s recent announcement that they will begin charging a monthly $4.99 fee for their services starting July 27th.

First, a (slightly technical) History of the Universal Hub (e.g., Wink)

Smart home devices that are easy for the average person to install and manage started to become popular in 2014. This was driven by startup companies collaborating with mainstream companies to release affordable, easy to set up equipment and devices for the home. Starting with thermostats, cameras, smart doorbells and lights, the movement has since expanded to include many other home appliances.


Because of the popularity of smart phones and tablets, nearly everyone who purchased smart home products already had a centralized control system they conveniently carried with them. People liked the idea that with their phone they could control their home, answer the door, or change the temperature in their house from anywhere in the world.

The Dilemma: How to Connect a Network of Smart Home Devices

For a person to control a smart home device from anywhere, the device needs three things to work:

  1. The device must have electronic chips in it to communicate and physically control its function;
  2. The chips need a way to reach the Internet; and
  3. There must be a service operating on the Internet to receive and send information and commands to and from the chips in the device. Typically called cloud services.

Back in the early 2000’s, manufacturers struggled to find the best way for smart home devices to communicate between one another. We are all familiar with two communication standards used for things like our laptops, tablets and phones to connect to each other. Their brand names are WiFi and Bluetooth (FYI: WiFi is short for “Wireless Fidelity” which people agreed sounded silly, so it was shortened to WiFi). WiFi and Bluetooth use radio signals that send information around.

The electronic chips that use WiFi can send signals very far, but the chips back in the early 2000’s were comparatively large, used a lot of power, gave off a lot of heat, and they were costly. Also, we have all experienced how WiFi signals can drop. Almost every home has a spot where the WiFi stops working.

Bluetooth electronic chips are very small. So small that they can fit in earphones. They use very little power, don’t give off heat, and are very cheap. However, the range of Bluetooth is very short, only about 30 feet and the signal can’t travel through objects like walls and people’s bodies.

ZigBee and Z-Wave Offer a Solution

Two new electronic communication standards, ZigBee and Z-Wave, were adopted in the early 2000’s to solve the problems manufacturers were having. The electronic chips that communicate using ZigBee and Z-Wave are extremely small, energy efficient, and are cheaper to manufacture.

ZigBee and Z-Wave solved another big problem — signals being dropped or lost. Every device that uses one of these radio transmission protocols both receives and broadcasts, allowing each device to act as a relay. If we could see ZigBee and Z-Wave connections, they would look like a web, where everything is connected to each other. This is called a mesh and mesh systems have far better performance because of their dependable redundant connections. In fact, the more devices that are added, the faster and better the connections become unlike WiFi which slows when too many devices are added.

There was still one issue remaining: how the smart home devices reach the Internet. Something local was needed to receive the ZigBee and Z-Wave signals, convert the signals, and connect the devices to WiFi in a home in order to connect to the Internet. Devices that performed this function were called smart home hubs (hubs for short).

The problem was that each manufacturer created their own hub for the devices they made. For example, smart bulbs used a proprietary hub created by the manufacturer that made the bulb, while smart bulbs from another manufacturer used a different one. Smart locks had their own hubs, as did the smart light switches and plugs. Also, each hub used a different app that was installed on phones and tablets. It was normal for some people to have 5-10 apps to control their smart home. If someone wanted to set up a smart home, they encountered chaos and a lot of costs.

A New Player in the Game: Wink

Things changed in 2014 when small startup companies began manufacturing hubs that could communicate with multiple brands of home automation devices. These centralized hubs could talk to a wide range of home automation devices from multiple different manufacturers. This highly simplified the install process when using devices created by multiple companies. Also, for the user, you could use one app to wirelessly control your devices. If your WiFi changed, and if your hub was plugged into your WiFi router, you didn’t have to worry about setting everything up again. And, if you changed the router then you just plugged the hub into the new router, and you were done.


In a two-year period starting around 2013 through 2015 many companies released centralized home automation hubs and almost immediately went out of business because of the tremendous challenge of supporting the vast number of new smart home products that were being released. Companies that got a foothold included SmartThings, Insteon, Staples, Lowe’s and professional firms like ADT and AT&T. One company, Wink, took a different approach.


Wink simplified life for those who were not very technical. When putting new devices on the hub, the Wink app included videos of how to install the products for a vast range of manufacturers. Their support call center was also readily available to assist. From my personal experience, hold times were rarely over 5 minutes. Further sweetening the deal, unlike other manufacturers, Wink did not charge additional costs after the initial purchase of the hub which cost less than $100.

Wink starter kit with HUB, devices, and home automation app
Image: Wink starter kit with HUB, devices, and home automation app

For six years, people could use the Wink hub and its app for free and enjoyed:

Centralized installation
• Centralized management of devices from various manufacturers

• Continual updates for new features
The ability to create smart routines (called robots): One could click one button to dim multiple lights and bring the thermostat to a comfortable temperature to settle down and watch a movie
• Easy dependable security
• Excellent customer support
• Voice control of products on the hub using Amazon Alexa or Google Home

Wink Moves to Subscription-Based Services

Wink users received a shock in May of 2020 when Wink announced they were moving to a subscription service and users had to pay-up in one week or lose access to the hub and app they had used for years. The following is part of their statement:


“Since 2014, Wink has grown to support more than 4 million connected devices. During this time, Wink has relied solely on the one-time fee derived from hardware sales to cover ongoing cloud costs, development, and customer support. Providing users with local and remote access to their devices will always come at a cost for Wink, and over the years we have made great progress toward reducing these costs so that we can maintain that feature. Wink has taken many steps in an effort to keep your Hub’s blue light on, however, long term costs and recent economic events have caused additional strain on our business. Unlike companies that sell user data to offset costs associated with offering free services, we do not. Data privacy is one of Wink’s core values, and we believe that user data should never be sold for marketing or any purpose.”

This move infuriated users, forcing them to drop the product (and thus abandon or rebuild their smart home setup) or pay up. With the change announced during COVID restrictions, the short notice and lack of warning, users were justified in their frustration. The common question was, why should I have to pay for something that was free for so long?

In Favor of Fees

Because of popular free sites and services such as Google, Facebook, Instagram, and others, we have grown to believe we have the right to these services and that they should be “free”. However, if Wink is still committed to privacy, their original model was not sustainable and it was only a matter of time before they would need to make a change.

Companies have costs: staff, buildings and equipment, commerce and a host of other services for which they incur expenses. Also, they must return a profit. For a product to be reliable and worth investing in, the company’s operation must also be reliable and worth investing in. Over the past six years, a long list of companies have released great products, but due to poor management they went out of business. They left their customers with unusable devices and dead apps. These users received no reimbursement. I, myself, lost at least $2,000 worth of devices when Lowe’s shut down their Iris hub. The product lasted for less than 5 years. There are three ways companies cover their costs.


1) Target Marketing. If we look at Amazon and the Alexa Echo, there is the initial purchase that can be as low as $30. Each month there are new features added which have included free video and audio calling, home automation control, music, and other services. Alexa now performs almost all the functions of a central smart home hub.


How does Amazon cover the cost of this? The speakers give them insight into your home and how you use and consume things. In short, our use of the device tells them what to advertise and sell us. Also, many people, including myself, use the Alexa Echo to make purchases directly from Amazon. My family uses a good quantity of AA batteries and when we run low we say to the Echo, “Alexa, order more AA batteries.” It responds, “Based on your last purchase, is this what you want?” A picture of the last order appears, and we respond with, “Yes.” We like the convenience and have safely used our Echo for years.


2) Selling Your Personal Data. The second way companies make money, and the most insidious in my opinion, is they sell everything about you to other vendors and advertisers. They take the Amazon model one step further. For example, Google purchased and recently took complete control of the Nest company, which manufactures some of the most popular smart home products.

In 2019, Google created a new requirement: in order to use the products and all the features you must use a Google account and email. In fine print they state they will be linking your email, calendar, and document information to a pool of information about you. They also link your account to your Google Home account and smart speaker. This means they can sell information about how you use your lights, security, email, events, how you react to weather, etc. to anyone willing to get that information about you. In short, you are paying Google with information about everything you do.


Companies like Google and Facebook are so pervasive in our lives, we never stop to ask how we are getting all their services for free. As we click through the online agreements, we do so not realizing we are selling our privacy and giving them personal information to use any way they choose.


3) Subscription Services. The third and final way companies make money relates to subscription service. This method is typically used by smaller companies than say Google or Amazon. Wink is one of these companies. For Wink to continue to support their products and the users of their products, they must either: 1) receive a payment from companies like Google who pay smaller companies for specialized information about you; or 2) keep your information private but charge you a fee to provide their service.

At the end of the day, nothing is free and we will either pay with our money or pay with our privacy by sharing personal information about how we live.

What will you choose?