How Much Do Subscriptions Cost You? Probably More (and Maybe a LOT More) Than You Think
A new study shows that U.S. residents spend billions of dollars per month on subscription services. Yes, billions. Every month.
Individual things like beauty boxes, Netflix, meal services, Amazon Prime, dating apps, and music streaming seem affordable. (“It’s only $19 per month.”) However, we’ve gotten pretty good at avoiding the math.
“America’s Relationship With Subscription Services” was a survey of 2,500 consumers done by the Waterstone Group. It took place in three parts:
First, people were given 10 seconds to guesstimate how much they spend on subscriptions each month.
Next, it offered prompts with specific examples of such expenses and gave them 30 seconds to guess again.
Finally, the survey walked them through 21 categories to determine average monthly spending.
The results were a little startling:
The average of the first (10-second) guess: $79.74 per month
The average of the second (30-second) guess: $111.61
The average true cost (after a category-by-category checklist): $237.33
That’s a 197 percent increase between the first wild guess and the actual amount spent — which translates to nearly $1,900 per year in unaccounted-for spending.
Obviously we don’t all spend that much; some pay much less than $237 and some pay more. And some services are necessary; for example, as a freelance writer I need Internet access and web hosting, and some people have given up landlines entirely in favor of mobile phones.
Other subscriptions may actually save you money if, say, you live in an area with few shopping choices or if you have family or health issues that keep you from going out to do your own buying. In that case, subscribing to Target or Amazon for deliveries of housewares and baby or pet products could be a good idea.
But how much are you spending on things that no longer make much of a difference in your life?
‘I’ll Cancel It Next Time’ Syndrome
Some people get magazines year after year because they neglect to opt out of the auto-renew.
They hang on to a barely used Amazon Prime subscription because after all, they might send away for a bunch of stuff at Christmas. (Except that they don’t.)
They keep paying for a gym membership because they just know that next month they’ll start working out again. (Except that they never will.)
The same can be true of subscription services. One reason such companies make money is that some consumers aren’t motivated enough to cancel a service or product even after they’ve grown disenchanted with it.
“By the time people realize they don’t want [a service] anymore, it takes time for them to cancel it,” Pace University marketing professor Larry Chiagouris told the Washington Post. “The real money is in the inertia.” This all-too-human tendency can get expensive.
A Simple Solution
You may not be able to recall everything you’re getting. Easy enough to fix: Set aside an hour to do a subscription audit. That is, go through your budget for monthly expenses and annual ones, too, such as Amazon Prime.
(Too busy or not sufficiently motivated to go through your finances with a fine-tooth comb? Naturally there’s an app for that. Free services like TrueBill and SubscriptMe help you see what you’re paying for each month.)
If you want to base your audit on the Waterstone results, here’s the list of categories that survey used:
Fashion subscription boxes
Beauty subscription boxes
Home security systems
Children’s subscription boxes
Identity protection monitoring
Lifestyle subscription boxes
The results of your subscription audit might surprise (or dismay) you. And even if you’re not hitting $237 a month, ask yourself this: Am I getting real value out of these things?
Sure, a “cheap shaving items” club sounded like a good idea (“Never run out of razors again!”) when you signed up. But could you get the same results by purchasing in bulk at a warehouse store or online? You’d never run out of razors again that way, either. My partner buys shaving tools by the sack at Costco, a habit that covers his blade-y needs for a year or more. (Bonus: We don’t have to deal with packing and mailing materials that these subscriptions generate.)
Likewise, a meal service like Hello Fresh or Blue Apron might feel frugal, because it’s generally cheaper than going to a restaurant or ordering takeout. But you’re still cooking – and maybe that’s the reason you wanted the service in the first place, to stop having to plan and shop for ingredients. Instead, why not look up a few recipes and have the ingredients delivered? (Incidentally, TSD writer Holly Johnson calls these services “not carefree, enjoyable or even that tasty…(and) way too expensive.”)
Still not convinced?
Do an audit even if you’re not feeling the pinch financially. Especially if you’re not feeling the pinch, because it’s so easy to write this off as not important enough. “Well, maybe I haven’t been watching those extra sports channels, but it’s only X dollars a month and I’ll probably love having it when the playoffs come around again. Besides, I can afford it.”
Now think of that expenditure, and others like it, in these terms:
Opportunity cost: Your money could go toward more important things than, say, BarkBox. Yep, that’s a monthly subscription box for your dog. Pro tip: Dogs will eat out of the catbox if you let them! They do not have refined palates, and will be just fine with generic treats from the pet store or with an occasional carrot stick or cube of cheese. Meanwhile, that’s an extra couple of hundred dollars per year that could go toward your emergency fund, retirement, a child’s college savings plan, a really cool vacation, or other goals.
The privacy question: The Post article also suggests that subscription services are a gold mine of personal information – and that it might be sold. How much of your life and habits do you want floating around out there?
The physical clutter factor: If it’s digital news, you read it and it’s gone; if it’s edible, you consume it. But when it’s things like crafts kits, StitchBox, beauty items, or LootCrate, the deliveries can really start to pile up. How many Doctor Who shirts and Funko Pop figurines does one person need, anyway?
The virtual clutter effect: Some people listen to Spotify or Pandora all the time. They live and die by their FitBits. They’re totally going to read/listen to all the great fiction and nonfiction. They believe that one day their prince or princess will be found on that dating site.
But be honest, people: Have you stopped downloading books because you haven’t had time to read the last dozen you bought? Do you listen a lot less than you thought you would? (And could you find an online source of free music, or even tune into a radio station IRL?)
When was the last time you updated your Match.com profile, or used the service for anything except a sardonic laugh with your pals? And don’t get me started on whether people are using diet and fitness apps any more regularly than they used their former gym memberships.
Point being: You could very well be paying for something(s) you’re not using, and maybe feeling off-and-on guilt about this. It messes with your head, and crowds your life.
Hedonic adaptation: Everything new gets old pretty quickly. So your kid just loves the science projects boxes that cost you more than $225 a year, but gets bored with them after a while. What else you got? A monthly crafts box? Awesome! This one costs $300 a year, true, but isn’t it good to get your kid thinking creatively? Until he or she gets bored again.
Or maybe it’s the adult who gets hooked on StitchFix initially, then moves up to Gwynnie Bee and on to TrunkClub. Netflix alone isn’t enough; let’s get Hulu. And then let’s get Hulu Live!
Oh, look, a fishing tackle subscription box – wouldn’t that be perfect for my partner the fly guy? Hmmm, a gluten-free monthly snack set would be a nice treat for my niece with celiac. And so on and so on.
When is enough enough?
The Bottom Line
And how much are you spending on things you’ve stopped noticing? Be honest with yourself about which purchases add meaning to your life – and whether you could find the same sorts of meaning in other ways.
Doing so is good both for the bottom line and for peace of mind. Your financial goals will be easier to reach, and you won’t have craft kits gathering dust and making you feel guilty.
Award-winning journalist and veteran personal finance writer Donna Freedman is the author of “Your Playbook for Tough Times: Living Large on Small Change, for the Short Term or the Long Haul” and “Your Playbook for Tough Times, Vol. 2: Needs AND Wants Edition.”
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