Here’s a hilarious story. For the past three years I’ve been paying $15 a month for an electronic fax service I’ve used… twice. That’s $540. For the same amount, I could have bought 20 rolls of fax paper. Or 10 real working fax machines. Or a plane ticket to Ireland to visit the museum where the world’s first fax machine is on display.
Say hello to the subscription economy, where every business—and I mean every business—moves toward billing you monthly or yearly. That shirt you’re wearing? There’s a subscription for that. Toilet paper? Yep. Razors? A billion-dollar business. A doorbell? Ding dong!
The charges regularly hitting our credit cards have expanded far beyond video and music-streaming services and, yes, newspapers. The average American pays $237 a month for subscription services, according to a July 2018 report from West Monroe Partners.
Eighty-four percent of Americans also completely underestimate how much they spend every month, according to the report.
There’s a Subscription for That
That’s because the assortment of services is harder to keep track of than the flavors of LaCroix sparkling water. And the number of subscriptions we pay for, and how much we pay, is only going to keep ballooning.
Don’t get me wrong. I love subscriptions. I love that soon I’ll be able to pay $7 a month for the newly announced Disney+ instead of paying a la carte for each $3 episode of “Mickey Mouse Clubhouse.”
But we can’t just go on signing up for “free trials” that turn into years-long payments. We have to pay attention to where our money is going. Please join me for my Subscription Spring Cleaning Program, available for $0 a month—if you act now.
Why Subscriptions Are Exploding
The technology industry loves the term SaaS, or Software as a Service. It’s the idea that software isn’t just bought once and installed, but rather is subscribed to and always updating. Microsoft Office 365? SaaS. Google Drive? SaaS. Your kid’s coding app? SaaS again.
There’s also CaaS, Content as a Service. Netflix ? Hulu? Spotify? Apple News+? All CaaS. And then there’s HaaS, hardware as a service. Your connected door lock, thermostat, security camera, maybe even your car or your toothbrush, now come with subscriptions.
Throw it all into one basket and call it Everything as a Service or—don’t hate me—“EaaS.”
“I cannot overstate the mega trend of everything as a service. Nothing is off limits here,” says Tom Dibble, chief executive of Aria Systems, a company that provides a cloud billing platform for subscription businesses. “There’s massive demand for this, typically around millennials who are resistant to ownership.”
With subscriptions, companies can bank—literally—on a certain amount every month or year from a set number of people.
“Wall Street loves these business models. There is great power in recurring revenue,” says Tien Tzuo, chief executive of Zuora, a company that creates software to help businesses run subscription services. Look no further than Apple’s move to services as iPhone sales slow and the company’s recent announcement of new gaming, news and TV services.
Not only are we going to have more subscriptions but their prices will go up. Starting this month, Netflix is increasing the price of all its plans—again. (See chart.) That follows rises by competitors Hulu, YouTube TV and DirecTV Now. They’re beginning to make cable look like a deal.
It’s just the start. Many subscription services are intentionally priced low to start, Mr. Tzuo explained. Once the value of the service has been proved, prices can go up or more expensive tiers can be added. All the while, the companies gather data about how we use their services in order to create irresistible upsells.
What We Can Do
The surge in services leaves us with a job so big, there are actually new services offering to help.
I tested Trim and Truebill, which burrow into your credit-card and bank transactions to find recurring charges. Both of them make it so easy to log in to your personal-finance accounts, I felt… uneasy. Trim CEO Thomas Smyth assured me that the company doesn’t sell or provide the data to any other companies and uses industry-standard security measures. Still, I don’t like outside companies seeing all my transactions and balances.
Here’s what we’ll do instead:
Step 1: Audit. Log in to your credit card and bank accounts and make a list (or, better yet, a spreadsheet) of all your monthly and yearly subscriptions, along with their charges.
If you really want a digital solution, I recommend an app like Bobby, available for iOS, that allows you to make simple lists and tally up the totals.
Step 2: Consolidate to family plans. Have your partner do the same and then cross-reference the lists. I quickly spotted some duplicates in my household. I cancelled my Amazon Prime subscription and joined my wife’s. Ditto for Apple Music. Now instead of $20 a month for two subscriptions, we pay $15 a month for the family plan.
Step 3: Cancel. Mark the subscriptions you really don’t find any value in anymore—or worse, ones that started as free trials and turned into a recurring monthly charge. Then say goodbye.
Certainly, that’s easier said than done. More often than not the “Cancel my subscription” button is hidden in an app or website menu—or worse, you have to call and question what you have done in your life to deserve 30 minutes of ear-melting hold music. A 2018 California law, which requires businesses to provide a way to cancel subscriptions online, has certainly helped in that regard.
If you’re having difficulty, try the company’s customer chat service—or just send it an email. I got a whole month credited back for a “free trial” of a person-lookup service I’d accidentally started paying for.
One of the benefits of subscribing to other services using Apple’s App Store? They’re easy to cancel. On the iPhone, go to Settings and then iTunes & App Store. Tap your Apple ID, then View Apple ID, then Subscriptions.
When signing up for new services, look out for the ability to disable any auto-renew function, and if there’s a free trial, set a reminder on your calendar just before the trial period ends, so you can consider canceling before you get charged.
Step 4: Repeat.The only way we can make sure we don’t keep paying companies for the rest of our days is by going through this pruning routine every year or so.
Now written on my calendar for May 8, 2020: Subscription Spring Cleaning Program Begins. Here’s a pre-made reminder for you if you use Google Calendar on your computer—no subscription necessary.
Write to Joanna Stern at firstname.lastname@example.org