The Subscription Economy: Is it Causing Money to Slip Through Your Hands?

In preparation for the upcoming Thanksgiving holiday, I purchased an indoor electric turkey fryer! (Quite excited!) I purchased it this weekend from Amazon and got a great deal because of their “Countdown to BlackFriday” sale.

Several times throughout the checkout process, I was “invited” to become an Amazon Prime Member. For a split second, I considered it. But after a quick mental audit of how often I order from Amazon, I couldn’t rationalize the $99 annual fee.

The fee made me think of what one client recently said to me:

“I want money to stop slipping through my hands…”

It’s a sentiment I hear often; it is what can so easily happen in our subscription-services economy; and it is precisely what spending $99 on Amazon Prime would have felt like for me.

And it was exactly how I was feeling as I mentally reviewed certain other on-going subscription based fees I incur – whether they are charged annually or monthly.

Perhaps the charge is nominal so you rationalize it by saying, “oh, it’s only $5.99 a month…”

Or maybe you say, “well, if I use the service once or twice, then the annual subscription has paid for itself…”

Or worse yet, maybe you don’t even realize you’re paying for a product/service each month. This happened to a friend of mine; she finished her doctoral thesis six years ago yet she recently realized she was still paying for subscriptions related to her research work that is now complete. To the tune of 320 Euro a year or $400 a year…for six years!!! You do the math.

Subscription services – the “new” new way to consume and buy

Subscription services aka the subscription economy isn’t new. Magazines have been doing it for decades. But today, this model is popping up in all sorts of industries. Including personal finance! Case in point: LearnVest, or a little closer to home…the Financial Intimacy Lounge – a not so subtle plug -:).

In fact, John Warrilow, author of the forthcoming book, “The Automatic Customer: Creating a Subscription Business in Any Industry,” said at Inc. Magazine’s GrowCo conference: “…[subscription businesses] provide the greatest value to both the [business] and the customer.”

When I think of value, I think of it as expressed in terms of uniqueness, convenience, variety, simplicity, flexibility, affordability and, well, a changing value system with regards to how consumers behave in almost every aspect of life.

I also think of value as expressed in terms of a continuing relationship.

And just like all on-going relationships, when you get lazy about ‘em and don’t pay attention to what is and what isn’t working, well, you know… Someone is really happy and the other one ends up quite unsatisfied.

Don’t be unsatisfied

As we near the end of the year (can you believe it?), now is actually a good time to ask yourself if you are stuck in a recurring payment trap with some of the subscription service/s you use. In other words, is what you are buying and consuming via your subscription giving you the value you want. Or, is it the cause of money slipping through your hands, too?

Maybe the monthly or annual amount  isn’t “a lot” in the grand scheme of things. But the financial detox exercise I’m about to propose is less about dollars and cents in the absolute sense. Instead, it’s about being “conscious and intentional” about what you’re choosing to do with your money and whether those funds could be (re)directed to something else that has more value to and for you – whether you measure that based on pleasure or utility.

So here goes:

  • Grab your banking and credit card statements for the last three months. If you receive statements electronically, please print them out. (You can always recycle the paper.)
  • Review those statements and highlight your recurring expenses. Choose one color for monthly expenses and another for annual ones.
  • On a separate sheet of paper (or in a spreadsheet), list the recurring expenses and rank them according to three categories: pleasure; utility; waste of money.

When I did this piece of the exercise, I chose to keep Netflix – even though I don’t use it often. It’s nominal and I like the “option” of having it. Yet, I chose not to renew my ZipCar membership. I’ve rented a lot of cars in the last two years – not one of them was a ZipCar!

  • In this same spreadsheet, sum up each category…you just might be shocked at what you discover. In addition to evaluating the total financial outlay, look to see if your automatic withdrawals are spread throughout the month. This will help manage your cashflow and ensure you’re not lopsided leaning more toward  the beginning or end the month.
  • Make an assessment of each line item.

Anything you deem to be a waste of money, get rid of immediately. Or, downgrade your plan (if that’s an option). Before I sat down to pen this, I did that with a business expense. I’m not quite ready to get rid of the service completely, but I’m also not using all the features of the pro plan, and I’ve decided to stop spending money based on the “maybe, one-day I will thinking.”

  • If possible and appropriate, migrate the monthly or annual withdrawals for your recurring expenses to one banking or credit card account for easy tracking.

The beauty of subscription services is that they are really all about YOU. It’s about access the way you want, how you want it, and when you want it. Fundamentally, it’s about choice – your choice. And, with choice comes control.

You are in control.

Don’t abdicate that control by paying recurring fees for products/services you no longer find pleasure in or that have outlived their utility. Because, sadly, some businesses are counting on you to trivialize a “small” dollar amount. Or, for you to be so busy living your life that you completely forget about what you committed to. 

If you find money slipping through your hands, at least don’t let it be with regards to subscription services. 

 

p.s. I’m so excited to be a guest speaker in Bari Tessler Linden’s The Art of Money Symposium on enTheos.com – joining some other cool peeps like Barbara Stanny, Mindy Crary and many others. Check us out here: https://www.entheos.com/The-Art-of-Money

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