We’re living in the world of subscriptions, where our expenses are being organised into monthly lump sum payments that leave our bank accounts often without us even realising. Most of us don’t have an issue subscribing to watch movies on Netflix, to listen to music on Spotify or to show loyalty to our favourite newspapers and magazines nowadays. But as much as 5 to 10 years ago, subscription-models weren’t as accepted.
According to leading subscription management platform Zuora, the subscription-based payment model, or “the subscription economy” (as it’s popularly called) is the result of “shifting the focus to delivering services instead of products” as we “witness the end of ownership”. Zuora’s 2019 End of Ownership survey found that 74% of international adults believe that, in the future, people will subscribe to more services and own fewer physical goods. While 57% want to “own less stuff”, which could be achieved through subscriptions.
This shift in consumer mindset from being the owner of a product, to a flexible “nomad consumer”, who is loosely committed to subscription services, has meant companies across the globe have had to shift their business model. In fact, 70% of adults across the globe surveyed in 2019 felt subscribing to products and services frees them from the “burden of ownership”.
According to Zuora’s ANZ Subscription Shift survey in 2016, more than two thirds of Australian businesses were planning to adopt a subscription model by 2018-2019. While the companies who have done so across North America, Europe and Asia Pacific have seen their sales grow by more than 300% over the past 7 years.
How much are subscriptions costing consumers?
The subscription-based spending model does come with a price. A$8.99 per month for unlimited Disney Plus seems like a steal, but when you couple that with $13.99 for Netflix, $11.99 a month for Spotify (and yes, even the $5.99 student rate is still an expense), then open your weekly Hello Fresh food delivery to enjoy while you binge your $14 a month Stan subscription, after spending the day using your Microsoft Office subscription and Adobe licence that often skips to the back of our minds – this stuff adds up!
And what’s worse is usually we often forget or find it hard to keep track of all the services we’re subscribed to.
In fact, a study by REST Super in 2019 found 3 out of 5 Australians are wasting money on subscription services they either don’t use or have forgotten about, with $3.9 billion thrown into unused subscriptions, apps and services. More than 1 in 10 Australians put over $100 a month into their subscriptions.
Another 2019 survey conducted by Fetch found 40% of respondents plan to reduce the number of subscriptions services they subscribed to.
So how can we streamline our subscriptions?
The downfall of having everything at our fingertips is that it’s often hard to recall who we’ve actually shared our information with. This usually makes it quite difficult to organise, manage and streamline our subscriptions.
Here are some things to keep in mind:
- Be in the know – set an alert whenever a subscription payment comes out of your account each month so you can budget for this expense, or at the very least, keep a list whenever you’ve subscribed to a new service. If you’d prefer to download an app that can do this for you, check out our article on 4 budgeting apps for your financial health.
- Is that free trial really free? – the free trial is one of the most common and strategic traps of subscription-based services. If you don’t find you’ve used the service enough while you’re on the free trial, let’s be real, you probably still won’t be using it if you start paying for it. If you sign up for a free trial, make an alert or reminder when the trial is over, because they’ll usually start automatically charging you after the trial date is up.
- Normalise the word CANCEL – the beauty of subscriptions is that, more often than not, they’re as easy to cancel as they are to sign up. Usually when we’re putting our card details into a subscription we’re signing up to, there’s a voice of caution in the back of our minds whispering things like “check the cancellation policy”, “careful you don’t get stuck” and other anxiety-fuelled doubts. These aren’t necessarily bad things to keep in mind, but it’s also important to normalise the word cancel and get comfortable with cancelling subscriptions loosely as you become a more intense saver. For example, you could pick one video streaming subscription per month, so while you’re binging a show on Stan, cancel your Netflix and so on.
- We are F-A-M-I-L-Y – everything is better when we’re together, no? This premise applies to subscriptions too. A number of subscription-based models apply family discounts where a number of users can access the account and you can split the payment to make it cheaper. For example, the Spotify Premium Family plan is $17.99 per month and allows up to 6 household members to use the service, compared to the individual monthly fee of $11.99.
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regard to your circumstances.