There’s a major trend sweeping, and revolutionizing, our modern day economy. Subscription services have taken over the market, some increasing performance by 800%, and prompting one business leader to even coin the term, “Subscription Economy”. Pay-per-item businesses are shifting their focus from selling a certain number of individual units to subscribing a massive number of consumers to their services.
Subscription services have acutely shifted the mentality of business leaders and marketers, cementing their focus on the customer and the relationship. It’s less about the greatness of their product and more about the value they’re adding to your life. With exponential advancements in technology, more consumers have adjusted to being the center of every business’s attention and are welcoming to the concept. In a word, it’s all about convenience.
There are two sides to every coin, and I don’t think this “Subscription Economy” is exempt. There’s a major appeal to the convenience and value companies are focused on providing you. But there’s also a cost. Remember that this strategy is driving their bottom line, so you’ll certainly pay a premium to be the center of their attention.
In order to understand how much convenience is really costing you, I took a look at some of the most popular subscription services.
Arguably the pioneer in the subscription industry, Netflix has woven itself into the very vernacular of today’s culture. They now have 3 different pricing plans you can choose from – $7.99/month, $10.99/month, and $13.99/month.
If you’re not familiar with it, Blue Apron is a meal kit delivery box. They deliver recipes and pre-portioned ingredients to your doorstep every week so you can cook dinner without having to go grocery shopping. They also have several different pricing plans – 3 meals for 2 people is $59.94/week; 3 meals for 4 people is $139.84/week.
This is a clothing/accessory subscription box, where you receive monthly items that you can try on and choose to keep or send back. You pay a “stylist” fee of $20, which is credited towards any items you choose to keep. So the amount you spend depends on which items of clothing you keep. You can set a budget limit for your stylist to stay under, but the average item is $55.
The average gym membership is right around $50/month but 67% of these memberships aren’t used. “Boutique” or specialized gyms, like Crossfit, TurboSpin, Barre, Title Boxing, and Hot Yoga cost significantly more, some reaching over $150/month.
Spotify is a music streaming service, which gives you access to a massive library of music, videos, and podcasts. You can use this service for free but will be interrupted frequently by commercials. Spotify Premium is $9.99/month.
Yes, this subscription box is for your dogs! For $20/month, you receive treats, toys, and goodies for your furry friend. You only get the $20/month pricing if you subscribe for a year. For 6 months, you pay $25/box and for just one box, you pay $29.
If you subscribed to each of these services, and chose the low or medium pricing option, you’d spend $210.92 a month, which translates to $2,531.04 a year. (You can see the breakdown of pricing I used below).
That’s a lot of money to spend on convenience. Keep in mind that total is just for the 6 services listed above, and is on the conservative side of the spectrum. That $2,500/year doesn’t include cable, groceries, your kids’ school uniforms, or your mortgage. There are also many ins and outs to these kinds of services, so I’d recommend doing some research before signing up for any new ones.
If you are looking for a way to improve your finances, stop living paycheck to paycheck, save more, invest, or get out of debt, here’s where I’d recommend you start. Cancel all your subscriptions and be purposeful with that money instead.
Here are some ways to use your extra cash:
I want to know your thoughts on subscription services! Which make it into your budget, and which do you live without? What is the craziest subscription service you’ve heard of? Share with us on Facebook!
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