The Problem with Subscriptions

Subscriptions are unlimited. They can be used 24/7 or not at all and the price is the same. Life on the other hand only has 24 hours in a day and 168 hours in a week. With sleep and work taking up most of our time we are normally left with just a few hours in the evening for our unlimited subscriptions. I personally have around 2 hours each night to pick an activity or subscription. Whether it be Netflix, Disney plus, Amazon Prime, Crave, or even work out apps Down Dog, Peloton, CENTR and Apple Fitness. You can only use 1 at a time and you only have limited time to use them. Some subscriptions can be used while doing other things like music apps (Spotify and Apple music) so there is a bit more opportunity to get your money’s worth but most are single use.

 
The best case scenario is you are unemployed with no responsibilities and you can watch Netflix all day long never leaving the house to get your money’s worth. In Canada Netflix currently costs (2024) $16.49 per month. If you managed to watch Netflix for 100 hours a week it would cost you 4 cents per hour, which is pretty darn good. Worst case scenario you never use the subscription and you are paying for nothing. This is super common with gym memberships as everyone thinks they will workout way more than they actually will. The more subscriptions you have the more you divide your already limited time.

Streaming Subscriptions

You can only watch a single streaming service at any given time meaning you can only fully utilize one service at a time. You may be really into Netflix's Stranger Things or Love is Blind but while you are binging you are paying fully for your other streaming services while getting no value from them. Some months may be better utilized then others but according to Statsica the average watch time on streaming per day is 62 minutes. So let's round to 7 hours a week or 28 hours a month. There are 730 hours in a month so with the average watch time of 28 hours you would only be utilizing 3% of the total hours you could be watching. That would be 59 cents an hour, not too bad. But if you have 2, 3 or 4 streaming services then you divide the time watched. 2 streaming services watched equally at 28 hours a month at $16.49 = $1.18 per hour watched. 3 streaming services = $1.77 and 4 streaming services = $2.36. If you are on holidays or watch less than the average person of streaming or simply take time off from watching streaming the cost of each hour watched goes up drastically.

Winning Strategy

The best strategy with streaming services is to be decisive in the shows and services you want to watch. Search for a show or movie on Google or Google TV, find out which service it is on, then only then, sign up for the service. If you are hardcore you can cancel the service immediately then resubscribe if you are still watching. I recommend just having a single subscription at a time. When you are bored of a service, cancel and sign up with a new one. Rinse and repeat so that you are only ever paying for a single service, keeping your fixed cost for streaming services to a minimum.

 

Fixed Cost

Subscriptions are paid month after month, usage or not, being a constant expense. It is fixed like a water bill that just comes in and is paid. Fixed costs remove agency to make a decision with your income. You cannot choose to eat out or save or go shopping with money that is already consumed by fixed costs. Subscriptions although they can be mostly canceled at any time hit all the hallmarks of a fixed cost. They are passive and require no decision making, creating a situation with months go by without even realizing. Spending money is related to pain in the brain and passive spending bypasses that trigger making it easier to spend. Keeping a list and reviewing each subscription each month will help to create that pain needed to know if you are getting enough value from each of them.

Promotes Overconsumption  

Have you ever gone to an all you can eat restaurant and just got a small plate of food or maybe just a simple salad. No, of course not. It's all you can eat. At the minimum doing two full plates trying to get your money's worth. Well with subscriptions it's all you can eat as well. Want to get your money's worth, you better watch or listen or enjoy each and every subscription you have constantly. There is a continuous nagging at you to consume that which you have purchased and no matter what you do, you could always consume more. Its unhealthy and it promotes gluttony of binge watching, listening and any other way of consumption.      

Physical Subscriptions

Some subscriptions get sent in the mail each month like loot boxes, socks, meal kits, tie kits, Dollar Shave Club etc. These can be quite handy and convenient but once again bypass the decision making allowing for unnecessary spending. Amazon even has an autofill service that will automatically reorder diapers, deodorant or other staples. Companies love the constant revenue and customers love not thinking about the purchase.

Subscriptions are sadly becoming more and more popular in our modern society and like it or not it is becoming more and more difficult to avoid them. It is important to understand the dangers of them and make sure each subscription is truly needed and each one is fully utilized. Convenience is not always worth the price of subscribing.

If you found this helpful and would like help budgeting or investing please email me at taylormckeecoaching@gmail.com