How many do you have?

Introduction

You cannot help but notice that there seems to be more and more subscription services around these days. From magazines, to television, to internet, to software and even to automobiles; it seems you can subscribe to anything nowadays. It seems also that there may be even more to come along in the future with podcasts and cell phone subscription services in the pipeline.

Have you ever stopped to ask whether all these subscription services are good value for money. Have you even stopped to work out how much of your hard-earned dollar gets dished out each month on subscriptions?

Well, perhaps now is the time to do just that.

Range of Services on Offer

Once upon a time, your grandparents possibly subscribed to a newspaper or magazine and that was it. Other services, such as radio, transport, food delivery were probably not available to them. If they were available, then your grandparents would probably have paid for them as and when they required them and may well scoff at the thought of tying themselves to an annual or monthly subscription.

Nowadays, things are very different. People can subscribe to just about anything and, often, they are actively encouraged to do so.

Why is this?

Justification

Almost any company offering a subscription package will claim that the principle benefit is that they gain an income with which they can develop their product further. This appears to be the main justification for subscriptions.

Advantages

Of course, there are advantages. Subscribers get updates free, (usually), while they continue to subscribe. Companies offering the services have a good indication of their level of subscription income, especially if subscribers pay annually.

Subscribers paying regularly, means that details of those subscribers need to be held by the companies. This gives the companies the necessary details with which to offer further services or products to their subscribers. This creates a readily available market.

Often, it seems, several products or services are bundled together in a common subscription package. In some ways, this allows unpopular services to be maintained by being bundled with popular services. Hence, landline telephone services, which are becoming less significant, can be bundled with a popular service, such as internet access.

Also, companies can sometimes bundle a product, such as TV services, along with internet access, possibly to make rival standalone TV packages look less attractive. Why would you subscribe to a separate TV provider when you internet service provider includes a TV package within your existing bundle?

Disadvantages

Every subscription package must have its disadvantages as well as its advantages. However, it is when you consider all your subscriptions together that you see the biggest disadvantage, … their cost.

If you take each subscription on its own, then it’s subscription cost may not seem great on your finances. However, you need to consider the total cost of all your subscriptions and their impact on your monthly budget. It is all too easy for the costs to mount.

Yet, I would even argue that companies are not pricing their services effectively. A monthly subscription to an online service should cost pennies per month, not dollars. But companies are not considering their service or product in relation to all the others you subscribe to; they are only concerned about your subscription to their product.

It is understandable that a company is concerned simply with your subscription to their own service, subscription income is probably their only source of income. Which, in itself, is a weakness. If a company needs to raise more funds, what can they do but raise the subscription cost to their users? This, as we have seen with Netflix, is a big problem because it alienates users and leaves them with the stark choice of staying or leaving. Which puts the company’s finances at risk.

The subscription market is crowded and there are many services competing with similar services to get subscribers’ money. Inevitably some will fail. This puts the subscriber in a vulnerable position; what happens to their subscription if the product they choose then fails?

What Now, What Next?

I think it is already clear that the subscription market and the subscription models need re-evaluation. Customers do not like to be viewed as a resource to provide money to prop up ailing companies or services. So it is inevitable that many customers will re-consider their subscriptions. This is likely to lead to many companies seeing a reduction in their subscriber income.

For companies, the time is right to reconsider other financing models or to make their subscription models more attractive to the customer.

In the future, let’s hope we can see much more flexibility in the pricing models offered to potential customers.