Recurring payments and subscription services have become a part of our regular spending habits. Of course, subscription payments are nothing new, for decades now we have subscribed to newspapers, magazines and paid rent or insurances on regular payment cycles.
However, the emergence of increasingly digital products and the on-demand economy have seen subscription services and recurring payments increase significantly in both our personal lives and our businesses. This need not be viewed in a negative light, in fact the on-demand economy gives us the flexibility to scale up and down to meet our needs. This does however present some new challenges – enter the practise of subscription management.
In this post, I’ll walk you through the basics of subscription management and optimising your ongoing expenses. Let’s begin with taking stock of the services that you have.
Know what you are paying for
When we stop and inventory the services that we have, it may be very surprising just how many commitments and recurring payments we have attracted. In my experience with our customers, the discipline of budgeting and closely managing your finances is an act that is frequently preached and seldom practised. Particularly as our income grows and the financial pressures begin to ease, the focus on closely managing regular expenses becomes less of a necessity, leaving the door open to unnecessary costs.
I too have experienced this in my business. I recall a time where I was looking back through my credit card statements only to discover I had been paying over $100 per month for a cloud based service that I signed up to as a trial. Four months on and over $400 later I realised that I had neglected to cancel the subscription. Naturally I was disappointed in myself given I had literally explored the service for one day. Why? I was busy and focussed on my business. The on-demand economy makes it very easy to sign up to a service, it’s also all too easy to forget to cancel if you aren’t keeping track of your subscriptions.
Make sure you are you being charged correctly
Once you have a handle on the services that you are paying for, you need to be confident that you aren’t being overcharged and that your recurring payments accurately reflect your plan or contract. In my experience, billing errors occur most frequently with services with complex pricing models, service add-ons and a blend of fixed and variable costs. Mobile phones, internet and telephone services are all common examples and areas worth exploring. However, understanding your cost breakdown can be a time-consuming process so you’ll want to begin with your big spend services first.
Assess whether your needs have changed
Our lives and businesses undergo constant cycles of change and as such, our expenses should consistently reflect our current needs. It makes sense to regularly review our services and subscriptions and adjust them to reflect any new circumstances.
In my experience in digital business, the product and content development stages of a business are a time when we find ourselves frequently initiating free trials and quickly amassing a number of subscriptions in pursuit of our development and launch goals. However, as we transition from initial product development, we often find that some services are no longer required for the next task at hand.
The story is equally true in our personal lives. We tend to go through stages where we may watch more television, utilise a particular app or perhaps have a greater fitness focus. But if we find that pattern has changed and we are now no longer watching movies on the weekend, using that app anymore or have thrown in the gym towel for a new sport or hobby then we should be reviewing our need for those payments.
One of the key benefits of the on demand-economy is that we frequently have the flexibility to start and stop our services at any time. Once we begin to embrace this, we can comfortably cancel or suspend our services knowing that we can start them again any time we want. Fortunately for us all, companies make it incredibly easy to sign up again, after all they want our business.
Interestingly, on multiple occasions I have been offered a discounted rate for resubscription. One of the key challenges that businesses face is customer churn and retention and so offering a discounted rate to stay with the service can make good business sense. If you do receive a discounted offer to resubscribe, retain the email or provided coupon code so that if your needs change in the near future you can use this to your advantage.
Review your pricing plans
Once you have a good handle on your current needs, you need to review your pricing plans. If you are paying a monthly subscription fee, a quarterly or annual fee option could be saving you money. Most companies offer some form of discount for a longer term commitment or perhaps even lifetime subscriptions which exchange a recurring payment for a one-time fee. Some careful thought on your behalf will help you determine whether this is an ongoing need. If you are convinced that is the case, then trade a long term commitment for a better price.
For those of us that are frequent consumers of digital services such as web professionals, digital business and even brick and mortar business, foreign currency is also a factor you need to consider. This is particularly the case if you reside outside of the United States given the prevalence of payment plans in US dollars. Your bank account or Paypal statement will easily show you the converted rate in your currency. It is a fact that many companies tailor pricing to different countries so you’ll want to check back with the service provider to see if they now offer payment in your local currency. Re-signing to a local payment plan may be in your favour.
Know your term commitments and renewal dates
The chances are that some of your recurring payments will have an associated term commitment. Mobile phones, electricity, rent and mortgage payments are all common examples where you may find yourself with a contract or commitment in place that limits your ability to change providers or affect your regular payments.
You may also find that you have services with longer term payment cycles. I previously mentioned the benefits of making longer term commitments in exchange for discounted pricing, however this approach also bring challenges if you aren’t managing your renewal dates.
In these instances, you need to be scheduling a review period prior to the conclusion of the contract or term. There are several potential outcomes that you can face at the end of a contract term or payment cycle. Firstly, the price can increase. This is particularly common with rental agreements, fixed term mortgages and insurance payments just to name a few. The second potential outcome is that the service expires, leaving you in the position where you may no longer have the service that you need or desire. The third potential outcome that you may face is the service automatically renewing for a subsequent period. This is clearly a disappointing result if you are no longer have a need for the service or you miss an opportunity to change providers. Finally, even if the outcome is that you continue to pay the same amount on a casual basis, you can be leaving money on the table if you aren’t actively exploring your options at this time.
In this post we have touched on the basics of subscription management to manage your recurring payments. This is not rocket science, yet so many of us fail to actively manage our subscriptions and ongoing commitments leaving our personal or business finances ripe for optimisation. So I’d encourage you today to start the process. Take an inventory of your subscriptions, ensure you are being charged correctly and reassess your current needs. Take the time to review your current pricing plans and schedule time before your services renew and contractual terms end. Then you are on the path to ensuring your subscriptions and recurring payments are not costing you more than they should.
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