Chip Shots by Chip Griffin

Is the subscription model over-subscribed?

In recent years, we have moved from an Internet saturated in ads to one heavily dependent upon subscriptions.

Venture capitalist Fred Wilson makes a smart observation about this trend in his 2019 year-end post:

“a subscription overload backlash is emerging as many consumers have signed up for more subscriptions than they need and in some cases can afford.”

It seems that everything requires a subscription these days.

While it can provide great flexibility, both in terms of access to services and in short-term cash management, it has become a bit overwhelming.

My family dropped our cable TV subscription over a year ago — and replaced it with more than half a dozen individual streaming services. It’s still a cost-saver, but managing the accounts, passwords, and activation codes sometimes feels like a part-time job.

My phone is littered with apps that require subscriptions, many for just a dollar or two per month. Most confer no ongoing benefit from the subscription, so it really amounts to little more than a never-ending installment payment plan. But it’s the only way to get access to many of these apps.

There are benefits, of course. Business software that used to require substantial upfront investments (plus big upgrade fees) can now be kept always-current for fairly reasonable monthly subscription payments. Of course, if you just wanted a one-time purchase, you’re usually out of luck.

Even many of the WordPress plugins I use for my business now require subscriptions. Unfortunately, many times you have no choice but to pay the subscription fee before you can really figure out if the tool works — and then remember to cancel the auto-renewal if it doesn’t.

Which brings us to managing all of these costs. I have tried to centralize as many as I can on PayPal so that I can see what I have active (and cancel those that I don’t need/want any longer). But that’s not always an option. Apple consolidates access to subscriptions for their iOS devices, which helps for those subscriptions.

But many of these subscriptions simply go straight to a credit card.

Periodically I try to audit all of the business and personal subscriptions that I have, but it is a real challenge. I probably ought to maintain a spreadsheet of all of them, including renewal dates for the annual ones, but that’s not always simple. Plus some of them may be subscriptions set up by others in my household.

Staying on top of these subscription costs can be quite beneficial to businesses in preventing profit leaks, especially in the small- to mid-size agencies I consult with. They are often surprised at how many tools are going underused or even unused, despite hefty monthly/annual payments.

So where does that leave the subscription business model itself? It’s clearly here to stay. And as a former owner of a SaaS company that primarily sold subscriptions, I’m a fan.

Fred is right that there is a risk of backlash, especially for products and services that are simply using subscriptions as a way to extract more revenue without providing meaningful ongoing benefits. If the tool or information won’t continue to be substantially upgraded or updated, then it probably isn’t really suited for a subscription.

Of course, there’s also probably a business to be built around helping business and consumers manage all of their subscriptions — no doubt for a low monthly subscription fee itself.

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