We conducted an analysis of 2,500 Americans’ budgets, spanning 21 categories of subscription service. What follows are our most useful findings.
Perception vs. Reality
We suspected people underestimate how much they spend on subscription services, so to begin our survey, we played a little game to test the theory. It involved three steps:
1. We began by asking people to think generally about “recurring monthly expenses associated with digital services, devices and subscription boxes.
2. Then we gave people 10 seconds to guess how much they spend per month on such expenses.
3. After recording an initial answer, we asked people to take 30 seconds to think about the question more carefully, before answering a second time. We prompted them with specific examples of services and service categories, including “WiFi, mobile service, Netflix, Spotify, Birchbox, Dollar Shave Club, GoDaddy, PlayStation Now, iCloud, Fitbit, etc.”
- Average of first guesses (10 seconds): $79.74/month
- Average of second guesses (30 seconds): $111.61/month
That’s a 40% increase in estimated spend between the two guesses.
Next we took people through an exhaustive inventory of their recurring monthly expenses, across 21 categories. A number of services, particularly apps, have free versions. For our analysis we focused solely on consumers using paid versions of these apps.
Once respondents’ inventories were complete, we had a new number to contend with: $237.33. Across the 21 categories we measured, that was the average total spend.
- First guess: $79.74/month
- Second guess: $111.61/month
- Actual spend: $237.33/month
That’s a 112% increase from the first to second guess and a 197% increase from the first to actual spend.
Below is a snapshot that shows how much people underestimated and overestimated their actual spend.
Clearly, most Americans are unaware of how much they spend on subscription services. When pressed for a quick answer, they dramatically underestimate the amount. This is a boon for companies operating subscription models… and a bust for advocates of conscientious budgeting.
Top of Mind Expenses
Once we established which services each respondent subscribes to, we asked people to rate how acutely aware they are of that monthly expense, on a scale of 1-10.
Built to Last
We assessed people’s relationships with subscription service(s) from each category, in two ways:
For each subscription, respondents could identify one of four statuses:
- Happily hooked
- Happy, but not hooked
- Unhappily hooked
- Unhappy, not hooked
On the whole, our data shows that people are happy with their subscription services. They may be surprised to know exactly how much they spend on such services in total, but there seems to be a broad base of highly retainable customers in the categories we analyzed. What’s most interesting for us is the consideration of attachment to certain services, or as we’ve termed it, who’s “hooked” on what. One interesting example in this regard: people are most “happily hooked” on music streaming services, like Spotify, but much less so on mobile phone service, despite the fact that for most customers, their beloved music streaming platforms would not exist without mobile.