Insider Tips

Oversubscribed? Breaking the subscription trap

How many subscriptions do you have? Is it just Netflix and one other streaming service? Or do you subscribe to myriad apps on your phone or online? Do you even know how many subscriptions you have anymore?

If you don’t know, you’re not alone. We're all guilty of piling on more subscriptions than we actually use. Research shows that on average Australians spend more than $1,200 a year on untouched subscriptions and forgotten outgoings. That’s a lot of extra money that could be in your pocket.

However, it doesn’t help that some companies intentionally make the cancellation process challenging. The Australian Competition and Consumer Commission (ACCC) is urging the government to take action against 'subscription trapping'.

While we await change, what steps can you take to streamline your subscriptions and keep your finances in check?

What are subscriptions?

At its core, a subscription model is a business strategy where companies charge consumers a periodic fee for a product or service. Once the domain of magazines and newspapers, this model has now branched out. Today, it encompasses everything from your favourite shows on streaming platforms to meal kit deliveries.

 

 

From a business perspective, it's a win-win. They get a steady flow of income, and consumers, in turn, enjoy uninterrupted access to their favourite services.

Subscription trends in Australia

Australia has seen a significant surge in subscription-based services. According to Kantar’s report on entertainment on demand, streaming services alone have more than six million subscribers. Crunch the numbers by the average spend of $105 a month, and you’ll find Australians collectively spend an eye-watering $630 million monthly solely on streaming services.

This data offers a glimpse into the expansive and financial might of the subscription trend in Australia. So next time you're about to click on that "subscribe" button, maybe take a moment to reflect.

Most popular subscription services in Australia

​Australia's subscription service market is vast and varied, but a few stand out due to their overwhelming popularity. Let's explore some of the key players in various categories:

• • Video Streaming Services - Streaming giants like Netflix, Disney+, and Amazon Prime are the undisputed champions here. They account for 64 percent of all Subscription Video on Demand (SVoD) offerings.
  • Music streaming - Music streaming platforms have struck a chord with Australians, boasting over 16 million subscribers as of June 2023. Leading the pack are Spotify, YouTube Music, and SoundCloud, which account for more than 40 million of the 61 million-plus music app downloads.
  • Game subscription - Gaming is serious business Down Under. Over eight million gaming enthusiasts are subscribed with services like Xbox Game Pass, Apple Arcade, and PlayStation Plus.
  • Fitness and wellbeing - The recent emphasis on health and wellness has led to a surge in subscriptions for fitness programs, mindfulness apps, and holistic wellness platforms. Though exact subscription numbers remain unknown, Australians are reported to have shelled out a staggering $8 billion on fitness services and equipment.
  • Meal kits and food delivery - Meal kits and food delivery platforms have carved a niche, especially in bustling urban areas. More than seven million Australians are enjoying culinary delights from services like HelloFresh and Marley Spoon, favouring the blend of convenience and gourmet.
  • Offbeat subscriptions - Venturing beyond the mainstream, Australians are also diving into unique subscription services. This includes beauty boxes, routine product top-ups (like razors), and digital learning platforms.

Why are we drawn to subscriptions?

The numbers show that subscriptions have seamlessly woven their way into our daily lives. But what's the magic spell that keeps us clicking on that 'subscribe' button time and time again? The answer lies in an artful mix of psychology and savvy marketing techniques.

The psychology behind subscription models is quite simple:

• • Instant gratification - In today's fast-paced world, we're conditioned to want things now. Digital subscriptions, in particular, feed this craving by offering instant access.
  • Fear of Missing Out (FOMO) - If your social circle is buzzing about the latest binge-worthy show, you won't want to be left in the dark. The fear of missing out drives many of our subscription choices.
  • The comfort of consistency - By nature, humans adore routines. Subscriptions slide perfectly into this, by providing a predictable and consistent experience.
  • The lure of value - Economically, some subscriptions just seem to make sense. Why buy individual movies when a monthly fee offers you a vast library? This sense of a "bagging a bargin" is irresistibly attractive.

How companies are tricking us into subscribing

With a grasp on what makes us tick, companies set up offers to look super appealing and use clever tricks to get us on board and keep us there. Here are some tactics:

• • The free trial trap - An oldie but a goodie. Companies dangle the carrot of a free trial, banking on the fact that many of us will forget to cancel and end up parting with our cash inadvertently.
  • Complex cancellations - Ever tried to cancel a service and felt like you're navigating a labyrinth? This isn't by accident. Companies hope that by making the process a hassle, you'll decide it's easier just to stay subscribed.
  • The fine print fiasco - Buried within the depths of lengthy terms and conditions might be crucial information about the subscription, such as additional fees, the actual length of the subscription, or auto-renewal clauses.
  • Bundling bonanza - Companies often bundle multiple services or products at a discounted rate. At first glance, bundled offers seem like a steal. But often, these packages might include services we don't even want or use.
  • The pressure of scarcity - By marketing a deal as a "limited-time offer" or hinting that subscription slots are running out, companies play on our fear of missing a good deal to create a sense of urgency, pushing us to make hasty decisions.
  • Ads that interrupt - When you're engrossed in an app, a sudden pop-up ad disrupts your experience, urging you to consider a subscription.

Are we really saving money through subscriptions?

Subscriptions often present themselves as offering unparalleled value for money. Think about it: a monthly fee for unlimited access to a treasure trove of movies certainly sounds better than individually renting titles. But does the maths always add up in our favour?

Let's break it down: Suppose you're keen on catching a few movies monthly. Renting via Google Play would set you back $6 per title. Three movies? That's $18. In contrast, a Netflix subscription, boasting unlimited access, HD quality, and multi-device support, comes with a $23 monthly price tag. If you stick with just those three movies on Netflix, you're essentially paying an extra $5 each month, or an additional $60 annually.

 

 

On the flipside, if you were to watch say 10 movies a month, as well as other TV shows included in the service, the subscription suddenly seems like a steal.

There can be, however, unexpected costs in the subscription model known as “subscription traps".

What are subscription traps?

You might have noticed that while it's often easy to sign up for online subscriptions, especially those offering tempting free trials, cancelling them can be a whole different story. Welcome to the sneaky realm of subscription traps, where companies employ clever strategies to make your exit as tricky as possible.

At the heart of many of these tactics are "dark patterns." These are sneaky design choices on websites crafted to manipulate user behaviour. Trying to cancel? Prepare to navigate a maze, face emotional appeals making you second-guess your decision, or even find the much-needed "cancel" button mysteriously shrunk and hidden in a corner.

How to avoid subscription traps

Avoiding subscription traps requires a mix of vigilance, awareness, and proactive management. Here's how you can safeguard yourself from falling into these traps:

• • Informed choices are key - Prior to committing to any subscription, take a deep dive into its reviews. Are there complaints, particularly about the cancellation process? A prime example is Amazon Prime which has been criticised for its five-step cancellation process both on mobile and desktop.
  • Watch out for pre-ticked boxes - Be on the alert for boxes that are already checked off, as they can automatically opt you into additional services or extended subscriptions. Always uncheck boxes for things you don't want.
  • Document your steps - When you decide to cancel a subscription, document the process. Take screenshots or save emails as evidence, especially if you face difficulties or if the company claims you didn't cancel.

How to manage your subscriptions

Many of us juggle multiple subscriptions, from streaming services to software suites. As such, we must actively manage them to ensure we're truly reaping the benefits without unnecessary financial drains. Here’s your game plan:

Use subscription tracking services

Tools like TrackMySubs and Subby help you keep tabs on all your subscriptions. These platforms not only keep a consolidated record of all your subscriptions but also send timely alerts for upcoming renewals or pending payments.

Calendar alerts

Utilise the power of your digital calendar. Set reminders a week before a subscription is set to renew to give yourself ample time to assess its ongoing value.

Regular financial reviews

Dedicate time each month to sift through your bank statements, credit card reports, and digital payment histories. This routine check can help you spot any unfamiliar or forgotten subscription charges.

Organise with lists and categories

Maintain a spreadsheet or use budgeting apps that categorise expenditures. This way, you can see at a glance what's a fixed cost, what's a subscription, and where there might be room to trim.

Review subscriptions often

Your preferences and needs aren't static. Perhaps a streaming service that was once a favourite no longer piques your interest, or maybe you've onboarded a new app with features that overlap with an existing one. Regularly revisiting your subscriptions ensures you're only paying for what truly matters to you.

Subscription savings: How to get the most from your money

Subscriptions have woven their way into our daily lives, and with a little strategy, you can ensure they don’t burn a hole in your pocket. Here's how to maximise your savings and get the most bang for your buck:

Bundle and save

Telcos like Telstra and Optus often package phone, internet, and entertainment together. This bundled approach often translates to savings compared to standalone services.

The power of negotiation

Being a long-standing customer has its perks. Reach out to service providers and enquire about potential loyalty discounts or benefits. You might be pleasantly surprised!

Embrace family or shared plans

 

 

Popular platforms such as Spotify and Netflix cater to families and groups with shared plans. This way, several users can enjoy the service while splitting the bill

Opt for annual over monthly payments

Many services offer enticing discounts for those willing to commit to a year-long subscription versus monthly payments. If it's a service you know you'll use all year, this can translate into substantial savings.

Stay updated on offers

Regularly scout for limited-time promotions or loyalty bonuses. Staying informed can lead to unexpected discounts.

Where to report shady subscription practices

It’s not just about managing subscriptions efficiently; it’s equally vital to safeguard against unscrupulous practices. If you ever come across deceptive subscription models, here's where to turn:

• • ACCC's consumer complaints: Direct any complaints related to consumer rights violations or deceptive business practices to the ACCC's consumer protection division.
  • Your state or territory's consumer protection agency: Each state and territory in Australia has its own consumer protection agency, such as NSW's Fair Trading or Victoria's Consumer Affairs. They can assist with disputes and provide guidance on your rights.

Australia's current consumer protection framework, while robust, has areas that may not fully address the nuances of online subscription models. The rapidly evolving digital landscape has brought about challenges these laws might not have anticipated.

For instance, while a user can effortlessly sign up for an online subscription, there's no specific legislation in Australia mandating an equally simple cancellation process.

Acknowledging these modern-day challenges, the ACCC last year proposed introducing an ‘unfair practices’ provision within the Australian Consumer Law, targeting manipulative tactics such as dark patterns.

Subscriptions might be here to stay, they shouldn’t financially handcuff you. It's about striking a balance – making smart choices while ensuring businesses uphold ethical practices. If you have a problem with a subscription provider, lodge a complaint with us, and we’ll help you handle it.