Anyone born before 1990 should remember Columbia House – the “world’s largest record club” whose claim to fame was offering dirt-cheap music upfront to members who joined its mail-order subscription service.
The company made billions by using something called ‘negative option billing’, a process by which the customer agrees to have goods or services supplied automatically until a specific cancellation order is issued.
In the case of Columbia House, its members would receive discounted records, cassettes, or CDs – often up to a dozen for as little as one penny – and in the fine print agree to buy a limited number of items at full list price over a period of time.
On the surface, the deal was too good to be true. Basically free music! Then the offers kept coming and coming – I guess they really did want you to buy more albums after all. But at $25 a pop, plus shipping, suddenly the deal didn’t look very good.
So you ignored the offers until one day they stopped arriving in the mail. Something else arrived later on, though – a collections notice.
I’m sure we can all relate to that story – whether it was as a teenager with Columbia House, or some other subscription service that we got suckered into buying.
What’s your subscription prescription?
With two small children at home now, a similar offer caught my eye. Join the Disney Movie Club and get five Disney movies for $1. All I had to do was buy five more movies at regular price ($34.95 for Blu-ray, plus shipping) over the next 24 months.
I passed. Just because a product or service is cool, unique, or even free for a limited time, doesn’t mean you need to buy it. That’s doubly true when it comes to subscriptions. Remember, the awesome power of automating your savings – setting it and forgetting it – is working against you when you sign up for a monthly subscription.
That 30-day free trial for Next Issue turned into a $9.99 per month subscription. When was the last time you opened the app to read one of the magazines? The three-month trial for the Globe and Mail at 99 cents per month now sets you back $19.99 monthly.
Netflix has been a boon for cord-cutters everywhere, but how many of us subscribe to the on-demand streaming service in addition to an expensive monthly cable package?
Annual subscriptions for shopping at Costco and for services like Amazon Prime or Spotify must be evaluated regularly to ensure there’s value for money spent.
Another one to watch is your annual fee credit card. Do the rewards and perks justify the fee paid? Could you get the same value from a no-fee credit card?
My personal budget shows that I paid $624 in subscriptions last year, including the Costco Executive Membership, Amazon Prime, Netflix, Google Play Music, and two annual fee credit cards. I sampled Next Issue and the Globe and Mail on a trial basis, but cancelled before the regular rate kicked-in.
Action: Look back at your expenses from last year and make note to get rid of those costly subscriptions that just don’t add much value to your life. And, if you haven’t done so, cancel that Columbia House subscription already!