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 seemed 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 and handling, suddenly the deal didn’t look so appealing.
If you were like teenaged me, you ignored the offers until one day they stopped arriving in the mail. Something else arrived later on, though – a collection 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 addiction?
A similar offer caught my eye this past Christmas. 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.
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 also paid $20 per month for DAZN, the on-demand live streaming sports service that carries the NFL Sunday Ticket so I could watch my beloved Cleveland Browns. I cancelled after the Browns missed the playoffs (again).
Finally, I signed up for the Dollar Shave Club last year and paid $6.82 per month to get four stainless steel four-blade cartridges in the mail each month. It’s a great deal, and the product is awesome, but I’m not going through the blades that quickly so they’re starting to pile up. I’m on the fence about whether to continue.
My biggest subscription failure was a 30-day free trial for access to 10 images a month from Adobe Stock that turned into a $29.99 per month subscription when I forgot to cancel on time. That was in U.S. dollars too, by the way, which might as well have been $50 CDN.
Then there’s Netflix, 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?
I’m guilty of this. My family watches Netflix almost exclusively, yet we still pay for a basic cable package – just in case. Meanwhile our cable package is so bare bones that we couldn’t even watch the ball (any ball!) drop at midnight on New Year’s Eve (I cancelled time-shifting).
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. We shop at Costco weekly, and you can try to pry our Amazon Prime subscription from my cold-dead hands.
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? We like to travel and so we find the perks worthwhile on our annual fee cards. Your mileage may vary.
Take 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!