I’m amazed at how quickly the world of software and online services transitioned to the subscription model. Long gone are the days when a consumer could purchase a shrink wrapped computer program and use it until his computer was obsolete.

Once applied only to mail order steaks and newspapers, subscriptions have become a huge boon for the companies that deploy them. The model’s steady revenue stream catapulted the share prices of Netflix, Spotify, and Salesforce and revitalized struggling tech giants like Microsoft and Adobe. It further entrenched Amazon’s dominance through commercialization of cloud computing. 

The commercial benefits are unquestioned. But the spend conscious consumer like you will notice that subscriptions now pervade nearly every corner of life. Want a full picture of your online business network? Subscribe to LinkedIn. Can’t be bothered to buy a bottle of detergent at the grocery store? No worries, you can purchase a Tide subscription.

There are subscriptions for nearly every aspect of life, from razor blades to bacon.

Some subscriptions add a lot of value. I can’t purchase a newspaper and hope that content will remain relevant forever. However, the jury is out if I need a constantly updated version of Microsoft Office. One could argue that the features in Word 2011–which I write on today–are perfectly sufficient for my basic word processing purposes. And while there are undoubtedly serious Word users who need every new bell and whistle, I’d bet a buffalo nickel the plurality of folks are perfectly satisfied with the basic program introduced in 2003.

It is true that Microsoft office can be bought as a one time purchase, but the company goes out of its way to encourage users to choose the subscription-based 365 version. 

As you can see, the company touts the many benefits of the subscription. It never goes out of date! Technical support! Advanced phone features! Unlimited online storage! 

Just for fun, lets take a look at the price difference. A onetime purchase costs $149.99. A basic subscription costs $6.99 per month or $69.99 per year. Or if you’re feeling particularly frugal and can settle for ostensibly the same program, you can buy Office 2011 for less than $60. 

I’m writing on a MacBook Pro at the moment. The manufacturer predicts a four year lifespan, I reckon I’ll get more, but lets go with four. Take a look at how the numbers stack up after four years.

Year one looks pretty good for the license, but the 2011 version is still cheaper. Fast forward to year four and a perpetual purchase begins to look pretty good. All in, a user would spend nearly 50 percent more on the subscription than the perpetual license.

But I digress. This is not a discussion about Microsoft. Instead, it is an effort to take a serious look at how subscriptions have crept into our lives, simplify where we can, and get a handle on how this is affecting our finances.

Take stock

We’ve discussed the importance of making a budget. The same principal applies to evaluating subscriptions. I went through this process personally and I was amazed at the number of services I’m subscribed to. My list is below:

I spend $127.63 per month on subscriptions. Yikes. Make sure to look at all aspects of your life. I run in the (free) outdoors so don’t pay a gym fee, but many are paying a fee to practice yoga or spin in a studio.

This financial review made me realize that subscriptions can be charged on a once-yearly basis or as a reoccurring monthly charge. Take a look at the following areas to help get a handle on where you stand:

• Credit card statement: Take a look online or review your monthly statement. Subscription charges should be obvious.
• Apple subscriptions: If you use the Apple ecosystem, there is one centralized place to review subscriptions purchased through the App Store. Irritatingly, Apple Cloud storage, though a reoccurring subscription, does not appear in that menu. Cheat sheet on how to get to the subscription menu below.

• Amazon subscriptions: Log in, got to “accounts & lists” and check “membership & subscriptions.” This will let you know if you’ve subscribed to anything on Amazon.

If manually searching records is too onerous, there are a number of applications available that can help automate the process. Truebill and Trim both promise to delve into financial accounts to review reoccurring charges. Both profess to carefully protect financial data, but worth evaluating personal comfort level when opening a door to financial information. 

Consolidate family plans

There are many services that offer flexible plans. Netflix offers a premium plan for four users for $15.99 per month. Similarly, Spotify offers a premium subscription tier for families for $14.99 per month. An individual premium subscription costs $9.99. You and your significant other will enjoy that five dollar monthly or sixty dollar yearly savings. Drop that in the ol’ exchange traded fund to supercharge your savings.

Stock up on license keys

I expect perpetual-use licenses to eventually be eliminated.

As discussed above, the finances of purchasing a perpetual Microsoft Office licenses outweighs the costs of the subscription. The former will likely meet your needs.

My needs are simple. (1) Ability to open word documents, power points, and excel sheets. (2) Draft text in a word processor to conduct business (or blog!) at home. (3) Use excel to make extremely persuasive and incontrovertible financial points for these articles. Ha.    

Those needs do not require the most updated edition of Microsoft Office. Indeed, the functions above have been around since 2008. I write this today on Microsoft Word 2011. It works just fine for me. Based on the fact that you’re reading this, I suspect it will work fine for you, too.

Consider picking up a Microsoft Office perpetual license while you can and stashing it someplace safe.

Threaten to quit

This is pretty simple. Call the customer service department of the company that manages your subscription. Threaten to quit. Enjoy the discounts.

A moment ago I called the Wall Street Journal. I told them I could no longer afford to pay $22.49 per month for a subscription. I also noted I was thinking of switching to the New York Times. Boy oh boy did they offer me a discount.

I am now the newest $17.99 subscriber to the Wall Street Journal.

This strategy will not work with the new tech companies, but if you subscribe to traditional cable television, internet, news, or any legacy business struggling with subscriber loss, you can guarantee they are ready to make a deal to maintain your business.

Subscription Triage

Honestly reflect on your personal needs. Do you need six newspaper subscriptions? Do you have time to read them? Personally, I dedicate at least one hour every morning to reading the news. I read the Wall Street Journal cover to cover and peruse the international section of the Financial Times. The Economist is part of my weekend reoutine.

What this exercise taught me is that I do not regularly read Foreign Affairs. The $34.99 is a wasted expense. I maintained my subscription because I liked the prestige of telling people I was a subscriber, not because I was a regular reader.

Take an honest look at your subscriptions and assess your use. If it is less than once a month, consider terminating the subscription.

Conclusion

Subscriptions are a real cost. Take a concerted look at your exposure, evaluate the need, and make some cuts. It will get you one step closer to financial independence.