The subscription economy

One trend that struck me recently, is how many services and products are now subscription-based, rather than being one-time payments. A few years ago, we bought albums and films, now we pay for Spotify and Netflix. Instead of buying harddrives or blank CDs, we pay monthly for Dropbox or iCloud storage. And instead of re-mortgaging your house to buy the latest version of Adobe’s Creative Suite every few years, you pay monthly for Creative Cloud.

I thought it’d be interesting to take a look at my own subscription-based spending. I haven’t included real-world services or plans I was paying for 5 years ago as well — my mobile phone bill for example (which has remained remarkably steady).

  • Netflix: €11.49
  • Spotify: €9.99
  • iCloud: €0.99 (20GB)
  • Blog server: €8
  • Amazon Prime: €4.08 (€49/year)
  • CyclePro: €0.41 (€4.99/year)
  • Guardian Premium €0.83 (€4.99/6 months)
  • Dropbox €0.00 (28.8 GB via invites and offers)

Total: €35.38 a month or €424.56 a year.

That’s less than I expected, although I’m probably forgetting a few services and didn’t bother to list the paltry €0.99 WhatsApp charge a year.

There are a number of services I use heavily and would gladly pay for, but haven’t really felt a need to (Evernote and Dropbox, I’m looking at you) and one service I was happily paying for until they decided they didn’t want my money (Flickr Pro).

Looking at all of these services and their relative value to me, it’s interesting to see which are monetizing well and which are frankly undercharging.

I’m happily paying Apple €0.99 a month for a similar amount of storage that Dropbox has given me free over the years, yet I’d say Dropbox is far more valuable to me. However, since their only Pro tier is €9.99 (for far more space than I need), I probably won’t be giving them any money.

Anything under €10 a year is an easy decision and I almost wish more apps would switch to that kind of model, if it meant continuous improvements and updates.****

But given that a lot of users are probably paying similar amounts for similar types of services, it’s important to consider your app’s relative utility and importance in a user’s life when picking a pricepoint: Spotify is something I use daily and we spend a few hours every week watching content on Netflix, so the higher prices feel justified.

I suspect the number of subscription services we pay for will increase a fair bit over the next few years, as more companies seek out recurring revenue models to support continuous product updates and improvements.

So mine is €35.38 — what’s your number?