Consumers in Europe spend about 5% of all their spending on subscriptions. They spend, on average, 130 euros per month for subscriptions, such as video, music, sport, or food. The subscription economy in Europe is estimated to be worth 350 billion euros per year. This has been researched by ING, which interviewed 11,000 households in 11 different European countries.
The biggest problem that customers face while using subscription-based products/services is that they do not realize how much of their budget they spent on those types of activities. Recent surveys about rapidly growing subscription commerce show that people spend a lot more on subscriptions than they think. 84% of people grossly underestimated how much they spent on digital subscriptions according to a Waterstone Management Group survey.
Due to millions of US customers spending billions of dollars daily, the WestMonroe group did research about customer spending habits related to subscription-based services and products.
Initial research was conducted in 3 steps:
1. Participants were being asked to think generally about recurring monthly expenses associated with digital services, devices, and subscription boxes.
2. Then they were given 10 seconds to guess how much they spend per month on such expenses.
3. After recording a first answer, participants were asked to take 30 seconds to think about the question more carefully before answering a second time. They prompted them with specific examples of services and service categories, including “WiFi, mobile service, Netflix, Spotify, Birchbox, Dollar Shave Club, GoDaddy, PlayStation Now, iCloud, Fitbit, etc.”
Results of the research are the following:
- Average of first guesses (10 seconds): $79.74/month
- Average of second guesses (30 seconds): $111.61/month
That’s a 40% increase in the estimated spend between the two guesses.
The next part of the research conducted walking participants through an exhaustive inventory of their recurring monthly expenses, across 21 categories. Some services, particularly apps, have free versions, but researchers focused solely on the services that are being paid.
Once the respondents’ inventories were complete, the real number came to the surface, and it was stunning $237.33! Across the 21 categories that were measured, that was the average total spend.
Taken this into a count, here is the scale of the research results:
- First guess: $79.74/month
- Second guess: $111.61/month
- Actual spend: $237.33/month
That’s a 40% increase from the first to second guess and a 197% increase from the first to actual spend. This is a real sign of how big of a problem recurring payment business is to the customer. CNBC also wrote that the subscription habit is wasting $500 per year and gray-area charges — including fees that kick in after a free trial, auto-renewing services, and subscription fees that creep higher over time — won out as consumers’ top financial pet peeve in a MyBankTracker.com survey.
In 2019, people in the US spent $640 on digital subscriptions like streaming video and music services, cloud storage, dating apps, and online productivity tools, according to an analysis for The New York Times by Mint, the online budgeting tool owned by Intuit.
Even the satisfaction of customers has grown, they have no perception of how much money they spend. Small monthly payments on subscriptions seem cheap, but yearly, they are not.
So, if you want to control all of your subscriptions and recurring payments, sign up for Revuto 🙂