Ah, where would we be without subscription services? Whether you’re looking for entertaining media, boxes of merchandise, cooking ingredients, digital tools, or even shaving materials, there’s undoubtedly no shortage of subscription packages out there to meet your interests.
Notably, they’re of particular interest to entrepreneurial types who have more money than time. Pay a modest amount each month, and you can have access to something extremely useful. That’s legitimately a great deal when all of your energy is going towards business growth.
But be forewarned before you start signing up to every service you can find, because you need to understand how badly it can all go wrong. You see, subscription costs might sound cheap, but they add up quickly for business owners. Allow me to explain why…
They don’t have time to monitor outgoings in detail
Owning and running a business is like keeping a hundred plates spinning at the same time, and even if an owner hires people to spin plates for them, they’ll be the one to blame if anything comes crashing to the ground. In short, they’re under pressure all the time, and the exact nature of their ongoing finances will always fall below something else on their list of priorities.
This is even more of an inevitability when they have various employees working for them, because even if they somehow find a spare moment to check things, they’ll (perhaps rightfully) feel that it’s a task someone else should be doing — even though that’s not hugely significant if they’ve never actually taken the time to tell someone to do it.
And because they don’t take any notice of the outgoings, they won’t be able to maintain a meaningful idea of how much they’re spending in any given month. Subscription costs will start to feel abstract, and they’ll more readily throw another subscription on the pile, reasoning that one more won’t hurt. With nothing and no one to keep the outgoings in check, they’ll heap up until something reaches breaking point (a payment failing, for instance).
They set up free trials and let them roll over into full subscriptions
Everyone loves a free trial, and when someone is trying to run a business (and agonizing over weighty upfront costs), it’s exceptionally useful to discover that the utility they really want to try has a 30-day trial allowing them to test it without paying a cent. That way, they don’t need to invest and simply trust that they’ve made a good choice — they can try before they buy.
Unfortunately, it’s become very common for a subscription trial to not only require payment details to be provided before it’ll activate (there are good reasons for doing this) but also set the trial account to automatically convert to a full paid account when the trial period ends unless the account holder specifically cancels it in the account options. It’s really quite sneaky, and often catches people out.
Being incredibly busy, a business owner can easily start such a trial and breezily reason that they’ll simply cancel it before they start charging them, forgetting that their workload makes it rather unlikely that they’ll remember to get it done. Months later, they’ll have forgotten completely about the service, not knowing that they’re being charged for it regardless.
They don’t understand (or keep up with) subscription pricing
Subscription software is a worldwide business, and spans numerous types of currency. Admittedly, you’re mostly going to encounter US dollars, UK pounds, and EU euros (at least, if you’re using software in English), but that’s still enough variety to cause confusion among those who don’t know all that much about conversion rates.
Someone running a business in America might invest in a subscription to a UK-based service without realizing that the monthly price isn’t in dollars, for instance, or understanding that what they’re charged from month to month will change depending on changes in the rate.
Worse than that, though, is the matter of businesses changing their pricing models on a semi-regular basis. A company providing a service might decide that it’s been undervaluing it, and massively increase the prices, all without many subscribers even noticing. Sure, they might get emailed about it, but will they actually read those emails? If they’re busy, then maybe not.
They incorrectly estimate what they’re going to need
Imagine someone paying for a data connection for their smartphone with a cap of 2gb per month. They don’t use that much data in the average month, so when they reach a point of needing more, they simply pay for a little extra — it doesn’t cost too much, so no problem.
But then their data needs go up drastically, yet they stick with their routine. What happens? They end up paying for several gigabytes of add-on data each month, which of course costs them far more than it would to have simply paid for a higher tier plan in the first place.
In business, you need to be prepared for sudden growth, because you never know when you’ll catch a break and see a huge spike in interest. People in the ecommerce game know this very well: anyone who plans to leave the small-time and start selling at scale will ensure that they’re using an enterprise-ready platform beforehand, ready to accommodate the expansion.
To that end, a business owner must be extremely careful not to pick up subscriptions that are too much or too little for them. Pay for a level of service you don’t use, and you’ll waste a lot of money. Pay for a level of service unable to meet your needs, and you’ll lose money across the board. The best entrepreneurs are always thinking ahead to where they’re going to be next, making sure that they scale all their tools and resources accordingly.
It’s hard enough being a business owner without getting sloppy with subscriptions and allowing them to eat into your bottom line. Make a commitment to keeping track of your outgoings, only sign up to a service if you’re absolutely certain that you need it and can find the time to keep track of it, and — of course — use TrackMySubs to give you a safety net. Your bank account will thank you!
Patrick Foster writes regularly for ecommercetips.org. You can read more of his work at ecommercetips.org