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Subscription Optimization and Per Use Cost

Posted By Jim On 04/06/2009 @ 12:24 pm In Frugal Living | 8 Comments

We have a lot of subscriptions in our household. We pay to subscribe to several magazines (Real Simple, Wired, Portfolio). We are members of our local gym and we have Netflix. We both have cell phones (hers is through her company) and we both have E-ZPasses in our cars. All together we probably have at least a dozen “monthly” services that we pay money for, all of which made sense at the time we subscribed. As our needs and our routines change, some of those services may not longer make much sense.

The idea of subscription optimization and per use cost is very simple. For a month, track how often you use a subscription and calculate the per use cost. If you pay $60 a month for a gym membership and go thirty times a month, that’s a per use cost of $2. Then compare it with the a la carte cost, or how much it would cost if you weren’t a member but still used the service. If it’s cheaper to go a la carte, cancel the subscription.

Example: E-ZPass Commuter Plan

We used to have my wife’s E-ZPass (it’s a device you use to quickly pay tolls) on the Maryland Baltimore Region E-ZPass commuter plan. You pay $20 for fifty trips every sixty days, which amounts to a “per use cost” of forty cents. My wife’s work commute took her through the Fort McHenry Tunnel (or the Baltimore Harbor Tunnel, based on how she opted to drive to work) which was $2 each way; it was a no-brainer. When her office moved, she no longer needed the plan because she wouldn’t go through the tunnels. That was an obvious decision, so we canceled the commuter plan.

Example: Netflix

The easiest way to find your “per use cost” in Netflix, short of tracking it yourself with pen and paper, is to use Feedflix [3]. They can seamlessly integrate with Netflix (this gives them access to your Netflix account, which is a security risk) but it will give you a tremendous amoutn of information, as I mentioned in my post about maximizing Netflix [4]. They appear to be getting more accurate, compared to the last time I looked at them, and they revealed that my cost per DVD rental was $1.25, which is more than what I would pay at a Red Box ($1.06). Netflix is a more interesting case because you can’t go “a la carte” with Netflix, your single serving alternatives are other businesses like Red Box or your local video store.

Quality of Service

Sometimes alternatives don’t offer the same quality of service as the main option. In the case of Netflix, the alternatives do; in the case of cable television, they may not. If you watch a lot of your shows off the DVR, you might consider canceling your cable television service and watching shows directly from the broadcaster’s website or off Hulu.com. Watching the shows off the web is an alternative but it doesn’t offer the same quality of service (which may not bother you one bit!).

Remember Fringe Benefits

Remember to compare apples to apples. I took a look at my cell phone bill to see if it might be cheaper to use a prepaid cell phone. You can get a lot of savings here and you don’t even have to track anything, just open up your bill and calculate how much you’re paying per minute. I used 265 day-time minutes and paid $33.95 for a per minute price of 12.8 cents. There are prepaid cell phone plans that are cheaper than 12.8 cents a minute, so I might want to switch.

But wait, I only calculated day-time minutes because my plan only charges me for day-time minutes. A prepaid cell phone would charge you for all minutes, which for me would total 500 minutes, or 6.79 cents a minute. Prepaid cell phones also don’t have data plans (I use a lot of this) or text messages, so I would have to take those into account too. Remember to compare the whole package, not just selective parts.

Have you taken such a close look at your subscriptions before? Find any that you could trim or replace very easily with alternatives? I’d love to hear success stories about this.


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