How a Subscription Audit Can Help You Save Money
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Many Americans don’t realize just how much they’re spending on subscriptions until they take a closer look. With the growing popularity of streaming services, software, meal kits, and subscription boxes, it’s easy for those monthly fees to add up.
On average, Americans spend over $200 per month on subscriptions, and that figure can skyrocket depending on how many services you’re signed up for. Whether it’s Netflix, Spotify, or the latest meal delivery service, these costs can really add up if you’re not keeping track. It’s a good idea to periodically review your subscriptions to make sure you’re getting the most value for your money and aren’t paying for things you no longer use. A subscription audit can make a huge difference to the amount of money you spend on these services.
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What is a subscription audit?
A subscription audit is a process of reviewing and analyzing all active subscriptions an individual or organization holds. The primary goal of a subscription audit is to identify which subscriptions are necessary, redundant, or unused, and to optimize costs associated with these subscriptions.
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How a subscription audit works
Here’s a detailed look at each step involved in a subscription audit:
Inventory collection
The first step is to identify all subscriptions. Begin by listing every subscription service you subscribe to. This includes software (SaaS), entertainment services (Netflix, Spotify), professional memberships, cloud services (AWS, Google Cloud), gym memberships and any other recurring payments. Collect invoices, receipts, and billing statements. This can be done through email searches, credit card statements, and bank account reviews. Consider using subscription management tools or apps that can help aggregate and identify subscriptions automatically.
Cost analysis
Sum up the costs of current subscriptions, both on a monthly fees and an annual basis. This will give you a clear picture of the financial impact. Be aware of any hidden costs such as taxes, additional user fees, or variable charges based on usage.
Usage review
Look at how often each subscription is used. For software, this might mean checking login or usage logs. Determine if the subscription is providing value for the money. This can be subjective but should consider whether the subscription meets its intended purpose effectively.
Necessity assessment
Classify subscriptions as essential (critical to operations or personal needs) or non-essential (nice to have but not crucial). Ensure that each subscription aligns with your goals and needs. For businesses, this might mean supporting operational efficiency or providing a competitive advantage.
Redundancy identification
This is a very crucial step in the audit. Identify any subscriptions that serve similar purposes. For example, multiple streaming services or project management tools. Where possible, consolidate redundant services into a single subscription that can fulfill multiple needs.
Optimization
If you are not utilizing the full features of a subscription, consider downgrading to a less expensive plan. Alternatively, look for alternative providers that offer the same service at a better rate or with better terms. Contact providers to negotiate lower rates, especially if you have been a long-time customer or have multiple subscriptions with the same provider.
Cancellation of unused subscriptions
Pinpoint subscriptions that are rarely or never used. Follow through with canceling these subscriptions. Ensure that you have read the cancellation policies and understood any potential fees or penalties.
Documentation and monitoring
Lastly, maintain detailed records of all active subscriptions, including start dates, renewal dates, subscription costs, and usage metrics. Set up a periodic review schedule, such as quarterly or bi-annually, to revisit and reassess your subscription portfolio.
Conducting a subscription audit can reveal significant opportunities for cost savings and operational efficiency, making it a valuable exercise for both individuals and organizations.
How much can a subscription audit save?
The savings from a subscription audit can vary widely depending on the number and type of subscriptions you have, but many people find that they can save a significant amount. On average, individuals can save between $100 to $500 annually by identifying and eliminating unused or redundant subscriptions. In some cases, the savings could be even higher, especially if you have multiple overlapping services or premium plans that you're not fully utilizing.
Benefits of subscription audit
- Identifying unused subscriptions. By reviewing all active subscriptions, individuals can identify and cancel those they no longer use or need, eliminating unnecessary recurring subscriptions.
- Preventing overlaps. Individuals might find they have multiple subscriptions for similar services (e.g., multiple streaming services or cloud storage services). Consolidating these into one service can reduce costs.
- Optimizing subscription plans. If a subscription offers multiple tiers, individuals can assess whether they are fully utilizing the features of a higher-tier plan. If not, downgrading to a lower-cost plan can save money. Many services offer discounts for annual subscriptions compared to monthly plans. If the service is essential and will be used long-term, switching to an annual plan can result in savings.
- Negotiating better rates. Individuals can contact service providers to negotiate better rates, especially if they have been long-time customers. Providers often offer discounts or promotions to retain customers.
- Monitoring automatic renewals. By being aware of renewal dates, individuals can decide in advance whether they want to continue a subscription, avoiding unexpected charges. Setting calendar reminders for renewal dates can help in making timely decisions about continuing or canceling subscriptions.
- Leveraging free trials and alternatives. Before committing to a paid subscription, individuals can use free trials to determine if a service meets their needs.
- Budgeting and financial awareness. A subscription audit gives a clear picture of monthly and annual expenditures on subscriptions, helping individuals understand where their money is going. Based on the audit, individuals can create a budget for subscriptions, ensuring they spend within their means and prioritize essential services.
Best subscription management apps
Rocket Money
Rocket Money(formerly Truebill) is an effective tool for managing subscriptions and overall financial health. It automatically detects your recurring payments by scanning your bank and credit card statements, making it easy to identify and manage your subscriptions.
The app simplifies the process of cancelling unwanted subscriptions with just a few clicks and offers bill negotiation services to help you lower your monthly expenses on services like cable and internet. Additionally, Rocket Money provides detailed spending insights and budgeting tools, allowing you to track your expenses and find opportunities for saving money.
Trim
Trim utilizes artificial intelligence to help you manage your subscriptions and reduce your expenses. By analyzing your spending patterns, Trim identifies subscriptions that you may no longer use or need, and assists in cancelling them. The app also negotiates lower rates on various bills, including cable and medical expenses, potentially saving you money each month.
Trim provides personalized financial recommendations based on your spending habits and offers strategies to help you pay off debt more efficiently, making it a comprehensive tool for improving your financial situation.
PocketGuard
PocketGuard focuses on simplifying budgeting and tracking your financial health by categorizing your expenses and monitoring your subscriptions. The app’s key feature, “In My Pocket,” shows you how much disposable income you have after accounting for bills, goals, and necessities, which helps you make informed spending decisions.
PocketGuard also allows you to set and track savings goals, making it easier to save for specific purposes. Its real-time updates and clear visual insights into your spending make it a valuable tool for managing your finances and achieving your financial objectives.
Pros and cons
Pros
- Cost savings. Identifies and eliminates unnecessary or redundant subscriptions, leading to significant financial savings.
- Enhanced budgeting. Provides a clearer picture of recurring charges, helping with more accurate budgeting and financial planning.
- Optimized value. Ensures that you are only paying for subscriptions that offer genuine value and meet your needs.
- Improved efficiency. Helps consolidate or streamline services, reducing the complexity of managing multiple subscriptions.
- Opportunity for better deals. Allows you to negotiate better rates or find more cost-effective alternatives, potentially lowering overall costs.
Cons
- Time-consuming. The process of reviewing and analyzing all subscriptions can be time-consuming and may require significant effort.
- Potential disruption. Cancelling or changing subscriptions might temporarily disrupt services or require adjustments to your routine.
- Complexity. For individuals with many subscriptions, the audit process can be complex and require careful tracking and evaluation.
Use Rocket Money to Cancel Unwanted Subscriptions & Lower Your Bills
- Easily Find & Cancel Unused Subscriptions
- Save Up To $729/Year with Truebill
- 80% Of Users Save Money
- Track Your Spending with Ease
FAQs
How often should I perform a subscription audit?
It’s recommended to perform a subscription audit at least once a year. However, if you have a large number of subscriptions or if there are frequent changes in your services, more frequent audits (e.g., quarterly) may be beneficial.
What tools can I use for a subscription audit?
You can manage subscriptions through tools and apps, such as Truebill, Trim, or SubscriptMe, to help track and manage your subscriptions. Alternatively, you can manually review your bank statements, credit card statements, and emails.
Are there any legal or financial implications of canceling subscriptions?
In most cases, there are no legal implications for canceling subscriptions. However, review the cancellation terms of each subscription for any potential fees or penalties. Ensure you’re aware of any impact on services or features.
The bottom line
A subscription audit is a vital process for saving money and optimizing expenses by thoroughly reviewing all active subscriptions. It helps identify and cancel unused or redundant services, prevent paying for overlapping functionalities, and adjust plans to better match actual usage.
By negotiating better rates and gaining a clearer view of recurring costs, individuals and organizations can streamline their spending, avoid unnecessary expenses, and make more informed financial decisions. Essentially, it ensures that every subscription provides value and aligns with your needs, leading to more efficient and cost-effective management of recurring expenses.
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