Millions of Australians are signed up to monthly subscription services as businesses use the time-tested model for everything from streaming and music to everyday essentials.

But while subscriptions for things like laundry liquids, vegetables and even cooked meals are convenient, financial adviser and On Your Own Two Feet founder Helen Baker said it was easy to overpay.

“That’s how they get you – they get you to sign up and then you don’t end up using it as much,” Baker said.

“Hopefully people are using them, but a lot of the time there’s so much going on that people are committed to things they’re not using.”

Why businesses like time-tested model

Businesses have offered subscription services in one form or another for years, tracing back to 1860s in Britain, when it was common for households to buy milk delivery subscriptions.

The 21st-century version of the business model is often bedded in e-commerce and available for a much broader array of goods and services, whether that’s streaming content or sorting the pantry.

Consumers opt for subscriptions because they’re convenient, particularly for products you know you’ll need anyway. In turn, businesses enjoy certainty about their revenue and higher customer retention.

These days Australians are spending hundreds of millions of dollars on subscriptions every year. Video streaming alone accounted for a $324 million slice of household budgets over 2021-22.

Subscription prices have also risen in the past few years amid the cost-of-living crisis, as TND has previously reported.

Baker said subscription services often took advantage of the fact that Australians forget they’re signed up, or have entered their card details for a free month, only to forget to cancel it.

“It is over $100 a month for some of these things,” Baker said.

“[In] a year, that’s $1200; if you’re not using it, then for some people that’s a trip to Bali.”

How to save

Subscriptions can be tricky because the same thing that makes them convenient also makes it easy to overpay – money comes out automatically, without you swiping your card or handing over cash.

It gets even harder to keep track if you’re signed up to multiple subscriptions or are juggling free months.

That’s so common that it’s actually a key part of the business model; companies know that giving away a free month is a good way to hook people into paying hundreds of dollars over a year.

The first step Australians should take to get in control of subscription spending is to audit what they’re signed up to, Baker said, and then decide which services are actually worth it.

“Monitor how much family members are using a streaming service in a week or month,” Baker said.

It also pays to be meticulous when signing up for a subscription, make sure you’re confident that any bundle deal you pay for includes products and services you will actually use, at a good price.

Free trials can be good value, but only if you remember to cancel if you don’t intend to use the product.

“Make sure that before a free trial runs out, you lodge it in your calendar and turn it off,” Baker said.

Australians also want to keep in mind the rationale behind subscription services, which locks people into buying a particular product or service from one provider, without considering if a better deal is available.

That’s good for companies because it means their customers become sticky, shielding them from competitors undercutting them. But it’s also a sign you could be getting a cheaper price elsewhere.

With that in mind, it’s worth regularly reviewing any recurring payment in your budget, especially at a time when prices are being increased.