Judging What Each Subscription Is Worth

With every subscription on one list, the question changes from "what am I paying?" to "what is each one worth to me?" This chapter gives you four tests that answer it: cost per use, the sign-up-today test, a simple value score, and a check for overlaps. Together they sort every line of your inventory into one of four outcomes: keep, downgrade, rotate or cancel. The aim is not to cut as much as possible. It is to make sure every recurring charge is one you would choose again.

Test 1: cost per use

The simplest measure of value is what you pay each time you actually use something.

Cost per use = monthly price ÷ number of times you use it in a month

The difficulty is the denominator. People reliably overestimate how often they use flat-rate services. In their study of gym members, DellaVigna and Malmendier (2006) found that members on monthly contracts went so rarely that a pay-per-visit option would, on average, have cost them less. So do not estimate: count. For one month, keep a tally of each use next to each subscription in your inventory. Many apps and services also show your history or last sign-in date, which is a quick check.

Then compare the cost per use with the best alternative way of getting the same thing: a single class, a one-off rental, a day pass, a library loan, or a free version.

For example, a fitness membership at $60 a month costs $720 a year. Someone who actually goes three times a month, where a single visit costs a quarter of the monthly fee, would pay $540 a year buying visits one at a time. At that price ratio the membership becomes the better deal only from the fifth visit a month onward. The break-even point is always the monthly price divided by the price of one use, which you can work out for any subscription without a spreadsheet.

Cost per use is not the whole story. Some subscriptions are valuable precisely when they are not used, which is the next test's job to catch.

Test 2: would you sign up today?

For each subscription, ask a single question: if you did not have this service, would you sign up for it today, at today's price?

This question works because it removes two biases described in chapter 1. It sets aside what you have already paid, which is gone whatever you decide (the sunk cost trap studied by Arkes and Blumer, 1985). And it reframes cancelling as a choice not to buy, rather than as a loss of something you own, which blunts loss aversion.

If the honest answer is yes, keep it. If it is no, it is a candidate to cancel or downgrade. If the answer is "only some months of the year", it is a candidate to rotate, which chapter 6 covers for streaming and which works for many other services too.

Test 3: a value score for what usage misses

Some subscriptions earn their place without frequent use. Online backup is used rarely and matters enormously the one day you need it. A password manager or identity protection runs in the background. A course you use in bursts may lead to a raise.

To weigh these fairly, give each subscription a score from 1 to 5 on the two or three criteria that matter most to you. Common criteria are:

• necessity: would something important break, or be at risk, without it?
• time saved: does it replace work you would otherwise do yourself?
• enjoyment: does it reliably improve your week?
• progress: does it move a goal forward, such as a skill, health or income?

If one criterion matters more to you than the others, count it double. Then look at the scores next to the yearly cost. A low score with a high yearly cost is the clearest cancellation candidate on your list. A high score with a low cost needs no further thought.

Keep this light. The point is to make your priorities visible, not to build a precise model. Ten minutes is enough for a typical household.

Test 4: overlaps and things you already have

Overlaps are the easiest savings to find, because cancelling one of two duplicates costs you almost nothing. Look for:

• Two services doing one job: two cloud storage plans, two music services, two news services that cover the same ground, two fitness apps.
• A service included in something else: music or video included in a phone plan or a shopping membership, storage included with an office suite, a streaming service bundled with internet.
• Benefits on your cards: many credit cards include protections such as extended warranties or phone insurance when you pay with the card. These vary widely, so read your card's benefit guide before you cancel a separate policy.
• Your public library: many libraries offer free e-books, audiobooks, film streaming, language courses and access to newspapers with a library card. Check your library's website before paying for any of these.

From scores to decisions

Put each subscription into one of four groups.

1. Keep: high value, fair cost per use, no overlap. Leave it alone and move on.
2. Downgrade: you value it but use only part of it. Look for a cheaper tier, an ad-supported plan or a family plan (chapter 5).
3. Rotate: you value it for some months, not all. Subscribe when you will use it, then cancel (chapter 6).
4. Cancel: low score, high cost per use, or a duplicate.

Then see what the cancel and downgrade groups add up to.

For example, if the cancel and downgrade groups free up $40 a month and that money goes into savings automatically instead, over 10 years at about 3.9% a year after inflation it becomes about $5,832 in today's dollars, of which $4,800 is money you put in. The step that makes this real is moving the freed amount on purpose, the same month you cancel. Money that is simply no longer spent tends to be absorbed by other spending.