Latest news with #Bertini
Hindustan Times
29-06-2025
- Business
- Hindustan Times
Hulu to DoorDash: Why are more Americans slashing monthly subscriptions?
Millions of Americans are cutting back on subscriptions from streaming platforms to food delivery apps as rising costs force households to rethink monthly expenses. A new CNET survey shows nearly 6 in 10 U.S. adults are planning to cancel at least some of their paid subscriptions, highlighting growing frustration with price hikes, hidden fees, and auto-renewing charges that often go unnoticed until bank statements tell a different story, as per USA Today report. According to the same CNET report, the average American spends more than $1,000 a year on subscription services(Pexels) Marco Bertini, a marketing professor at Esade in Barcelona said, 'When people's budgets are tighter, they start asking themselves: Do I need to be paying over time for this? It just feels like a heavier burden.' One couple in Arizona had enough. Cassandra Navarro, who lives in Scottsdale, Arizona, got tired of all the small bills stacking up. She canceled Hulu, Amazon Prime, and DoorDash earlier this year. She says streaming services aren't worth it anymore — they raise prices often and remove shows she liked. As for food and shopping, she'd rather go to Walmart or swing by to pick up her takeout instead of paying delivery fees. Navarro and her husband have decided they'll cut back even more once they settle into their new house. They plan to build a collection of CDs and DVDs instead of paying for digital access every month. Navarro, 30 said, 'It just all adds up so much. We don't mind having one or two subscriptions, but when you have so many subscriptions at once, you start to feel like you don't have control of your life anymore. … You can't keep track of your own finances.' How much American spends on subscription ? According to the same CNET report, the average American spends more than $1,000 a year on subscription services and about $200 of that goes to stuff they don't use or need anymore. The reason so many companies push subscriptions is simple: it's profitable. A Harvard Business School report says around 75% of direct-to-consumer companies offer a subscription option. Bertini says this model works in certain industries, especially where the items are expensive. But not everything needs a recurring fee. "There are some places where it makes sense, and some places where it doesn't," he said. He also pointed out that some businesses rely on customers forgetting they're being charged every month. That may backfire as people become more careful with their spending. U.S. retail sales dropped 0.9% in May and 0.1% in April, which points to growing caution among shoppers. 'Do I want to have a recurring expense when my disposable income is a bit fluctuating?' Bertini asked. 'Disposable income, during tough times, is a little more uncertain. It may be higher one month, lower another, then maybe I'm unemployed.' Experts says it takes effort to cancel subscription Robbie Kellman McCarthy, an expert in consumer habits, says subscription-based companies may still do better than those that rely only on one-time purchases. He said, 'It takes effort to cancel, where it takes no effort to not purchase." He noted that during the Great Recession, some subscription services actually grew. Netflix, for example, saw a 26% rise in subscribers at the end of 2008, and another 31% jump the next year. Salesforce also saw more customers and more revenue. Still, not all subscription models are created equal. McCarthy said, 'If you're a utility like a telecom provider, (the risk is) probably pretty low.' He added, 'If you start moving toward streaming services, I think the risk goes up. When you move toward a box subscription, the risk becomes pretty high.' Also Read: Squid Game season 3 review: Darker and emotionally more impactful, Netflix show gets an imperfect but fitting finale FTC wants to make canceling easier One thing that could change the game for consumers is a rule from the Federal Trade Commission called 'click to cancel.' This rule says companies should make canceling just as easy as signing up — no long phone calls, no hidden buttons. If it took two clicks to subscribe, then it should take only two clicks to quit. The rule was passed last year under former Democratic Chair Lina Khan, but it's still not being enforced yet. Business groups have sued, saying it's too much of a burden. And the current FTC Chair, Republican Andrew Ferguson, said he voted against it because it was pushed during a lame-duck period. For now, the rule is on hold until July, to give companies more time to prepare. But Khan stands by it. "I really hope that sticks because this is hurting people," she said on the Pablo Torre Finds Out podcast in June. "Nobody should be stuck paying for a subscription that they either never signed up for or want to cancel."
USA Today
22-06-2025
- Business
- USA Today
Feeling oversubscribed? Why Americans are considering cutting their subscriptions
As cost-conscious Americans tighten their belts in an uncertain economy, they are starting to notice how quickly monthly subscription charges add up. Feeling oversubscribed? You are not alone. Most things these days – food delivery, ride hailing, TV and music streaming, fitness classes, digital storage apps – seem to come with a monthly payment. Few people have a system to manage the steady stream of autopilot charges on their credit cards or to track price hikes. What's more, they underestimate how much they spend each month on subscriptions. But as cost-conscious Americans tighten their belts in an uncertain economy, they are noticing how quickly these monthly charges can add up. Some 6 in 10 U.S. adults are considering breaking up with some of their paid subscriptions, according to a recent CNET survey. 'When people's budgets are tighter, they start asking themselves: Do I need to be paying over time for this?' asked Marco Bertini, a marketing professor at Esade, a university in Barcelona, who was not affiliated with the CNET survey. 'It just feels like a heavier burden.' What is the average amount of money spent on subscriptions? Cassandra Navarro of Scottsdale, Arizona, canceled her Hulu, Amazon and DoorDash subscriptions earlier this year. Streaming services have been too quick to drop titles and raise rates, she said, and she'd rather shop in person at Walmart or pick up a takeout order directly than deal with the extra costs associated with delivering goods directly to her doorstep. Navarro and her husband aim to cut out more music and movie streaming services after they move into their new home and have more space to collect CDs and DVDs. 'It just all adds up so much,' Navarro, 30, told USA TODAY. 'We don't mind having one or two subscriptions, but when you have so many subscriptions at once, you start to feel like you don't have control of your life anymore. … You can't keep track of your own finances.' The average American spends over $1,000 a year on subscriptions – $200 of it on unnecessary or unused subscriptions, according to the CNET survey. Why is the subscription model so popular? Nearly 75% of companies that sell directly to customers offer some sort of subscription, according to an industry and background note coauthored by Harvard Business School marketing professor Elie Ofek. The model makes sense in certain industries and can help consumers access big-ticket items, according to Bertini. But companies 'cannot and should not fit subscriptions to everything.' "There are some places where it makes sense, and some places where it doesn't," Bertini said, adding some bank on consumers simply forgetting the recurring charge. Those companies risk losing customers, especially as Americans tighten their purse strings. Retail sales were down 0.9% from the previous month in May, following a 0.1% dip in April, according to the Commerce Department. "Disposable income, during tough times, is a little more uncertain. It may be higher one month, lower another, then maybe I'm unemployed. Do I want to have a recurring expense when my disposable income is a bit fluctuating?' Bertini asked. McCarthy said the biggest risk to subscription companies is a lack of new subscribers, rather than a drop in the current subscription base. And that drop off will hit certain industries harder than others. "If you're a utility like a telecom provider, (the risk is) probably pretty low," he said. "If you start moving toward streaming services, I think the risk goes up. When you move toward a box subscription, the risk becomes pretty high.' Is the 'click to cancel' rule in effect? While subscription companies aren't immune to the effects of increasingly cost-conscious consumers, McCarthy says subscription-based companies are expected to weather economic turmoil better than purely transactional businesses. 'It takes effort to cancel, where it takes no effort to not purchase,' he said, adding that subscription companies fared well during the Great Recession. Netflix, for instance, closed the fourth quarter of 2008 with a 26% year-over-year leap in subscribers, and another 31% increase in the fourth quarter of 2009. Software company Salesforce also saw a jump in revenue and its customer base between 2008 and 2009. But a new rule from the Federal Trade Commission could make it much easier for consumers to click "unsubscribe." The agency's "click to cancel" rule, adopted last year under former Democratic Chair Lina Khan, requires businesses to make it as easy to cancel a service as it was to sign up. In other words, if a company allows you to sign up in two clicks, canceling should take no more than two clicks. Originally set to go into effect in May, the rule has faced legal and political challenges. Business associations have sued to block it, arguing it places too many burdens on businesses. Andrew Ferguson, the current Republican FTC chair, said he voted against 'click to cancel' because it came during the lame-duck period. The FTC has delayed enforcing the rule until July to give companies more time to comply. "I really hope that sticks, because this is hurting people," Khan said during an appearance on the 'Pablo Torre Finds Out' podcast in June. "Nobody should be stuck paying for a subscription that they either never signed up for or want to cancel." Will 'click to cancel' get canceled? New FTC rule faces legal, political challenges How to cancel an unwanted subscription Looking to trim monthly expenses? Here's how to break up with paid subscriptions.
