The rise of the “subscription economy” has transformed how Americans spend money. From streaming platforms to meal kits, subscriptions promise convenience and value—but new research reveals that many consumers are underestimating how much they pay for these services each month. A 2021 study by West Monroe highlights a troubling trend: Americans are spending more on subscriptions than ever before, yet they’re increasingly unaware of the cumulative costs. Let’s break down the findings and explore how to regain control of subscription spending.
Key Findings from the West Monroe Study
- The Average Monthly Spend Is Higher Than You Think
According to the report, the average American household spends $273 per month on subscription services—a staggering $3,276 annually. This figure includes everything from Netflix and Spotify to Amazon Prime, gym memberships, and software tools. - Underestimation Is Common
Shockingly, 42% of respondents underestimated their monthly subscription spending by $100–$200. Many assume they pay far less, often because subscriptions are automated and easy to forget. - The “Subscription Creep” Problem
The average household has 12 active subscriptions, yet most people believe they only have 7–8. This disconnect highlights how easily small recurring charges add up over time. - Streaming Services Dominate, But Other Categories Are Growing
While video streaming (e.g., Netflix, Hulu) remains the most common subscription, newer categories like food delivery (e.g., DoorDash Pass), fitness apps (e.g., Peloton), and cloud storage are gaining traction.
Why Are We Overspending?
Subscription services are designed to be frictionless and habitual, making it easy for consumers to lose track of spending. Here’s why people often overspend without realizing it:
1. The “Set It and Forget It” Trap
• 48% of consumers admit to forgetting about at least one recurring subscription, according to a 2022 survey by C+R Research.
• Free trials that auto-renew contribute heavily to overspending. 42% of people say they forgot to cancel a free trial before being charged.
2. Small Charges Add Up Quickly
• The average American spends $219 per month on subscription services but believes they spend only $86—a $133 underestimation (West Monroe, 2022).
• Over a year, that’s $1,596 in unaccounted-for spending—enough to cover several months of rent, groceries, or travel expenses.
3. Overlapping and Redundant Services
• 82% of households are subscribed to more than one streaming service (Deloitte, 2023), and many users don’t regularly use all of them.
• The average U.S. consumer subscribes to 12 different services, ranging from entertainment to software, fitness, and meal kits (Forbes, 2023).
4. Psychological Pricing Tricks
• Tiered pricing encourages people to overpay for features they don’t need—54% of consumers opt for a higher-priced plan just to avoid missing out on benefits they may never use (McKinsey, 2023).
• Annual billing discounts create a sunk cost effect, leading users to stick with subscriptions even if they don’t use them regularly.
5. Lack of Subscription Awareness
• A study by Credit Karma found that 1 in 4 Americans has continued paying for a subscription they thought they canceled.
• Some companies make it intentionally difficult to cancel, using tactics like hidden cancel buttons or forced phone cancellations to keep customers locked in.
How to Take Back Control of Your Subscription Spending
Overspending on subscriptions doesn’t have to be inevitable. Here’s how to cut unnecessary costs and regain financial control:
1. Audit Your Subscriptions Regularly
• Review your bank and credit card statements every three to six months to identify active subscriptions.
• Use subscription tracking apps like Truebill, Rocket Money, or Mint—these apps can help users save an average of $512 per year by flagging unwanted subscriptions.
2. Cancel Unused or Redundant Services
• 35% of consumers say they have at least one subscription they could cancel without missing it (Bankrate, 2023).
• If you haven’t used a service in the last 1–2 months, consider pausing or canceling it. Many companies allow temporary suspensions instead of outright cancellation.
3. Opt for Pay-As-You-Go Alternatives
• Instead of subscribing indefinitely, check if services offer one-time purchases or pay-per-use options.
• Example: If you only watch a certain streaming service for one show, subscribe for a single month and cancel after watching.
4. Negotiate or Switch to Cheaper Plans
• 60% of people who call and negotiate with subscription services successfully get a discount or better deal (Consumer Reports, 2023).
• Consider family plans or bundled subscriptions to save money without sacrificing service access.
5. Set Up Subscription Alerts
• Many banks and credit card providers allow you to set up alerts for recurring payments, so you always know when a charge is coming.
• If you sign up for a free trial, set a calendar reminder to cancel before the trial ends to avoid unwanted charges.
6. Use a Virtual Card for Trials
• Services like Privacy.com or Revolut let you create virtual credit cards with expiration dates, preventing auto-renewals after free trials.
• This method ensures you never get charged for a service you only meant to try.
7. Adopt a Minimalist Mindset
• Ask yourself: Does this subscription genuinely improve my life? If not, it may not be worth keeping.
• People who consciously limit subscriptions to 3–5 essential services save an average of $1,200 per year compared to those who subscribe impulsively (CNBC, 2023).
The Bottom Line: Cut the Waster and Save Money
By being more intentional with subscriptions, consumers can avoid the subscription trap and keep more money in their pockets. Implementing just a few of these strategies can lead to significant annual savings while ensuring you only pay for services that truly add value to your life.
Take Action Today: Block 10 minutes on your calendar to review your bank statements. You might be surprised how much you’ll save by cutting just one or two unused services.
Sources:
West Monroe: Americans Are Spending More on Subscriptions and Are Less Aware of Spending
Data reflects 2021 findings; trends have likely intensified with the growth of niche subscriptions since then.
