This article has been guest written by Izaak Wicks, from The Dream Factory NZ. Izaak specialises in website creation and custom digital solutions for businesses.
Through my career creating websites and digital solutions for businesses I've become increasingly aware of how many "Software as a Service" solutions we often rely on.
Some of these Software as a Service (SaaS) subscriptions are critical to a business's operation, such as accounting software, job management software and so on. Others, however, can have increasingly negative effects on the bottom line of a business when left unchecked. Worse yet, they can even run the risk of bottlenecking efficiency and impacting key business systems which I will get to shortly.
This phenomenon is becoming increasingly common and it's one I refer to as "Subscription Creep".
Subscription Creep explained
A quick Google reveals the term's already out there, although I coined the term as a manifestation of these "symptoms":
Your subscription will cost significantly more over months or years, compared to building this from scratch
Complacency: you've used it for so long that it is "just part of your running costs" - whether for better or worse you haven't really given it much thought
Not utilising your SaaS subscription: You have different subscriptions for different tasks, but there's potential to use just one tool for everything
Or, you have an "all-in-one" solution yet it only accomplishes one task within your business and nothing else.
You know you need it but can't remember why: "a charge that goes out to x every month, I keep meaning to see what that's even for!"
You're a victim of feature gating: Because of just one essential feature, you've been forced into using a higher tier plan.
Paying for 365 days to use only a fraction: You've signed up for something due to seasonal/temporary conditions and haven't cancelled it.
Lastly, the classic: "I forgot to cancel on the last day of the trial"!
Frustratingly enough for technology solutions, these charges also tend to be billed in American Dollars instead of NZD!
How poorly chosen digital solutions bottleneck business performance and growth
You've outgrown the solution
You may reach the point where extra functionality is required and your tool doesn't offer it, yet abandoning the solution could be difficult or disruptive. This is because...
You heavily rely on the solution.
You rely on this third party system so much that abandoning it would be costly. Not just in terms of the new service's cost, but also because of the existing workflows, data, connections etc within the current setup.
You're at the mercy of the solution
Consider the digital landscape itself. Many of these Software as a Service (SaaS) providers originate as tech startups, which often means pricing, features, and service levels can shift unexpectedly.
As these companies grow, face market pressures, or change ownership—sometimes within just a few years—businesses using their tools may find themselves dealing with sudden price hikes, altered features, or even reduced support.
Preventing Subscription Creep
Choose the right platform from the beginning and ask yourself whether a third party solution is necessary
This is perhaps the biggest one. Subscriptions often sneak in when they're "connecting" to or expanding on existing digital systems.
For example:
Sending data between existing subscriptions such as a CRM to another such as a job management or marketing system - you may be using a third party integration tool such as Zapier to do this.
You have a digital solution such as an online shop, but really it could be anything. You pay extensive money to run this - yet to achieve functionality you would expect out of the box, you're having to purchase a paid monthly add-on... maybe several.
In the case of sending data between subscription platforms, often your existing platforms have APIs and Webhook functionality. Without getting too technical, these are two tools a developer can use to allow your platforms to communicate with each other. They can easily build an integration that can be tweaked or built upon into the future, tailored to your requirements.
In the case of online shop add-ons, it is well worth writing down everything your tool requires or will require. When choosing a platform, look at what ones offer as many of these features out of the box as possible, and what ones are "add-ons". Some platforms are more reliant on paid add-ons than others, so doing your homework here is necessary.
Review and audit subscriptions on a regular basis
Your subscriptions are on a schedule, so should your audit of them!
Every 6 months or annually, mark out all of your subscriptions and identify:
The purpose of each tool
How often it’s used
Whether its features overlap with other tools
Whether a one-time fee alternative exists
Short of eliminating subscriptions you no longer need, look for/request "suspension" of seldom used subscriptions and measure their impact on your business. Did you really need them in the first place?
Request alternative pricing
Despite what you may see on a "Pricing" page, sometimes there are "secret plans" or custom pricing that can be done per-customer. In fact, I've successfully found solutions such as this several times. You don't know unless you ask.
Assess scalability: Decide whether this is a "means to an end" or an opportunity for growth.
A custom developed solution may not only solve the problem, but provide better scalability given it can be built on and adapted to your business. What may start as sending data from Point A to Point B may become a purpose-built tool for your business one day, offering a competitive edge and also adding value to your business.
One day, your in-house solution may even be software you sell to other businesses!
The ethics of how companies manage subscriptions has come under the lens, too.
I've been pondering how companies treat their customers when it comes to subscriptions. Adobe Creative Cloud, the industry standard for design software and a tool I use myself is under investigation for questionable practices when it comes to hidden fees and the ease of cancelling your subscription.
Did you hear Disney attempted to dismiss a wrongful death lawsuit brought on by an allergic reaction at a Disney World restaurant? The reason: years ago, the victim signed up for a 1 month trial of Disney Plus, and agreed to their terms and conditions. I am not joking.
Looking across the ditch, apparently your car's odometer and "distance to empty", once standard features, are now considered complimentary features according to Toyota Australia, in comparison to other paid offerings. Thanks for your generosity, I guess?
From car remote subscriptions to paying $80 so your car can say hello to you, subscriptions are increasingly becoming part of everyday personal and business life.
Once you have adopted a subscription and closely integrated its services within your business, it can be difficult to cancel as you become increasingly reliant on it. This is why digital system design and planning is imperative from the get-go.
When used correctly, subscribing to a third party to solve complex technological problems can be game-changing. All the maintenance and "tech stuff" is taken care of for a fixed fee. On the other hand, you may be waiving your right towards ownership of technology essential to your business.
Another thing worth pondering - what is your legal recourse "in the event of X"? You continue to click "Agree" every time a "We've made changes to our terms and conditions" appears, you don't have a choice as this is the only way to continue using the service and, let's face it, you'll never actually read all of the terms either.
What are your thoughts on the shift from ownership towards subscriptions, and are these services a major part of your business? Drop a comment below.
What are your thoughts on the shift from ownership towards subscriptions?
Does your business depend on many essential subscription services and solutions?
The team at BSP is good at identifying profit leakage and putting some of these subscriptions closely under the lens - drop a message and an advisor will get in touch.
If you have a cool idea or this has got you thinking about your current digital situation, my door's always open too. Fire an e-mail through to izaak.wicks@thedreamfactory.nz with the details and I'll be in touch.
Have thoughts on the shift from ownership to subscriptions or just want to vent? Drop a comment below.
