Why 123 Million Americans Buy Subscription Services

woman opening subscription box

How Americans buy their goods and services is changing. The increased availability of financing has allowed Americans to purchase more goods and services with less upfront cost. Why pay for the product in full or a full year of service when you can pay a nominal fee every month, like when signing up for a monthly subscription service?

The subscription service model has grown considerably from this paradigm shift. Realizing the power these cognitive biases can have on the customer’s decision to purchase, companies are offering more pricing and payment flexibility.

According to our recent survey of more than 2,000 people, 68 percent of Americans who purchase at least one subscription service reported convenience and price as their reason for purchasing.

The growth in subscription services has been astounding and with 62 percent of Americans reporting they do not subscribe to any services, this growth is likely to continue. Hitwise reports the increase in online traffic to the subscription box space alone is up 24 percent since 2017.

In addition to this increase in subscription services, we also discovered:

  • 17 percent of Americans who do subscribe to a service, subscribe to more than one.
  • Only 11 percent of Americans reported additional features and products were reason enough to purchase a subscription.

To learn more about what consumers want from their subscription services, jump to our infographic below.

Content streaming is the most popular paid subscription with 25 percent of Americans.

Although many people take full advantage of Netflix’s policy for the number of accounts per household, the company continues to increase subscribers year over year. Netflix is going all in with a production budget for original content between $12–$13 billion in 2018.

percent americans are paying for subscriptions

2 in 5 Americans use some type of subscription service, with 25 percent subscribing to content streaming services like Netflix and Spotify alone.

Men and women enjoy many of the same subscription services with nearly equal representation in most areas except for verticals related to food/beverage and cosmetics/toiletries, where women dominate. Of those who subscribe to food and beverage services, 68 percent are women, compared to male subscribers representing 33 percent.

Cosmetics and toiletries have a similar gender representation of subscribers. 69 percent of respondents who subscribe to services of this nature are female, compared to only 31 percent of men.

What benefit of subscription services retain the most customers?

Subscription services, like most business models, thrive on customer retention. If you cannot retain customers, the cost to acquire those customers can reduce, if not eliminate, the chances of success. Our findings indicate which benefits Americans find the most important resulting in a higher rate of retention.

68 percent of Americans want convenience or better deals from subscription services

priorities when subscribibg to a service

Nearly 40 percent of Americans choose to use subscriptions because they are convenient and easier to use than alternative means of buying products and services.

Interestingly, the only cohort that prioritizes better deals over ease and convenience is the 35–44 age range. For each decade of age increase after age 45, price sensitivity declines 20 percent on average as convenience becomes increasingly most favored by the 65+ demographic.

11 percent of Americans want additional features or products from subscription services

Surprisingly, a unique service or offering does not retain customers –– only 22 percent of Americans find this important. Additional features or products are even less favorable in the minds of Americans, with only 11 percent finding this significant.

Consumers have spoken: ease and convenience are the most important factors when deciding to purchase a subscription service. How will these subscription services remain relevant in the lives of Americans?

Are Subscription Services a Good Thing For American Consumers?

Although introductory deals and convenience can be alluring, subscription services can be a convenient way to accumulate unnecessary monthly expenses. This is much like how easy access to financing can be an easy way to accumulate debt, which can negatively impact your credit.

Credit card debt within the US is on the rise. Between 2016 and 2017, the total credit card debt increased 7 percent to $834 billion. Debt accumulation can creep up and compound entirely from trivial amounts, like $9.99 per month on a subscription service.

Americans make it clear in this survey: ease and convenience are more important than getting a better price. The following visual represents the findings from our survey of 2,000 Americans about their preferences when buying subscription services.

Survey Methodology

This subscription service study was conducted for Lexington Law using Google Consumer Surveys. The sample consists of 1,000 respondents per question, with an average margin of error of 3 percent. This survey was conducted on October 8th, 2018.