Everyone Wants a Piece of Your Income
There is an old wisdom:
This wisdom is not lost on some businesses as they know it’s easier to sell you a service once and then bill you for it automatically over a long period of time versus reselling the service to you each year. This form of billing, called recurring or annuity billing, is now common practice for most businesses. So who are the biggest users of this strategy?
- Cell phone companies*
- Cable and satellite television companies*
- Garbage haulers
- Credit monitoring services
- Cloud computing services (storage and file sharing)
- Any “of the month” clubs (books, music, fruit, meats, etc.)
- Maintenance contracts from service providers (heating, air conditioning, landscaping, etc.)
- Subscriptions (newspapers and magazines)
- Other online services (finding/rating local supplier services, online TV viewing, sports viewing packages)
* often contain multiple annuities within a bill
Action to Take Now
Create a list of your recurring charges. Check your bank account and credit card bills for similar monthly charges. Identify each vendor related to the bill and note what the service is that they provide. Then calculate an annual column for each bill (monthly times 12). Next, add all the costs up to find a monthly and annual total.
Note long-term contracts. Check the contracts for any exit penalties and auto renewal clauses. Write the auto renewal companies immediately to formally move to month-to-month after the initial contract expires.
Review the usefulness of each monthly bill. Now rate each bill on a scale from one to five against how important each one is. Start closing down those that are less valuable to you.
Move to annual billing where possible. While it creates a larger bill upfront, it requires the product to be resold to you each year. If you still love the service, try to negotiate a lower rate. This tends to work well with suppliers like online digital radio services.
Look for alternatives. Perhaps it is more cost effective to drop a group of premium channels in your online viewing lineup or replace cable with an online streaming service.
Eliminate overlap. Many consumers now have multiple streaming services. Rationalize them and consider whether any could be eliminated. The same is true for gaming and music services.
Conduct an annual bill review. A number of providers have multiple recurring charges within each bill! This technique is common with cell phone providers. So conduct an annual review of your bill with a service representative and look for a better deal.
Eliminate autopay. This out-of-site, out-of-mind technique is wonderful for the recurring billers. Paying for a service each month is a simple reminder of the cost of the service and a subtle hint to assess the value of the service to you. So each year, turn off your autopay. Leave it off until you have conducted your annual review. If the service is still of value, then and only then, turn it back on again.
The problem with recurring billing is they slowly carve out portions of your income for many years. Perhaps it is time to jump out of a recurring charge or two and save some money.
Rabalais Business Consulting is Acadiana’s Small Business Survival Specialists firm based in Lafayette, LA, offering specialized business and accounting services to small businesses in the traditional sector.
Our team of highly trained professionals possesses the expertise and experience to provide clients with a comprehensive range of services, including accounting, tax planning and preparation, financial planning, business consulting, retirement planning and more.
At Rabalais Business Consulting, our primary objective is to help businesses achieve their financial goals by optimizing their financial performance, minimizing their tax liabilities, and protecting their hard-earned wealth. We achieve this by working collaboratively with our clients to develop customized solutions that align with their unique business objectives.
Our approach to business consulting is tailored to the specific needs of each client. We believe that every business is unique, and therefore requires a customized strategy to achieve its goals. We take the time to get to know our clients and their businesses, so that we can identify opportunities for growth, mitigate risks, and develop strategies to optimize their financial performance.
Our team of professionals possess a wealth of knowledge and experience in a variety of industries. We are committed to staying up-to-date with the latest industry trends and regulations, so that we can provide our clients with the most relevant and effective advice and solutions.
At Rabalais Business Consulting, we are passionate about helping our clients achieve their financial objectives. Whether you are a small business owner looking to minimize your tax liabilities or a company seeking to optimize your financial performance, we are here to help.
Thank you for considering Rabalais Business Consulting for your business needs. We look forward to the opportunity to work with you and help your business achieve its full potential.