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TIP: Month to Month Contracts

One area a business loses money is with Month to Month contracts or subscriptions.  They seem safe when we sign up and since its MTM, we do not tend to track them like we do with contracts for a set term.

While MTM contracts do not obligate us to a term where we can cancel at anytime, they can also go up in price anytime.  Annual escalations are quite common.

In 2010 I signed up for a cloud based server service.  The subscription was set for Month to Month at a rate of $29.99 per month.  Since it was not for a fixed term, I just entered in the $29.99 per month recurring expense in my accounting software.  My credit card was charged every month.  Over the next 3 years I did not track that subscription, it was set as a recurring expense in accounting and since it was MTM my attention was focused elsewhere.

When I migrated my business data over to RenewAlert in 2014 I reviewed this Cloud Based Service subscription.  I logged in to my account to find the monthly payment I had been paying was $59.99 per month. In looking back at the history, I found the subscription rate had gone up every year.  Yet I had only been realizing a monthly expense of $29.99 per month every month.  I was paying more and not realizing the write off.  Further, I was not sold that the value was there for that pricing.

As a result, I set all MTM contracts for an annual review.  In that review, I look back at the pricing I paid for the last 12 months as well as how the service has been working for me.  Companies change and its important to know that everything you are paying for is playing a critical role in the success of your business.

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