Run it with less chaos · Every business
How Much Small Businesses Spend on Software They Don't Use
No national survey has measured unused software at small businesses, but research on subscriptions shows how easily recurring charges outlive their use, and an owner can find their own figure in an hour.
At a glance
- In a 2022 survey of 1,000 U.S. consumers, people estimated they spent $86 a month on subscriptions and found $219 a month once they listed every charge, about 2.5 times their guess, and 42% were paying for a subscription they had forgotten.
- Economists using payment card data estimate that customer inattention raises subscription sellers' revenue by between 14% and more than 200%, which shows how much of that spending continues without a decision.
- For an illustrative business with 14 software charges, cancelling three unused tools and downgrading one plan saves about $1,800 a year, close to a quarter of its software spend.
The number and where it comes from
One widely cited measure of forgotten subscriptions comes from C+R Research, a market research firm that surveyed 1,000 U.S. consumers between April 22 and May 2, 2022, split evenly across four generations. Respondents first guessed their monthly subscription spending at about $86, then itemized every service and arrived at an average of $219, which is $133 more than they thought, and 42% said they had stopped using at least one subscription but forgot they were still paying for it.
Those are household figures, and no Census, Federal Reserve or peer-reviewed study we could find measures unused software at small businesses directly; the large published software surveys come from vendors that sell license tracking to enterprises with hundreds of applications. What the household research does show, with stronger methods, is why the gap appears. A study of 7,752 health club members published in the American Economic Review found that members on monthly contracts of more than $70 visited about 4.3 times a month, paying more than $17 per visit when a 10-visit pass would have cost about $10, and a 2023 NBER study using payment card data found that cancellations rise sharply in the month a card is replaced, the one moment a renewal requires a decision.
| Study | What it measured | Finding |
|---|---|---|
| C+R Research, 2022 | 1,000 U.S. consumers listing their subscriptions | Real monthly spend of $219 against a guess of $86; 42% paying for a forgotten subscription |
| Health club study, American Economic Review, 2006 | Attendance and contracts of 7,752 health club members | Monthly members paid more than $17 per visit when $10 per visit was available |
| Subscription renewal study, NBER, 2023 | Subscription renewals in payment card network data | Inattention raises seller revenue by between 14% and more than 200% |
A business card carries the same pattern with higher stakes, because tools are often added by different people for different reasons, such as a trial that rolled into a paid plan, a second scheduling app someone tested or a premium tier bought for one feature, and each one renews without asking.
The calculation
The formula is short: (monthly cost of each unused tool + monthly savings from each downgrade) × 12. A tool counts as unused if nobody has logged in for 60 days or if another tool already does the same job.
| Recurring software charges on the statement (Assumption) | 14 |
|---|---|
| Average monthly cost per charge (Assumption) | $45 |
| Total monthly software spend (Calculated (14 × $45)) | $630 |
| Unused or duplicate tools found (Assumption) | 3, averaging $40 a month |
| Savings from cancelling them (Calculated (3 × $40 × 12)) | $1,440 a year |
| Plans downgraded to a lower tier (Assumption) | 1, saving $30 a month |
| Savings from the downgrade (Calculated ($30 × 12)) | $360 a year |
| Total annual savings (Calculated ($1,440 + $360)) | $1,800 |
| Share of monthly software spend recovered (Calculated ($150 ÷ $630)) | About 24% |
Illustrative example; replace every assumption with your own numbers.
How you compare
- Guessed versus real spend: consumers in the C+R survey underestimated their subscriptions by about 2.5 times. If your guess at monthly software spend comes in well under the total on your statements, you are in the same position.
- Forgotten charges: 42% of consumers found at least one. A business that has added tools over several years and never cancelled one is likely to find more than one.
- Your own baseline: pull three months of card and bank statements, list every recurring charge with its monthly cost and the name of the last person who used it, and compare the total with your guess.
The next step is to do that listing this week, cancel anything nobody used in the last 60 days and set a calendar reminder to repeat the review every six months.
About this research: No representative study of unused software at small U.S. businesses was found. This article uses a 2022 consumer survey by C+R Research, a peer-reviewed study of gym contracts in the American Economic Review and an NBER study of subscription renewals as evidence of the underlying habit. The worked example is illustrative.
Sources
- C+R Research. Subscription Service Statistics and Costs. 2022. 1,000 U.S. consumers, April 22 to May 2, 2022.
- DellaVigna, S. and Malmendier, U. Paying Not to Go to the Gym. American Economic Review 96(3), 2006. 7,752 health club members.
- Einav, L., Klopack, B. and Mahoney, N. Selling Subscriptions. NBER Working Paper 31547, 2023.
Related reading: The Five Kinds of Software a Small Service Business Needs (and What to Cancel) · The Hidden Costs That Turn a Profitable Job Into a Loss · What Doing Nothing Really Costs a Small Service Business
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