Cosmetic subscription plans can be ugly to your wallet


Subscription plans for products or services are popping up all over. And while getting you to pay an automatic, recurring monthly fee for something is a marketeer’s dream, Clark has long warned you to be careful with them. He’d much prefer you manage your payments manually so you can keep close tabs on your monthly spending.

And now there’s a new emerging form of subscription — one that’s hard to know if it truly provides value. Geared heavily toward women, companies offer samples of beauty products at a monthly fee that is presumably much lower than the retail price. One of these new plans is called BirchBox. For $10/month, you get sent very high-end cosmetic samples by mail every month.

The business model presumes that if someone really likes the product, they will turn around and buy full-size amounts of the product. This is a similar concept to the free samples provided in department stores cosmetic counters–but in this case you’re charged up front for the samples.

Birchbox, a two-person start-up just a year and a half ago, is booming now, with 50 employees and counting. They’re so successful that they’re now testing a subscription service for men. (Clark warns Birchbox: don’t waste your time, we guys just aren’t going to be into that!)

It’s neat to see new startups succeed in today’s market. But the damage to your wallet with this particular plan is not so much in the monthly fees. The danger is in the potential cost of all those expensive products you’ll now be tempted to purchase —  creating a “need” in your mind that otherwise wouldn’t have existed.

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