Paid membership programmes offering free delivery and bundled services have become standard across large retailers. Whether one is worth its fee depends on usage that is easy to estimate and rarely estimated.
What is actually bundled
Typically several distinct things.
Delivery benefits, which are the core proposition and the reason most people join.
Media services — video, music, reading — of varying quality and depth.
Early or exclusive access to promotions.
Photo storage, discounts at affiliated businesses, and various smaller benefits.
The bundling is deliberate. It makes the fee harder to evaluate against any single benefit and increases the perceived value.
The delivery calculation
The one that determines most decisions.
Count orders per year that would otherwise incur a delivery charge, multiply by the charge, and compare against the fee.
The complication is the free delivery threshold that applies to non-members, since orders above it would have been free anyway.
Which means the relevant number is orders below the threshold, and for households that consolidate purchases into fewer larger orders the delivery benefit is worth considerably less than it appears.
The behavioural effect
The cost that does not appear in the arithmetic.
Membership removes the friction of a delivery charge, which increases order frequency and reduces order size.
This is well documented and is the commercial purpose. A member spends substantially more than a non-member, which is why the fee is set below the value of the benefits.
Which means the honest calculation is not whether the fee is recovered but whether the increased spending is worth it, and that is a harder question.
The media services, assessed
Generally the least examined component.
Video catalogues bundled with retail memberships are real and are typically narrower than dedicated services.
Music offerings are frequently limited relative to a standalone subscription.
Which means valuing them at the price of a standalone service overstates them, and valuing them at zero understates them.
The useful test is whether you would subscribe to them separately, and for most people the answer is no, which sets their value low.
The exclusive promotion access
Worth treating sceptically.
Member-only sale events create urgency and a sense of privileged access.
The pricing during them is subject to the same reference price issues as any promotion, and price tracking has found the same pattern of unremarkable discounts.
Which means the exclusivity is real and the value of what is exclusive is frequently not.
The shared membership question
Where the arithmetic improves substantially.
Most programmes permit sharing certain benefits within a household, and the terms define household in ways that vary.
Where sharing is permitted, splitting a fee across two people halves the cost and the calculation changes entirely.
Restrictions on sharing have tightened across several services, which is worth checking rather than assuming a previous arrangement continues.
The alternatives
Which are frequently sufficient.
Consolidating orders above the free delivery threshold, which requires planning and eliminates the delivery cost entirely.
Collection points and locker delivery, which many retailers offer free regardless of membership.
And simply buying elsewhere, since delivery terms vary and the assumption that one retailer is cheapest frequently does not survive comparison.
The annual review
The habit worth adopting.
Membership fees renew automatically and the calculation that justified joining may no longer hold.
Reviewing order history once a year, counting the orders that actually used the benefit, takes ten minutes.
Most people doing this find their usage has changed, and a meaningful proportion find the membership is no longer paying for itself.
Which is the same conclusion that applies to every recurring charge, and this one is larger than most.
The free trial and the renewal
Where most unwanted memberships originate.
Trials convert automatically and the conversion is disclosed at signup and easy to forget.
Annual renewals are the harder case, since a year passes between the decision and the charge.
A calendar reminder a fortnight before renewal converts an automatic charge into a decision, which is the whole of the remedy and takes thirty seconds to set.
The monthly option
Worth knowing since it changes the risk.
Most programmes offer monthly billing at a higher annualised rate than the annual plan.
For anybody uncertain whether the membership pays, monthly is the sensible way to test it over a few months, at a modest premium, without committing a year.
And for anybody whose usage is seasonal, monthly membership taken only during the months of heavy use is frequently cheaper than an annual plan, which is an arrangement the pricing does not advertise.
Cancelling and returning
Returning customer offers on these programmes are common, which means cancelling and rejoining later occasionally costs less than continuous membership.
The delivery threshold arithmetic
Worth working through since it is the crux.
If a retailer's free delivery threshold is modest and you routinely order above it, the delivery benefit is worth close to nothing.
If the threshold is high and you order small items frequently, it is worth a great deal.
Which means two households with identical spending can reach opposite conclusions, and the answer depends on order pattern rather than order value.
Counting the last twenty orders and noting how many fell below the threshold settles it in five minutes.