10 Ways Being Online Saves You Money

iia_costsavings2016

In updating the “Top 10 Ways Being Online Saves You Money” report, IIA looked at the top areas of consumer spending and the discounts that are available to internet users.  Based on the 2015 Consumer Expenditure Survey released by the U.S. Department of Labor, we used online resources and applications to find discounts on essentials like housing, apparel, gasoline and food.  Broadband, both fixed and mobile, has changed the way that people shop online, providing access to discounts on everything from leisure activities to groceries. Some areas of this analysis, like housing, gasoline and newspaper expenditures, required data specific to certain cities.  For the purposes of this report, we chose five of the top 12 U.S. cities by population (New York, Chicago, Los Angeles, Dallas and Jacksonville), also keeping geographic diversity in mind. Overall, we found that the savings in this year’s analysis ($11,218.98) were slightly higher than those in our 2015 analysis ($10,504.25), based on 2014 numbers. As we did in last year’s methodology, we factored in the average annual cost of a mobile data plan AND home internet connection ($1,320).

We looked at similar products and used similar websites for comparison, though our research revealed new apps available for tablets and other mobile devices. 

The greatest source of savings in this year’s analysis was in the entertainment category ($3,628.76). We again found that “cutting the cord” on traditional cable TV subscriptions in favor of streaming content via Netflix or a similar service could produce significant savings.

The below methodology provides more detail as to the calculations used for each savings category.

METHODOLOGY

ONE. HOUSING. POTENTIAL SAVINGS: $3,574.12/YR (23.50%)
Source: Search-based study on apartments in New York, Chicago, Los Angeles, Dallas and Jacksonville
Methodology: Sampled 50 online postings in the above markets to determine average cost savings relative to local apartment rent.  Considered the average annual expenditure on housing ($18,409) minus the annual mortgage interest and charges for owned homes ($3,200), according to the Department of Labor annual study on consumer expenditures. Applied 23.50% savings factor to the remaining average expenditure for apartment living ($15,209).
Source examples: www.craigslist.org, Craigslist App, www.trulia.com, Trulia Rent App, www.zillow.com, Zillow App

TWO. AUTOMOTIVE. POTENTIAL SAVINGS: $3,279.00 (A ONE-TIME SAVINGS OF 9.77%)
Source: Cost analysis based on average new car purchase price in 2015
Methodology: Applied $3,279.00 savings factor from TrueCar.com to the average 2015 vehicle purchase cost net outlay ($33,560) based on a report by Kelley Blue Book.

THREE. HEALTH INSURANCE. POTENTIAL SAVINGS: $446.55/YR (15%)
Source: Kaiser Family Foundation Study
Methodology: Applied 15% savings factor from Kaiser study to the average amount spent on health insurance ($2,977) based on the Department of Labor annual study on consumer expenditures.

FOUR. FOOD. POTENTIAL SAVINGS: $507.90/YR (12.65%)
Source: Search-based study on basic basket of groceries with top selling items (Carbonated beverages, Milk, Fresh bread, Produce, Snacks, Cheese, Frozen dinners/entrees, Cold cereal)
Methodology: Created a standard basket of monthly groceries to establish a baseline retail cost. Conducted a series of online searches against the baseline to identify cost savings exclusive to the internet. Potential savings based on cost reductions at the aggregate basket level. Applied 12.65% savings factor to the average annual expenditure on food at home ($4,015) based on the Department of Labor annual study on consumer expenditures.
Source example: Amazon Grocery, Jet.com, Target Cartwheel App

FIVE. NON PRESCRIPTION DRUGS. $60.40/YR (17.87%)
Source: Search-based study on common over-the-counter medicines (Pain Relievers, Antacids, Cold Remedies, Allergy Relief, Natural Remedies)
Methodology: Created a standard basket of the best-selling non-prescription drugs to establish a baseline retail cost. Conducted a series of online searches against the baseline to identify cost savings exclusive to the internet. Potential savings based on cost reductions at the aggregate basket level. Applied 17.87% savings factor to the average annual expenditure on non-prescription drugs, $338 annually according to a study by the Consumer Healthcare Products Association.
Source example: www.drugstore.com, www.overstockdrugstore.com

SIX. GASOLINE. POTENTIAL SAVINGS: $42.85/YR (2.05%)
Source: Search-based study on lowest gasoline prices in New York, Chicago, Los Angeles, Dallas and Jacksonville
Methodology:  Researched average gas prices for each of the above cities and found the lowest advertised prices in each using the GasBuddy app, for a savings of 2.05% off of average gasoline expenditure ($2,090) based on the Department of Labor annual study on consumer expenditures.
Source example: www.gasbuddy.com, GasBuddy App

SEVEN. ENTERTAINMENT. POTENTIAL SAVINGS: $3,628.76/YR (62.03%)
Source: Search-based study on restaurant dining, sporting/concert tickets and leisure activities in New York, Chicago, Los Angeles, Dallas and Jacksonville
Methodology: Applied savings factor of 62.03% on dining outside of the home ($3,008) and entertainment such as concerts, events and leisure activities to the entertainment budget ($2,842) based on the Department of Labor annual study on consumer expenditures.
Source example: Groupon App, Living Social App.
Also added cost savings of “cutting the cord” on cable TV. To calculate savings, we looked at the average monthly cost of a cable subscription in the U.S. ($103, according to Fortune.com) and assumed the use of a streaming service like Netflix. Applied savings factor of 90.30% to the total average spent on cable as a percentage of total entertainment spending.

EIGHT. APPAREL. POTENTIAL SAVINGS: $827.75/YR (44.84%)
Source: Search-based study on basic clothing combinations for men and women
Methodology:  Created a set of standard baskets of apparel for a man (khakis/jeans and shirts) and a woman (skirts/jeans and tops) to establish a baseline retail cost in each of five price categories. Conducted a series of online searches against the baseline to identify cost savings exclusive to the internet. Applied 44.84% savings factor to the average annual expenditure on apparel ($1,846) based on the Department of Labor annual study on consumer expenditures.
Site example: www.6pm.com

NINE. NEWSPAPERS. POTENTIAL SAVINGS: $130.49/YR (54.05%)
Source: Search based-study reviewing major newspapers in New York, Chicago, Los Angeles, Dallas and Jacksonville
Methodology:  Calculated the standard annual rate for a daily delivery (including Sunday) subscription for three top papers in each of the above cities. Potential savings factor based on average annual daily subscription rates vs. online subscription rates and access to the newspaper’s app (where available).
Source example: www.nytimes.com, www.chicagotribune.com, www.dallasnews.com 

TEN. BILL PAY. POTENTIAL SAVINGS: $41.16/YR (100%)
Source: Cost analysis based on average consumer’s postage for seven bills per month.
Methodology: Created a standard multiple of monthly bills that are traditionally paid via postage (Rent/Mortgage, Gas, Electric, Water, Cable/Phone/Internet, Mobile, Credit Card). Applied average cost per U.S. postage stamp in 2015 ($0.49) for each monthly bill. Note: In 2016, the price of a U.S. postage stamp dropped to $0.47.
Site examples: www.mycheckfree.com, www.chase.com, www.bankofamerica.com

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