Is Everyday Extra worth it? (Australian)

Everyday Extra is a subscription offered by the Everyday Rewards platform which conveys some additional benefits to regular Woolworths Group users.

To begin with, the simplified answer to the question “Is Everyday Extra worth it” is “Yes, if you spend at least ~$70 a month at either Woolworths or Big W”. But there’s more complexity than that when you dig under the hood:

What you get

First let’s just make sure we’re all on the same page. Here’s what you get from Everyday Extra.

Once a month you can apply a 10% discount to a single purchase from Woolworths. This does not apply to all goods, for example you (unfortunately) can’t buy JB Hi Fi gift cards say at Woolies and apply the 10% discount.
In addition you also get a monthly single-shot 10% discount on Big W. It’s not either-or, you get both each month.
2x points on your base points from Woolworths and Big W. Unfortunately these aren’t all points, just a 2x modifier to the base $1 = 1 point you receive from normal purchases. You can think of this as conveying an additional 0.005% discount applied to everything (under the 2000pt = $10 framework).
“Extra Perks” which are a spattering of added benefits which have a random value. For our past 8 months we’ve so far received: 1x Free 150ml Juice ($2), 1x Free 200ml Dare Ice Coffee ($2), 1x Free Box of Vita Weat ($4), 1x Free Bag of Chicken Nuggets ($6), as well as an added booster which was an additional 2x base point modifier (0.005% discount). The frequency, value and term of the benefits from Extra Perks varies massively. I think a decent way to frame these benefits is an average $0.5–1 value generated monthly.

One last thing to note is these benefits do not come at the loss of other benefits. For instance, you can stack discount codes or discounted gift cards on top of Everyday Extra benefits.

What is costs

Unless you were lucky enough to lock in the old price, the two options are either $7/month or $70/year ($5.83/month). If you haven’t yet signed up you can follow a referral link - such as the one below - and receive ~$7.5 worth of points for signing up.

Finally there’s a free trial period, so the final sticker price for the first 13 months is (70–7.5)/13=$4.8/month. That doesn’t cover it though, because if you pay upfront you’re losing interest on that. A high interest savings account with Virgin Money is 5.35% so you’re actually losing $3.745 which prorated over the 13 months period results in a final cost of roughly ~$5.1/month.

Those numbers will all change when you go to roll the subscription in 13 months time, but by that time it won’t necessarily be the same price anyways so just plug in the figures you have handy. For the rest of the blog however I’ll be working on the basis that the effective cost roughly $5/month to make things simple.

The Math

Ok so first thing’s first, let’s get the straight forward stuff out of the way first. If your cost basis is $5, and the only benefit was a 10% discount, you would need to spend $50/month in a single shop at either Big W or Woolworths to be even. Given the prices these days that’s pretty much a given if you are already shopping at Woolworths frequently.

However you also receive the Everyday Extra perks, which we’ll mark at $0.5 work of benefit. In that frame, you only need to spend $45/month to break even.

Finally you receive an extra 2x base points as part of being an everyday extra member. You’ll receive the 1x base points for free so we can ignore those for accounting purposes. Earlier we mentioned that those points result in an effective 0.005% discount, so as a result the hurdle rate to monthly purchases is actually $44.9975 (i.e. the base points modifier sounds good but is ultimately worthless).

Decisions

Have a look at your purchase history if you have it available in the Everyday Rewards app and try to get a sense of your average maximum monthly spend.

If it’s greater than $70 you should purchase Everyday Extra irrespective of the term.
If it’s only greater than $60 you should consider purchasing Everyday Extra only with the 12 month precommitment.
If it’s only greater than $50 you should consider purchasing Everyday Extra only with the 12 month precommitment but only if you have the 1 month free trial.
If it’s only greater than $45 you should consider purchasing Everyday Extra only if all other conditions are met, your interest is less than 5.4% p.a. and you really trust a random blogger on the internet.

The decision becomes a bit easier if you think you can change behavior. If you believe you can merge most of your spending into one giant monthly purchase you can fit all your Woolworths spending under the 10% umbrella and increase the overall received benefit.

e.g. If you only spend $30 each week, if you were able to spend that all in one go you’ll receive 10% of 120–70 worth of benefit.

Caution

Why would Woolworths give away what appears to be free money. Here’s some potential options:

Breakage — in the same way gyms are economically viable because some giant percentage of subscribers don’t utilize the facilities, Woolworths group might be anticipating that the average user won’t leverage the discounts sufficiently to realize the full benefit.
Behavioral — if you receive a 10% global discount that cost you money and is limited in supply, you might spend much more than you otherwise would have normally to “get the most out of it”, in the process actually losing money because you spent more than you otherwise would have spent.
Everyday Rewards on-boarding — It’s just another way to get users to sign up to the Everyday Rewards program, to improve tracking, gamify purchases and so on.
Buy In — A 10% discount on something that’s 30% more expensive than it should be is still a bad deal.

Ultimately, if you still plan on purchasing from Woolworths in the future, and you believe you can remain steadfast to your budgets then most of these aren’t really issues.