By Don Nicholas • 09/03/2012
3 Subscription Pricing Strategies that Work
While the challenge of choosing the right subscription and single copy pricing strategy is not new to magazine publishers, it’s virgin territory for most subscription website publishers and many publishers exploring the digital newsstand landscape. Even magazine publishers are faced with new economic realities. The marginal cost of delivering a digital subscription to your own website is near zero. The cost of delivering digital issues via the Apple, Amazon, or Barnes & Noble digital newsstands is based on remit and the cost of delivering a digital issue paid to your digital publishing software provider (most likely the Adobe Digital Publishing Suite).
While the above is new, an Excel spreadsheet can help you map the right solution easily. The tougher decision is deciding how to position subscription versus single copy or limited access. It would be nice if there were a one-size-fits-all solution to this problem. There’s not. Depending upon your brand, delivery channels, and publishing economics (user, sponsor, or some hybrid of the two), one of these three solutions might be best for you.
Three subscription pricing strategies to ponder
Fair and balanced: If you want to neutralize price in the subscription versus single copy decision-making process, use the fair and balanced approach. Assuming you’re selling either a monthly issue or monthly access or both, set your price ratio at four-to-one. For a mass-market consumer brand it might ideally be $19.97 per year or $4.97 per month (issue).
Encourage sampling: Consumers don’t like commitment. When considering the purchase of an information product with which they’re unfamiliar, they largely prefer to buy one. If you want to encourage this behavior and thus maximize your single copy or monthly access sales, price your annual subscription at $19.97 and price monthly access or single copies at $2.97. This pricing strategy still provides a powerful incentive to take the annual option, but will result in a much higher percentage of people that take the single copy or monthly access price. It’s worth noting that there’s a huge difference in the long term economics of selling monthly access to a subscription website for $2.97 on a recurring basis, than selling a single magazine or newsletter issue through a subscription application for $2.97 on a non-recurring basis.
Push the subscription: If your overall economics favor selling subscriptions, consider what many now call “no-brainer pricing”, which sets a ratio of about two-to-one. Assuming we’re still talking about a subscription priced at $19.97, this strategy would dictate a single copy or monthly access price of $9.97. Note: In all the above cases I am avoiding avalanche price barriers like $10 and $20. You should, too.
While many magazine and newsletter publishers have avoided building subscription websites and thus avoided the above decision matrix until now, the rapid growth of tablet computers and the sale of tablet-based app subscriptions is dragging them to include digital subscription marketing in their core long-term publishing strategy.
More subscription pricing data on the way
Every week I hear from a colleague or client who has new data about the best pricing and promotion strategies for their digital subscription websites and digital apps. In many cases, they hadn’t even considered how single copy or monthly access pricing should play into their overall marketing and pricing strategy. That’s changing quickly. As new data and case studies appear, you can count on us to cover them here, in our webinars, and in our upcoming live events.
Posted in Subscription Website Publishing