These subscription pricing strategies will help you pinpoint the perfect amount to charge readers for access to your publication’s premium content.
Online news subscriptions are all the rage — not just among publishers, but among readers, too. According to a survey by the Reuters Institute, 44% of publishing executives rank digital subscriptions as their most important revenue stream. That’s a big jump from just a few years ago, when publishers were still relying on display advertising and print subscriptions to fund their news organizations. As social media platforms like Facebook continue to syphon off revenue from digital publishers, it’s no wonder local news organizations are putting such a sharp focus on optimizing their digital subscriptions and membership programs.
Unfortunately, it’s not always easy to get readers to pay for a product that was previously free. Subscription pricing strategies for digital publishers can be fraught with complications. Just look at Bloomberg, which announced that it would be adding a paywall last year. Readers balked at the steep price tag. Standard subscriptions cost $35. For $40 per month, readers could get access to online and print editions of Businessweek, as well.
Generally speaking, the average cost of a digital news subscriptions is somewhere between $10 and $20 per month. When subscription packages are created using the right pricing strategies, the added expense doesn’t have to intimidate or frustrate readers. In fact, subscription programs should ideally involve an alignment of incentives, as they give readers a way to feel more involved and connected with the news organization.
With that in mind, here are some of the top subscription pricing strategies that digital publishers are using as they decide how to much to charge for their subscription programs.
1) Reader demographic research
Publishers can only charge what their readers will pay, and the readers of certain publications can afford to pay more than others. Publishers who serve a niche market — let’s say, the publisher of an online magazine for art collectors or an online magazine about the yachting lifestyle — can command higher prices for their subscriptions than publishers with general interest websites. The demographics of a publisher’s readership require significant attention, making this one of the most important pricing strategies for digital publishers in every niche.
2) Competitive analysis
What are competing publications charging for their subscription packages? The answer to that question will determine what subscription pricing strategies are sustainable. While it’s true that some readers will pay more for a better product, that’s only true to a point. When it comes to local news, readers are unlikely to subscribe to more than one publication and they’re likely to choose the lower priced option. This doesn’t mean that all publications have to be priced exactly the same, but it does mean that publishers should take their competitors’ prices into account when designing their own subscription packages.
3) Testing to optimize conversions
One of the beauties of being a digital publisher is having the opportunity to constantly test new subscription pricing strategies to figure out which exact prices drive the greatest number of conversions. Depending on the visitor data that a publisher is collecting, it’s possible to show certain visitors different prices based on things like visit frequency or user location. Any number of pricing strategies can be tested to maximize conversions — different subscription prices, different subscription lengths, and different payment options.
4) Combining packages
News outlets that still produce print versions of their products would be smart to offer at least three subscription packages: print-only subscriptions, online-only subscriptions, and print and online subscriptions. Loyal print readers can often be incentivized to upgrade their subscription to an all-access print and online package as a way to get access to the publisher’s archives, which are obviously not available via print alone. All-access subscriptions cost more than print-only, making it possible for publishers to increase revenue without attracting a single new reader.
5) Cost-plus pricing
Cost-plus pricing isn’t the first choice of most publishers, because determining the cost of running an online news website isn’t straightforward. Nonetheless, when all else fails and publishers feel stuck trying to nail down the best subscription pricing strategies, it makes sense to run the numbers with cost-plus pricing. Figure out exactly how much it costs to run your publication each month, including hosting and website management fees, employee salaries, and other business costs, and divide that figure by the number of subscribers you have or expect to have in the coming months. Cost-plus pricing can be dangerous for a new publication, since a small number of readers aren’t going to absorb excessively-high subscription fees, but running the numbers is still a worthwhile exercise for publishers who are setting up the right subscription pricing strategies.
Are you having trouble choosing the right price for your subscription program? Reach out and connect with our team, and we’ll tell you more about the advisory services we offer to digital publishers.