The Economist’s Michael Brunt shared some of their research and learnings on subscription price increases during a great presentation at FIPP World Congress 2017. There are some useful insights for anybody considering a price boost to their subscriptions, so I’m dropping this here to refer back to this in the future.
Despite this bullish attitude, he did warn that the price inelasticity of subscribers “should be closely monitored”. Their research found that you could increase the subscription price “up to a certain point” without experiencing a decrease in value. “But if you increase prices over 20 per cent you will find that your decline in volume will negate the increase in revenue. We have also found that every time you put the price up, there will be a decrease in volume, so it doesn’t matter if you put the price up by 5 per cent or 20 per cent. We found that you should do a price increase infrequently and in a big amount. So the next price rise for us will not be until March 2019.”
This is because the business is run in three-year cycles, he explained. The first year will see a price rise, the second will see the business benefiting from revenue per copy growth and the third will see the price stabilise in the marketplace resulting in an increase in volume.
Now these are for The Economist’s subscribers, which is certainly a different makeup than many other publications. It’s also for print, which is a different beast than digital. But I’m willing to bet the patterns, if not the exact percentages, hold true regardless of scale or medium.
They also surveyed their existing subscribers, and found some themes in why folks are so willing to pay for their news.
A survey revealed five interesting factors:
1. As a “smart guide to the forces that shape the future”, The Economist predicts — “fairly accurately” — what will happen in the world and analyse the forces that shape it.
2. As a trusted filter on world affairs The Economist “distil the news in a finish-able package” — an antidote to information overload. “You can read the The Economist to the end but you cannot read to the end of the internet.”
3. The Economist contributes to — and advocates for — positive change.
4. Despite being London based, The Economist “always take a global perspective”.
5. It’s a premium product that costs three to four times more than other similar publications but readers are happy to pay for it. “We produce quality and our readers find our journalism valuable and are willing to pay for it. We are reassuringly expensive”.
Again, these change from publication to publication, but that readers are capable of articulating a benefit statement to justify their recurring payments suggests the strength of the product. If you don’t know why readers say they benefit from consuming your content (not why you think they benefit), then you better ask them.
Here’s the video of the full presentation:
