A Simple Monetization Execution Cheatsheet
Of Business Models That Apply to Newsletters and Online Sales.
Hello Everyone!
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Welcome to another cheatsheet that builds on my other strategy and implementation cheatsheets including Publication Strategy, Marketing, Recommendations, Engagement (multiple posts), Pricing, Promotion, Content Organization, Using Notes, Design, and AI Image Generation.
Now, let’s address the dreaded ‘M’ word - monetization.
If you are hesitant to turn on paywalls, then this post should help you learn more about payment models and possible options to consider for the future.
If you already have paywalls, then maybe this will help validate or provide alternate options at your disposal.
Let’s break down each model:
Freemium Models: Variant A
I refer to it as Variant A, because the freemium nature of it is entirely driven by the writer’s content and Substack or other newsletter platform features. This model entails mixing up free-only, free, and paid within a single post, or paid-only sandwiched between free posts each week.
In the digital world, you may recognize this model when you opt for free signups and access basic features for free with upgrade pricing to access additional features in the standard and premium options.
One example is Canva which offers pro and watermarked designs, but only at a premium. The free access is to high-quality mass designs and restricted feature sets but still quite useful for the budget-constrained creator.
Freemium Models: Variant B
This is the model variant where posts are free but with sponsored content from external parties or include affiliate links. Or it could be that a few paid subscribers enable more free content to be available to everyone.
Sponsored Posts
Many Substack newsletters follow this model when they offer sponsored space in weekly posts for vendors or other interested external parties to reach their audiences, usually when it has crossed 1000 readers at a minimum. More often, this is used when authors have upwards of 5000 readers.
Affiliate links
Affiliate links serve as a lead-generation mechanism for software or product companies. By offering commissions to affiliates, these companies gain access to creator or influencer audiences or closed groups that they may not otherwise reach through traditional marketing channels. This mutually beneficial arrangement allows companies to expand their customer base while providing creators with a source of revenue.
Affiliate links can be particularly effective in niche spaces like photography. For instance, if you're a photographer, you might recommend gear that you use or genuinely endorse. When readers purchase these products through your affiliate links, you earn a small commission.
Readers benefit when you use genuine product links that you can vouch for. However, more often than not, affiliate links are sprinkled indiscriminately throughout free content. Sometimes, as in some Medium articles, it is hard to tell if a recommendation is authentic or driven by the need to earn a commission.
Applying Freemium Modes
You can adopt the same philosophy of a Software as a Service (SaaS) framework: Free, Standard, and Premium options.
For example, you could design your pricing for posts the following way:
Option A: Vary the number of free posts to paid in a week. Use ratios of 1:2 (free:paid) or 2:1 based on your growth trajectory. If you are still building your base and have fewer paid subscribers, using a 2:1 ratio will help you convince more readers of the value you add (increases awareness and consideration funnels, in marketing terms) while offering exclusivity to your paid subscribers. This model is often used here on Substack by many writers. Take care to make all content high-quality, and not lower the content value.
Option B: Within a post, paywall content - offering free content and paywall the premium aspects. This is also widely adopted on Substack.
It can be counterproductive if you are building a base, but if you have enough paying readers, then it may secure your subscription from churn while creating the feeling of missing out (FOMO) - a new social-media-driven psychological feeling that has subscribers adopt different behaviors to avoid feeling they are missing out (hence the name!). This is considered a ‘nudge’ for free subscribers to upgrade.
Again, this is a risky strategy, and if not done subtly where the free content can stand on its own as a complete section, you may end up coming across as setting up ‘click-bait’ content or offending future subscribers who get annoyed by these techniques.
A writer published her survey results of readers on Substack, which confirmed that readers get annoyed by posts with limited free paywalled content. These were readers who were most likely to upgrade as well.
If you still choose to go this route, as established authors, brand names, and celebrities often do, you may want to offer enough value in the free content, that if they choose not to upgrade, they would stay with you. For instance, describe a trip, with stock photos, and paywall personal photos of the trip or hold back your favorite photos or trip insights.
If a nascent writer, consider using standalone free posts and separate paid posts with the Substack auto feature of medium previews turned on (see Dashboard→Settings→Payments for option) instead of a mixed type post.
Are you using other ways to offer freemium content? Share a tip in the comments below!
I have analyzed hundreds of Substacks over 3 months and designed a minimalistic pricing model for newsletters below (paywalled!) that demonstrates the above tips.
In the coming weeks, I shall return to this macro summary and show various ways in which you can apply this to your category of writing.
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