A Simple Pricing Strategy Cheat Sheet
Insight: On paths to monetization.
Have you wondered about how to price your publication on any platform? To price, first you need to formulate your strategy (see cheat sheet). Let’s say you have created a strategy you are comfortable with. Or you wish to experiment anyway.
Here’s a simple consideration guide for your pricing strategy.
Goal Definition: What is your goal? To earn a living, or to earn your first dollar or to create value (pop quiz: what is the correct answer? See below)
Timeframe Evaluation: What is your runway for earning from your publication? Based on the answer, you will need a definite marketing strategy to achieve it - for instance, whether it is 3 months, to a year makes a difference in the choice of execution strategies, available budget, and target milestones. It is also important to understand audience willingness to pay in your timeframe, based on their perception of value.
Peer Benchmarking: Is your goal and length of runway benchmarked against peers in the same system, online, in the general marketplace, geography, and the category vertical and the industry? For instance, 10 writers made $1000, in 30 days, writing pithy captions on fashion trends on Twitter, but 2 writers made $10,000 writing on startup investment strategies on Medium to a specific startup founder community in 6 months, creating an online course while you are writing screenplays for the entertainment industry. It needs to be set in context, in the environment, against strategies used and the systems in play.
Market Analysis: What is the overall pricing direction of consumers in your category, market, and industry of choice? Are consumers buying gadgets or books often? Are they spending on subscriptions to AI technology trends newsletters or book clubs?
Competitive Analysis: What are your peers in the same vertical, on multiple platforms, and channels using as a pricing and promotion strategy? For instance, they may have settled on a low price, with no discounts, because they brought over 100,000 of their fans from Instagram, and the volume makes it possible to lower the unit price as they have a 50% conversion ratio. Or others are assuming a default price that Substack has supposedly set at $5 (which by the way, is not correct. You can make the price as low as you wish).
Promotion Strategy: What promotion strategies are you able to support? You can enable a unique referral system to incentivize your audience to refer new subscribers.
Conversion Ratios: Do you know the conversion ratios for your chosen channel, in your vertical (e.g. business) and category (e.g. finance)? For instance, Substack authors have an average of 1-5% conversion ratios based on the author’s brand and credentials and the length of time they have been building a subscriber base. An average newsletter on Substack is organically growing at a rate of 10-50 subscribers per month without effort. Using a specific marketing strategy - recommendations, follows, notes, collaboration, social media channels - can boost that 10x. Of course, this is assuming you are creating unique content (fiction, gardening), or writing on a topic that is currently in vogue (AI) or is an evergreen topic (fiction, writing, tech, finance).
Audience Willingness: Are you gauging intent or willingness to pay with free trials, free posts, free articles, and creating value consistently ? Substack has a specific feature - pledge - which is a passive strategy to enable intent to become a paid subscriber when you decide to turn paywalls on based on your publication strategy and pricing goals (see 1, 2).
Ease of Payment: How much friction is there to receive payment on the platform of your choice? How easy is it for your subscriber to sign up ? On your own website, friction should be near zero and you should enable one-click payments. On Medium, there is a tiered paywall. The Substack platform only supports Stripe, though, for Europe, they have started to roll out bank links as well. Substack does a good job of giving you several tools to enable payments - flexibility of using nudges throughout your posts with subscribe buttons, gifting, pledges, shares etc.
Pricing Types: Finally, the trickiest consideration of all: Is your pricing:
Cost-Based - translated to you spent 10 hours for 10 posts, and you set your hourly cost as $40, and decide you need to charge 20% over your cost to produce the newsletter on a monthly basis to recover your costs each month.
Competitor-Based - Someone else writing 10 posts a month is charging $8, and writing similar content, so I can offer it for $8 or just a tad lower -say, $7- so I appear competitive and better.
Value-Based - Your subscriber will pay for perceived value and this increases over time. The more value you add, the more the pricing you choose will hold and help you say higher than your costs. For instance, for the same price of $8 in the example in (b), you also offer a free book, a monthly webinar, and a cheat sheet in addition to your 10 posts a month.
The answer to question in [1] is (c) especially if you are not in a commoditized market.
Writing, though appearing commoditized when considered ‘content,’ with cents/word pricing gigs, is actually a value-based pricing system, as best-selling authors demonstrate. Just like paintings! The value is derived from the topic, the audience, the quality of writing, and the volume of subscribers, and the additional benefits that derived from reading your work that is intangible.
Pricing is not an exact science, and the specific strategy to use depends on your goals, and the rest of the pieces of the puzzle as outlined in other cheat sheets.
Looking for a tailored solution? Connect with me at hellotechmadesimple@proton.me to discuss your newsletter strategy, promotion, and pricing and maximize your success. DM me!
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Thanks Jayshree - this is super helpful đŸŒº
Thank you, I’ll keep it in the ‘on hold’ file