From throw-away products to bundles to universal pricing, magazine publishers are still all over the map
Magazine pricing strategy has certainly evolved quickly over the past year. In 2013, we still believed that universal pricing was the best way to handle print, website and tablet products. Today, we’ve evolved our own thinking and our new Best Practice is decoy pricing, which requires different prices for different products.
Interestingly, an article in PCWorld published just weeks before the iPad’s debut in 2010 speculated that publishers would continue their traditional pricing models of $10 to $20 per year … and “I hope that’s the model iPad magazines go with,” added the writer. Of course you would. You’ve been getting thick, glossy, content-rich magazines for pennies since the beginning of time. Why would you want to pay more?
One of Don’s biggest pet peeves is the decades-long policy that magazine publishers pursued – to maintain rate base – of pricing their publications dirt cheap. $9.99 was indeed a common price for 12 full issues of a consumer magazine.
As Don notes, that policy trained generations of consumers to believe that magazines are cheap, throwaway products. Mind you, this seems to have been restricted to the U.S. When we taught our Digital Publishing Course in London to global publishers last year, eyebrows in the room rose collectively to the ceiling when Don mentioned the prices of some well-known American magazines. They were astonished that any industry would shoot itself in the foot in that way.
Don’s angst over this issue made him practically float out of his chair with happiness at an MPA Swipe 2.0 conference last year where Hearst Executive Vice President John Loughlin declared war on cheap magazine pricing now that digital editions – or as we call them at Mequoda, app editions – are so popular.
What did Loughlin think is a fair price? “19.99 is the start of fair value,” he said, adding that nearly 900,000 Hearst subscribers have already agreed with him. Loughlin isn’t shy about his position: He also sounded this theme when talking to the Wall Street Journal earlier that year. “I hope that this is the demise of $6 and $7 and $8 and $9 print subscriptions,” he said at the time.
It was a great soundbite, but Hearst still charges $8-10 for most of its print products, and $12 for most of its tablet editions – sold, for reasons we’re unaware of but which we hope they tested – in six-month increments of $6. The company has also recently entered the ranks of decoy pricing publishers, and again, we hope they test this! Subscribers can get both print and tablet editions in an annual bundle for $13, just $1 more than the app edition.
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Thus Cosmopolitan, for example, offers these packages in a decoy pricing arrangement:
Print: $12
Tablet: $12
Print + tablet: $13
Yes, our models tell us that they’ll probably drive more sales for the $13 option and will also generate more sales overall. But the increase in revenue is minimal, compared to other bundle prices. The $1 increase from print or tablet to the combo package certainly delivers what we call the “no-choice choice,” which is a polite way of saying “no brainer.” But our research shows that a $5 increase delivers the same impact, and you get more money!
As the model shows, our testing says you can still get more orders and more buyers for the highest-priced offer, even when it’s $5 more than the next price. But as always, test your own offers to find out what works best for your audience.
Meanwhile, as we always like to point out, one of our clients, the Biblical Archaeology Society, happily allows us to use their data to point out the benefits of Mequoda’s Best Practice bundle pricing:
$19.95: Biblical Archaeology Review app magazine for $19.95
$29.95: The Biblical Archaeology Society digital library
(BAR archives plus 20 years’ worth of Bible Review and eight years of Archaeology Odyssey)
$34.95: BAR app edition + BAS library
According to BAR Online Editor Noah Weiner, in 2013 BAS earned $97,000 from the combo offer, the most expensive option. Everything else combined totaled $58,678: $38,322 less than sales from the combo offer all by itself.
As we’ll see in a moment, that kind of success is not pursued by larger publishers.
Meanwhile, another trend showing up among those big players is illustrated by The New Yorker: the three-month offer. The theory behind this strategy is that it lowers resistance to buying by making the commitment smaller. And in the digital era, the costs to renew four times a year rather than once are minimal, so it’s worth testing.
App magazine publishing as camouflage
As the WSJ noted, Hearst was joined in this campaign by publishers such as Bonnier, owner of Popular Science and Field & Stream, and by Condé Nast, publisher of Vogue and The New Yorker. In fact, as I wrote last year, The New Yorker has not only raised its prices, it did so in a somewhat surreptitious way by simply attaching a $20 higher price to the magazine, print or app, when it launched its app edition in 2011.
Thus the old $39.99 price for print rose to $59.99, and the tablet edition was priced at $69.99. Nowhere did The New Yorker actually announce a price increase, thus completely camouflaging that extra $20 behind the dazzling debut of its app.
However, The New Yorker has stepped backward with its current offer, which is one price for all three offers – print, app, or the combo package. In essence, this is still universal pricing. Not only that, but those $59.99 and $69.99 prices are gone – at $12 for 12 weeks, as I noted above, the new annual price is $47.
The Economist also joined in this sleight-of-hand. When they abandoned universal pricing in 2012, they took the opportunity that move provided to bump the price from $129 to $160 for the bundle, while leaving the $129 price in place for app-only or print-only. Those prices are still in place today, and The Economist has added a fourth option, a “premium” subscription that includes print, app and eight country and industry reports from the “Economist Intelligence Unit.” Those eight reports must be pretty valuable, because adding them to the $160 combo package bumps the price up to $300.
What makes app magazine publishing worth more?
2013 appeared to be all about higher prices for both print and app magazines being accepted by the consumer, and it’s encouraging that consumers are willing to pay more for an app product that, from the outside, looks much less expensive than print to produce. But are app magazines really worth more than the old print magazines? At Mequoda, we really do believe that higher prices for app subscriptions are about more than just correcting decades of underpricing.
App magazines, as Hearst’s Loughlin points out, offer extra value, including instant delivery, enhanced and extra content, and interactivity, not to mention being easily archivable and searchable without taking up space.
And for younger consumers, it also appears to be important that app magazines are green.
Then there’s the data starting to trickle in showing that tablet owners hit two of marketing’s most desirable demographics: They’re young, and they’re affluent. It’s not often you can get both of those demographics in one product. This two-fer means that the target audience for app subscriptions is more willing to spend money because they have more to spend – and on top of that, they haven’t been trained to think that print magazines are birdcage liners.
How often do you get a win-win situation like that? And oh by the way … Condé Nast has data showing that its tablet subscribers are renewing their subscriptions at a higher rate than print-only subscribers – and they’re also paying higher prices for their renewal subscriptions. By my count, we’re now up to a win-win-win.
Walking the walk
So if Hearst isn’t following its own advice, Condé Nast has lowered its app price, and The Economist is at least holding its price ground, what’s really going on around the industry? We decided to survey prices offered by leaders in the industry, based on our analysis of the most recent AAM circulation data.
We did three price studies: top 10 magazines by total circulation, to 10 magazines by tablet circulation, and top 10 magazines by improvement in tablet circulation. The bottom line? Magazine pricing is as varied as snowflakes, even inside one publishing company.
Some publishers charge more for print than tablets, and some do the opposite. Some publishers, like TIME, are still employing universal access. Most don’t offer bundles, but at least the three who do make an effort to maximize their pricing policy. Two of them, National Geographic and Maxim, offer a $5 “no-choice choice” leap to the bundle.
Here are the details. First we checked out the top 10 magazines by circulation.
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Rare is Loughlin’s “fair value” price of $19.99. Meredith is stubbornly sticking to its rock-bottom print price of $5.99. Perhaps that’s one of the unspoken reasons for the death of Ladies Home Journal, which ceased publication as of last month.
The only bundle on this list is National Geographic. And, as I said, TIME offers universal access, while Hearst, despite its bundle offered for Cosmopolitan, offers no bundle for its two largest magazines, and is only slightly more ambitious with its largest magazines than Meredith is, with a print price of $7.99.
Next, we looked at the top 10 magazines by tablet circulation. Reader’s Digest, which we discussed in an earlier post, and National Geographic are the only two from the top 10 total circulation list to appear on this list as well.
Here’s that snowflake thing going on. Bonnier’s Working Mother costs the same for print and tablet; Maxim charges more for tablet than print; most of the others charge more for print; and GQ, inexplicably, doesn’t offer a separate tablet subscription at all. Their app is available only as a bundle with print.
Some of these publishers have actually begun raising their prices, which observers believe is part of a trend in the industry. We’ll all get to see if that’s true the next time we do this survey!
Finally, we went to the magazines which presumably are doing everything right, because they’re the top 10 in tablet circulation improvement. But there’s no magic answer here for those of us studying the best pricing practices – prices are once again all over the place, and we’d guess that the reason these publications are doing so well with tablet circulation is because of the on-the-go nature of their readers, not because they’ve carefully thought out their pricing policies.
The top nine offer no bundles. Some at least have healthy prices for print – no $5.99 prices here. Most price print higher than tablets, but Rider and Natural Health price their two editions the same. And Outside goes with universal pricing.
It would appear that there’s no one answer for optimal pricing policies among these successful publishers. But at Mequoda we’re still sticking with our belief in fair value of print magazines and in our Best Practice of decoy or contrast pricing.
These practices succeed for our niche publishing clients, none of whom aspire to be TIME or Reader’s Digest – like the Biblical Archaeology Society, they’re content to drive ever-higher revenues for themselves and quietly succeed inside their specific niches with Mequoda’s pricing policies.
At the same time, we’re interested in your experiences. Do you have a carefully-thought-out, bulletproof pricing policy? Have you tested the six-month subscription? Or are you still guessing, like the biggest names in the industry? Let us know in the comments below, especially if you have data to share.
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