What is strategic pricing?
For independent publishers and content creators, strategic pricing involves carefully balancing reader affordability with sustainable revenue generation. This may include implementing tiered pricing models, offering special promotions, or adjusting prices based on audience feedback and market trends.
Effective strategic pricing helps publishers maximize their revenue potential while maintaining reader loyalty and supporting their journalistic mission.
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How much should I ask for?
Economists will tell you that market forces — supply and demand — determine how much your readers are willing to contribute. That said, you can always make a suggestion. We recommend sticking to the rule of three:
- An amount that most readers can afford to contribute for now
- An amount that is a little lower for readers on tighter budgets
- An amount that is a little higher for readers who can afford it
Strategic pricing with no existing data
If you’re just starting out, look at what your competitors are offering. This could be other newsrooms, or, if you’re in a news desert, other sources that could grab a reader’s attention, like a streaming service.
Then, think about your target reader. What news (or entertainment, if your competitors are streaming services) needs do they have, and how well do you address them compared to your competitor? Be honest!
From there, this growth strategy matrix framework is a great way to determine how you set your initial prices. If you meet your audience’s needs much better than your competitors, you can charge a little more. If you aren’t, then you may need to charge a little less.
Strategic pricing with some existing data
If you have existing data, find your average monthly contribution by dividing your monthly recurring revenue (MRR) by the total number of members. If you’re just getting started with reader revenue, consider surveying readers to determine what they’d be willing to pay per month — then use this number as a starting point.
From there, consider how much it would cost to cover the perk(s) you’d like to offer. Don’t forget to include your own time and labor. You don’t want to lose money on your membership program — especially if readers would prefer you reinvest those funds into the journalism.
Some publishers decide they want to offer the same incentives to everyone, and others choose to reserve specific perks for members who contribute more.
“The Independent has no distinction in benefits between our tiers. Everybody gets the same benefits,” said Corinne Colbert, co-founder of Athens County Independent. “We have a high poverty rate, so we wanted to avoid tying benefits to ability to pay.”
What if I don’t have the capacity to offer extra perks?
That’s totally okay! Readers of mission-driven publications often choose to contribute because of the quality of the work, not for merch or exclusive newsletters. When asking for financial support, focus on the real-world, tangible impact your journalism has had. Readers also appreciate knowing where the money goes.
Familiarize readers with the idea of financial contributions with passive calls-to-action in your regular newsletter, welcome emails, or reader surveys. For example, The Intercept’s recent survey explicitly asked readers what they believe is the best way to fund independent journalism: with ads, grants, or reader support.
Lastly, consider offering limited-time special gifts during revenue campaigns for new supporters, like The Pulp did during a year-end fundraising campaign. There’s no one “right” answer — just what makes sense for you and your readers as you develop your strategic pricing approach.
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Don’t be afraid to change up your tiers
Your membership tiers are not set in stone. As the publication grows, the way you steward your members should change to reflect that.
There may be situations where you might consider increasing or decreasing your prices. For example, if you notice that readers are giving regularly at the amounts as set out by the pricing tiers, you could look to increase the tiers a modest, incremental amount such as $5 and see how it’s received by your audience. On the other hand, if you’re struggling to get paying subscribers, your recommended prices may be set too high and you may want to consider lowering them. Across the Indiegraf network, a pricing table set at $10, $15 and $20 per month is the most common.
If you do need to switch the pricing strategy up, make sure you’re transparent with your audience about how and why you made that decision. The key is to understand what’s important to your reader. For example, if your readers value in-depth investigations, tie that into messaging around a price increase. You could let your readers know how much it costs to produce these types of investigations and how their support will enable the publication to continue publishing these pieces. It’s about figuring out what your publication’s value to the audience and why do they support you, and tying it to how this informs the pricing tiers.
Above all, we recommend conducting regular audience surveys, and, if you have time, doing one-on-one interviews with engaged readers, to better understand what they want from your publication. If you are addressing those needs, then you have the ability to maintain or increase your prices — but if not, then consider taking a hard look at what you are offering and making changes to your editorial product.
What is customer lifetime value?
Customer lifetime value (CLV) represents the total dollar amount of donations or subscription revenue you can expect from your average reader. It’s a great tool to leverage for strategic pricing as you make decisions about increasing or decreasing your prices because your CLV calculation is a snapshot of a given point in time.
There are many ways to calculate CLV, but perhaps the simplest method is to account only for revenue, not costs. It doesn’t matter which method you use, as long as you stick with it over time.
The best way to use CLV is to calculate it regularly, such as every quarter, and benchmark against yourself. You can also use it to measure the impact of changes — like increasing or decreasing your recommended donation amounts.
We understand that news entrepreneurship can feel challenging, but you are not alone!
Book a free chat with us to share your challenges, and we will provide tailored insights on how Indiegraf’s technology and services can help you overcome them. Whether you’re looking to engage your readers for the first time or seeking to enhance existing support, we’ll guide you through proven strategies to convert your audience into sustaining financial contributors.
