Mastering Subscription Pricing: Insights from Industry Leaders
With Instagram launching a brand new subscription feature worldwide, Spotify raising subscription prices by up to $2, and Netflix ending one of its most iconic offerings, companies and creators across the digital subscription economy are jostling to find the most competitive monetization models.
One of the biggest challenges is how to structure subscription prices. Consumers have countless choices, so it’s critical that price meets value.
These do’s and don’ts from digital publishing leaders demonstrate ways to strengthen pricing strategies and meet the needs of diverse audiences.
Understand ‘Customer Value Perception’ Comprehensively; Don’t Silo Pricing
Strong subscription pricing strategies start with understanding Customer Value Perception (CVP) – or why a customer pays for one brand’s content over a competitor’s. What makes the product worth the price to them in the first place?
While that may seem like an obvious task, media researcher Tim Groot Kormelink explains that, in this relatively new field of digital publishing, most studies focus almost exclusively on broad insights, not customers’ experience-based perceptions:
“While many scholars have long focused on quantifying news consumption (e.g., days per week spent with news) and people’s attitudes toward it (e.g., how people feel about news as expressed via survey questions), Groot Kormelink [studies] how audiences experience the news in their day-to-day lives…[His study participants] had four primary motivations for not subscribing: price (no surprise there!), adequate news available elsewhere for free, concerns about commitment (i.e., not wanting to bind oneself), and delivery and technical problems.”
Customers have so many more options available to them today, so far more features factor into their assessment of product-for-price merit, especially in media and journalism.
It’s still true that using CVP in marketing means “attempting to influence and increase [a product’s] perceived value [by emphasizing] qualities such as aesthetic design [or] accessibility…”, but for digital publishers it’s even more involved. Each user’s perception of their holistic experience with that brand matters, if publishers want to master price-for-subscription satisfaction.
One example of this comes from a study exploring the gap between which values journalists hold in comparison to their American audiences: “[Only] one of five core values touted by journalists also shares the support of a majority of Americans.” Former Washington Post columnist Margaret Sullivan explained that this insight doesn’t have to result in making unethical reporting or marketing decisions; instead, it should inform the ways publishers and content creators (journalists) understand their audiences, transparently position their products, and build trust.
Audiences value different brands and their digital environments for a variety of reasons, so it’s important for publishers to know where the points of value perception lie for each reader and then provide an experience and pricing structure that meets them there.
For example, the Washington Post offers content for free, without excessive ads blocking the content, and then serves a pop-up with other value propositions. Their tactics meet CVP for certain readers by considering the device being used, time-based relevance, values like exclusivity and information, ad experience, geographic coverage, language, and key content themes:
“Stay informed with a subscription…24/7 coverage from 1000+ journalists. Subscriber-exclusive events. Unmatched political and international news.”
Rather than siloing pricing strategy as a separate concern from editorial choices and user experience – or basing the marketing funnel on a standardized view of what potential subscribers value – successful publishers take a holistic, experiential approach to understanding each reader’s value perception throughout the branded experience.
Price for Diversity; Don’t Discriminate
The digital revolution has made content available to readers worldwide. Visionary publishers and subscription businesses understand the importance of knowing their audience and pricing their products accordingly. Diversity goes beyond fairness in content coverage; it also involves pricing models that promote trust, loyalty, and non-discriminatory subscriptions.
A study by the Reuters Institute for the Study of Journalism found that when cross-functional media teams built inclusive monetization models, their companies developed deep insight into user behaviors, created committed reader communities, and established more sustainable funding:
“Almost half of news leaders …said they were worried that subscription models may ‘super-serve’ richer and more educated audiences…Asking readers to be transparent about what they can pay to support an outlet’s journalism reflects a broader commitment to transparency from these newsrooms and can contribute to the more human, less transactional, relationship with readers…This more personal relationship influences how new products are developed and funded…”
In the study, publishing companies from South Africa to Spain experimented successfully with pricing that prioritized readers’ real financial needs; they found that ‘self-constructed sliding scale, pay-as-you-can, shareable access, and timing-based pricing models (ie. free content during elections, followed by transparent post-election subscription offers) drew more people from varied and diverse walks of life.
As a result, companies saw up to a third of registered readers convert to paying subscribers within a year, and the trust built through these reader-first monetization strategies also resulted in lower churn.
In pricing, authentic concern for information democracy and demographic inclusivity will attract and retain both subscribers and skilled journalists, strengthening the entire business.
Price for Convenience; Don’t Complicate the User Experience
Aligning price with customer expectations enhances subscriber satisfaction and loyalty. This includes making it easy for customers to control charge changes. Analysis from Pymnts in 2022 confirmed: “Next to unexpected costs, the difficulties consumers face when trying to cancel a subscription are among their biggest frustrations…[56% say] recurring payments are hard to keep tabs on and it takes them up to three months, on average, to cancel unwanted recurring payments.”
Complicating the subscriber experience around pricing crushes further monetization opportunities. It also diminishes customer value perception. Competitive industry leaders make sure the user experience is seamless from technical environment, to customer support, to content delivery and user control over product changes.
There are also other ways to price for convenience, such as building partnerships that contribute to the overall quality of digital experiences.
For instance, Czechian publisher iDnes.cz boosted digital subscriptions by pricing with ‘media adjacent businesses,’ writes media management expert David Tvrdon:
“The most interesting thing about its subscription is that it doesn’t only offer access to news and sports, but also access to movies, audiobooks, tickets and experiences (2-nights of free glamping, discounts for electrobikes, etc.)…it’s not about having the most or best (features, benefits) in general. It’s about giving your subscription offer a strategic advantage and meeting the needs of your audience.”
Despite the saturated subscription market, digital media publishers who price strategically and dynamically will see continued revenue impact. A comprehensive view of customer value perception and inclusive monetization models strengthen their market position. Digital publishers who meet subscribers’ expectations by pricing products for convenience and versatility will see returns on retention.
Across many tactics, industry leaders make it clear: smart monetization strategy all comes down to putting the subscriber first.
Looking for a deeper dive into subscription pricing? Download our in depth e-guide “The 5 Dos and Don’ts of Digital Subscription Pricing”.