February 26, 2010

Just How Desperate Are You?

The print publication industry is indeed facing any challenges:  declining ad revenues, free content online, increased competition for eyeballs, and many more.

That doesn't mean pricing decisions should be made out of desperation.

I just received my renewal notice for TIME magazine. The regular annual rate according to the invoice is $72. The annual cost when purchasing at the newsstand is $252.45.

I am being offered the Platinum Subscriber rate (apparently offered to anyone with a subscription since I've only had mine for one year) of only $20.  But I can renew now for two years (112 issues) for only $25.  No, you didn't read the numbers wrong.  So desperate is TIME to try and hook me for two years, I'm offered an additional 52 issues for the same price as ONE newsstand.

The two-year rate amounts to 22.3 cents/issue.  Each issue averages around 36 pages.  So TIME's message to me is that their publication quality isn't even worth what it costs to print each page of the magazine.   And yes, I know ads subsidize the magazine's costs, but those revenues are declining rapidly, remember?   

Bottom line? Two years of TIME will cost less than half what I pay for 30 days delivery of the New York Times.

It's an absurd pricing model that reeks of desperation.  But because it is such a bargain, people will sign up.  In turn, the minimal subscriber revenue stream further weakens magazine financials, probably leading to even more desperate decisions to acquire revenue at any cost possible.

In this case, the ultimate cost is the almost complete devaluing of the product itself.  It is a completely unsustainable revenue model that devours itself and a brand's value proposition with each renewal notice sent.

Perhaps you have a product or service with a pricing model based on similar dire straights.  Nonprofit organizations notoriously price their efforts with insufficient consideration of their true value.  Stop it.  Right.  Now.

Commoditizing your offerings ultimately cannibalizes your core purpose.

2 comments:

Shannon Otto said...

Amen, Jeffrey. I couldn't agree more. Time should realize that people who truly want to read their content will continue to pay for it. Such huge discounts aren't always necessary.

Bruce said...

Couldn't agree more. By significantly discounting posted rates, the perceived value of your publication can decline. If rates are posted in a fair manner to the end user, there shouldn't be a need to significantly discount.