Monday, April 10, 2023

Substack Pricing Experiment

Gergely Orosz:

Wow. @SubstackInc experimented with pricing, reducing it by 1 cent, so e.g. instead of $10/month, do $9.99/month.

The result?

A significant decrease for the pricing ending with .99. Which goes against conventional pricing wisdom!!


The actual appearance of your published prices can have subconscious effects on your potential customers that increase sales. In some cases, smaller details like ending your prices in 0’s or 5’s and avoiding decimal pricing can justify a higher price by presenting an image of higher quality. This type of psychological pricing strategy is used in high end restaurants all the time, and you rarely see a price like “8.99” for a meal unless you’re in a chain or franchise establishment. Prices ending in 9 are meant to persuade consumers they’re getting a bargain, but prices consisting of round numbers (no cents, no decimals) can subliminally convince customers that your company has integrity and your product is sophisticated. In other words, it’s worth the high price they pay.

Elizabeth Lopatto:

Substack is desperate, huh? That’s what I understand from their fundraising email, anyway. They’re now hitting up retail investors for millions of dollars after they failed to raise last year.


Substack makes its money by taking a 10 percent cut of the subscription fees its newsletter writers charge. (Its payment processor takes another 4 percent, according to Wefunder.) The company says it paid out more than $300 million to writers, cumulatively.


Doubled their revenue in a year! Not too bad. I might have some other feelings if I knew anything about their cost basis, but unfortunately, I don’t. So I don’t know if the company is profitable, but I am going to take a flying leap and assume not — because in this environment, profitability is something to brag about.


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