Price-raising tricks of the trades; Can you increase your title's subscription rate without hurting your readership? The answer could be yes, if you consider these factors

Folio: The Magazine for Magazine Management, June 1, 1997 by Eric Freedman

Can you increase your title's subscription rate without hurting your readership? The answer could be yes, if you consider these factors.

When it comes to setting subscription prices, Gerry Byrne is in an enviable position. As vice president and publisher of Cahners Publishing Company's daily and weekly Variety--two must-reads for the entertainment industry--Byrne approves a subscription price hike every nine months, on average.

"Our demographics make Wall Street Journal readers look destitute," says Byrne, "so we have more elasticity than the average bear." When Byrne was interviewed, weekly Variety was testing a jump from $189 to $219. Overall, prices have tripled in the past five years, while circulation has reached new highs of 37,000 weekly and 27,000 daily.

While Variety might not be average, the desire to boost revenues is. And if your trade title depends on subscription revenue, pricing decisions are inevitable. Some considerations are obvious, including production, postage and paper costs, your overall renewal rate and the success or failure of the last price boost. Beyond that, you need to keep an eye on your market and your rivals.

What will the market accept?

The question shouldn't be simply how much will your readers and potential readers pay. That's like asking a friend, "How much money would you like to earn?" The only honest answer is "more."

Start with your view of and respect for the industry your magazine serves. As Fred Ciporen. vice president and group publisher for three other Cahners titles, puts it, "We generally review subscription prices every other year and do tests to see what price increase the market would consider reasonable--not what it would bear. We don't want to be perceived as trying to squeeze the market, although we put a lot of editorial out there."

With Publisher's Weekly, for instance, there's a philosophical commitment to support independent bookstores and libraries. That led to a two-tier pricing structure, with book publishers paying more--currently $149--and library and bookstore subscribers paying less--$99. As for Library Journal and School Library Journal, Ciporen says the company charges more than its competition because they're "must-have publications."

What more can you offer?

Of course, you're always concerned with the caliber of the editorial product. But it's an easier sell to subscribers if you promise, and deliver, more when you implement a subscription increase.

Here are several ways to do that: First, add features, perhaps a regular column by an industry expert or a new column on tax, legal or marketing issues. Second, offer a new-subscriber or renewal premium worth having, such as a collection of past articles that remain timely. Third, unveil a redesign with sharper graphics, more photos and a reworked cover format.

Alternatively, you can follow the lead of Strang Communications' Christian Retailing in Lake Mary, Florida. When the magazine--whose paid base makes up 10 percent of its circulation--increased subscription prices from $45 to $55 in 1994, it also increased frequency to 18 issues a year.

Do you need higher numbers?

The relationship between circulation and advertising is one big difference between most subscription-supported trade and consumer titles. A consumer publication that loses readers usually loses advertisers. But readership tends to follow advertising in trade magazines. Chances are, if engineers think your advertisers are migrating to a competitor, they'll migrate too.

Absolute numbers for the sake of numbers don't do you or your advertisers much good. Ciporen says that the 40,000-circulation Publisher's Weekly could add another 10,000 subscribers, but "to what end? They wouldn't be the people who make the book-buying decisions. We're trying to maintain the proper market penetration, which makes an efficient buy."

However, don't ignore appropriate market expansion--Publisher's Weekly recently added 1,000 subscribers by going after the growing number of nonbookstores, ranging from Williams-Sonoma gourmet cookware stores to gift shops, that now sell books.

Larry Bregel, circulation director at Strang, recommends an annual review of subscription prices, even if you decide to stand pat. "Every year we look at the possibility of price increases," he says. "That's a healthy requirement for any business because price is part of the mix of how you market your product."

After its last such review, Christian Retailing stayed at $55 because "mainly we didn't feel the market could bear an increase now," Bregel explains. "I could raise the subscription price and cut circulation in half. Our market is very different from Variety's. Christian bookstores aren't exactly loaded."