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Pricing Strategies for Newsstand Success

Whether you are launching a new title or considering changing a long-held price on an established title, cover price has a dramatic impact on profitability. Every additional dollar added to the price will increase your revenue per copy sold, make every copy sold more profitable to your wholesalers, and potentially increase your retailer rankings. But remember that every additional dollar added to your price makes the browser think a moment longer about whether or not to bring your product to the register. When considering your cover price strategy, remember these important points:

 

    1. Choose Added Value Over Lower Price. Years of testing have confirmed that if you have the option of making your product more appealing to your potential customer by adding value to the package or by lowering the price, go with the added value. Make your book thicker, add a special section, bind something in or bag something on, and you will increase your sales; reduce your price and you might see an impact, or you might not. It is very hard to gain sales momentum through price reduction, even if the reduced price is announced on the cover of your magazine; that extra dollar of the cover price makes an impact when added on, but considerably less impact when taken off.
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    3. Remember the "Thud" Factor. Concurrent with the principle mentioned above, the thickness of your magazine, the number of pages-in short, the "thud" factor--is one of the most important elements in determining the success of your magazine on the newsstand. You can charge more for a thicker book, but there for a thin package it is very difficult to build sales.
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    5. Be Aware of "Avalanche" Points. A general rule of thumb is for every dollar added to the cover price, you can expect to lose about 10% of your sale. There are points, however, at which the loss in sale becomes more precipitous, and in fact becomes so great that it is not counterbalanced by the revenue gained. For most categories, and most magazines, five dollars is still an avalanche point; lately, however, some magazines and some categories have been establishing higher cover prices and higher avalanche points.  Magazines that offer special value, are in luxury categories, offer essential information for specific needs, or cover technology-related fields have found that they can establish higher cover prices with impunity. Discover your own categories avalanche points and keep them in mind as you develop your pricing strategy.
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    7. Go for the "$.99" Price Point. With few exceptions, there seems to be little value to the $.25, $.45, or $.50 price point; tests indicate that consumers are as likely to buy a magazine priced at, for example, $3.99 as they are to buy one at $3.45 or $3.95. This appears to be the case even taking into account the sales taxes that put the price over the next dollar point, even over the avalanche point. Take advantage of those extra pennies in revenue; you won't sacrifice much in sales.
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    9. Consider the Competitive Environment. If there are three publications of over 100 pages priced at $3.95 in your competitive set, you don't want to go in with a launch of 80 pages priced at $4.95. Regardless of any value your publication may add to the category, anything you offer that your competitors may not, you increase your chances for success by taking into account what competitive publishers are doing in terms of cover prices.
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    11. Consumers Lose their Price Sensitivity Over Time. If you are testing higher cover prices, test them for several issues. You might find that you take a hit in sales for the first few issues, and then begin to recover over time. Often a publisher will find that over the course of half a year they recover all the readers that were lost when the cover price was first raised.
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    13. The Avalanche Point Retains its Impact over Time. The above principle does not apply, however, to your title's or your category's avalanche points. Sales lost at the avalanche point will not be recovered; once you've passed an avalanche point you must budget for reduced sales over the long haul.
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    15. Time Your Increases. A stong issue will override some of the resistance to a price increase and help you weather those reduced-sale issues. Time your increases, therefore, to coincide with special issues, buyers guides, or other added-value releases. Your seasonality might also be a factor in your favor; increase your price with your strongest seasonal issues to minimize impact on sales.
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    17. Remember Wal*Mart. Representing as much as 20% of your magazine sales, Wal*Mart cannot be ignored in planning cover price changes. Any increases in price must be approved by the Wal*Mart buyer or you risk de-listing in this important chain. A free copy of the Special Report "Ways to Win with Wal*Mart" is available with a subscription to the PTSS "Ways to Win Workshop" series, click through for details.
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    19. Test. While split testing on the newsstand is not as easy as it was-Wal*Mart, for example, will not offer the same product at two prices in its chain, and that single chain will affect most of your wholesale distribution-it is still possible to create effective price tests on the newsstand. Look for testing ideas and templates, in the "Ways to Win" Workshop series.

 

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