Close
Join 237,000 weekly readers and receive practical marketing advice for FREE.
MarketingSherpa's Case Studies, New Research Data, How-tos, Interviews and Articles

Enter your email below to join thousands of marketers and get FREE weekly newsletters with practical Case Studies, research and training, as well as MarketingSherpa updates and promotions.

 

Please refer to our Privacy Policy and About Us page for contact details.

No thanks, take me to MarketingSherpa

First Name:
Last Name:
Email:
Text HTML
MarketingSherpa Email Summit 2015 - SAVE $700 - VIP PRICING ENDS THURSDAY
Jun 21, 2001
How To

A Market Research Expert's Advice on Online Subscription Price Testing (Hint: Don't)

SUMMARY: Seems like every Web and email newsletter publisher these days has sent their free readers asking, "What would you pay if we started charging?"  If you are one of them, or if you plan such a survey, definitely read this quick, useful advice from a market research pro first! 
The "MR" in MRNews.com stands for "Market Research," so when we heard this online publication switched from free to paid in January, we called up publisher Philip Kleinman in the UK to find out how he surveyed readers about the price increase. Answer: he didn't. He says, "I did no reader research about willingness to pay. I did informally ask a number of people, mostly readers, what they thought of the idea. Unsurprisingly they mostly said it was lousy."

In fact, as a research expert Kleinman strongly advises online publishers against asking readers if and what they will pay. He says, "Who in his right mind is going to say he thinks he should pay for something he is currently getting for nothing? A slightly more meaningful question would be 'Your favorite website, hitherto free, is going to start charging $50 a year for access. Will you pay?' But even that question is hardly worth asking, since the answers will only tell us what people say, not what they will do. I'm afraid that asking silly questions does not constitute a guide to wise commercial decisions."

Kleinman notes things were much easier in the old days when publishers could send out varyingly priced direct mail offers to see which one pulled the most profitable response with none of the recipients being the wiser. He says that neither the highest, nor the lowest price was ever necessarily the winner in terms of units sold or profitability. A lesson worth remembering now.

But the Internet makes that type of price testing almost impossible because people can find out that there are other prices too easily. Kleinman says, "Will people pay for access to a website? The logical answer is yes, if they value it enough. How to find out whether they do? Suck it and see."

So, Kleinman himself sucked it and saw. In December 2000, he told his 3,500 free subscribers they'd have to pay sixty pounds a year for site access as of January. People who anted up before the end of the year got a fifteen-pound discount. So far almost 6% of free readers have converted -- a highly respectable figure. (Kleinman continues emailing a headlines-only version of the newsletter for free to "seduce" more conversions.)

And -- you'll love this -- an AC Neilsen executive wrote Kleinman, "in very serious terms about how regrettable and deplorable it was that I should put up a barrier to the free exchange of information across the world." Kleinman quickly replied, "Please help me. I've heard a rumor that AC Neilsen is actually asking clients for money to sell them information!" Although the executive gruffly conceded the point, he has yet to pay for an MRNews.com subscription.

http://www.mrnews.com
See Also:

Post a Comment

Note: Comments are lightly moderated. We post all comments without editing as long as they
(a) relate to the topic at hand,
(b) do not contain offensive content, and
(c) are not overt sales pitches for your company's own products/services.










To help us prevent spam, please type the numbers
(including dashes) you see in the image below.*

Invalid entry - please re-enter




*Please Note: Your comment will not appear immediately --
article comments are approved by a moderator.

Improve your marketing

Join our thousands of weekly Case Study readers. Enter your email address below to receive MarketingSherpa news, updates, and promotions:
Note: Already a subscriber? Want to add a subscription?
Click Here to Manage Subscriptions