Jul 17, 2002
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Several semi-newly free-to-paid site/ezine publishers have been complaining to me recently about fall-off in their conversion rates. The usual story goes: they switched from free to paid. At first lots of people switched over, about x% of readers a week.
Big excitement, champagne corks a'poppin. Then suddenly a let down. Conversions were slowing rapidly. Less and less fresh cash coming in. Why? why? why?
To which I say, you should have been expecting this. Situation normal. In fact you can spreadsheet this stuff out ahead of time.
It's not perfect, but at least it will give you some idea of what to expect.
1. Columns: create a series of columns for each month from the month you plan to announce your switch to paid (if you're smart you'll pre-announce it with a special price for early birds) until 12 months after the switch date (or however further you want to go). Reserve your first column at the left for row titles, and your second column for numbers you plan to use as multipliers. Months start in column three.
2. Rows: obviously your first row is titles for all the columns.
Row #2 is labled "new free readers/new traffic." In this row you want to put the amount of fresh brand new, unique, people who will either sign up for your newsletter or visit your site in that month. For the first month conversions start, assume everyone is new because your entire list is new to this subscription offer. In future months only true newbies are "new."
Row #3 is labled "% 30day paid." This means the % of your total newbie file (not total readers unless they all count as "new" per
above) who you think will convert to being paid subscribers in the first 30 days of seeing your lovely site/ezine/offer.
Row #4 is labled "% 60 day paid." This means the % of your total newbie file from the prior month's newbie column (now in their 30-60 lifespan) who will convert to buying now.
Row #5 is labled "% 90 day paid." This is the % of your newbie file from two month's prior newbie column (now in their 60-90 day
lifespan) who will convert to buying this month.
Row #6 is labled : # subs sold. This is where you add up the numbers of converted subscribers in each column from rows 3,4,5 to get the total number of subscription units sold that month.
Row #7 is labled: Cash. This is where you multiply the number in row #6 by your annual subscription price.
If you are selling by the month instead or in addition to annually, you'll need to add:
Row #6a: Total Mo/Mo #. This is your total number of month-to- month subscribers that month. You determine this by multiplying last month's total by the percent you think will "stick" (I often assume 80% of each month's total will stick the following month) and adding that to the total number of new units added on this month.
Row #6b: Mo/Mo $. This is the number above multiplied by your monthly subscription rate.
There you have it. My down'n'dirty subscription calculation spreadsheet. When you pop your numbers in you'll be surprised to see how obvious the whole cash flow thing is. Of course after a few months your new subscription conversions will fall, because you'll probably have far fewer new free readers to feed into the conversion hopper!