Newspapers

Mather Economics has completed several consulting engagements for newspaper clients in the area of home delivery subscription pricing. Engagements have included the following:

New-customer price elasticity - Data on current and former customers and on non-customers is applied in an economic model to estimate the influence of offer price, offer lengths, premiums and several other factors on the tendency for customers to subscribe to the paper and at what service frequency. These results are used to develop target offers for new customer starts.

Existing-customer price sensitivity - Using monthly transaction data, analyses of customer retention were completed to understand the influence of several variables, including renewal prices, competitor pricing, and market penetration. The conclusions are applied in the development of renewal offers for existing customers.

Pricing strategy development - Data on incremental costs, including production, delivery, and acquisition costs, are combined with circulation and advertising revenues to measure gross profit by customer. This analysis supports the creation of a home delivery discounting strategy designed to maximize the return from each paper's incentive budget.

These projects have helped newspapers to improve revenue while maintaining home delivery circulation. As part of our discounting work, we have also assisted clients in managing their under 50% discounted subscribers, develop new subscription offers for customer segments, and establish appropriate discount strategies for the use of electronic payment alternatives (EZ pay).