A large metro newspaper wanted to identify the revenue-maximizing pricing action for digital-only subscribers.
- Mather prepare a stratified random sample of 2,000 digital-only subscribers into four groups.
- A control group of $3.99 (weekly) was compared against three test groups of $4.99, $5.99, and $6.93.
- Key performance metrics and revenue impact were analyzed.
- An incremental $16M in 3-year revenue vs. the control group was determined from the most aggressive price increase ($6.93).
- Surprisingly, the incremental stop rate was greatest at the lowest level of price increase.
- Revert rates were high for the most aggressive group due to customer service to mitigating stops by offering stop-save prices.
- Overall, the price elasticity in the $6.93 test group was -0.05 compared to -0.09 and -0.21 for the $5.99 and $4.99 groups, respectively.