{"id":211,"date":"2025-01-27T18:34:50","date_gmt":"2025-01-28T00:34:50","guid":{"rendered":"https:\/\/sherwinlakegroup.com\/P1\/?p=211"},"modified":"2025-01-27T18:34:50","modified_gmt":"2025-01-28T00:34:50","slug":"pricing-unintended-consequences-in-media","status":"publish","type":"post","link":"https:\/\/sherwinlakegroup.com\/P1\/2025\/01\/27\/pricing-unintended-consequences-in-media\/","title":{"rendered":"Pricing Unintended Consequences in Media"},"content":{"rendered":"
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My long-since-retired parents shared with me the other week their ire over a massive price increase for home-delivery of their local newspaper.  The new price of $199\/month was more than an order of magnitude higher than the $19\/month for the online subscription.  Always the problem-solver I told them to cancel their subscription and order the paper to be delivered to their new next-door neighbors.  They did and now pay $93 for a 1\/2 year which is 80% less than what they paid before.  You can guess what they’ll be doing in 1\/2 a year.    Until then they’ll be talking about the paper as the butt of many a joke at all of their dinner parties whom are also print subscribers.<\/p>\n

Humor me as I speculate on what’s happening behind the scenes.  A pricing model at the paper recognized that their longest remaining print subscribers had a virtually perfect retention rate at virtually any price-point.  What did the pricing model probably include or not include?<\/p>\n

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  1. Segment customers correctly by age and media-type.<\/li>\n
  2. Either\n
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    • Didn’t have retention rate or customer willingness-to-pay data at that level of price-increase OR<\/li>\n
    • Did have retention rate or customer willingness-to-pay data by zip code.<\/li>\n<\/ul>\n<\/li>\n
    • Take into account availability and ease-of-access of new-subscriber offers<\/li>\n
    • Have additional goals or guardrails for damage to reputation<\/li>\n
    • Recognized that retirees may already have a subscription to next-best-alternative papers but regard those as a step-down<\/li>\n
    • Have a goal to migrate customers to less-profitable online subscriptions.<\/li>\n
    • Experienced pressure to over-promise higher revenues and used this as the primary or sole price model goal.<\/li>\n<\/ol>\n

      As the Monday-morning quarterback I can comfortably say that the newspaper could have better modeled for the shortcomings in 2-4 and made more money from this segment in #1.  If they were already modelling by zip-code retention rates then hats off: my parents were an outlier.  Regardless, a goal or guardrail on reputational harm per #4 from over-pricing could have also addressed mistakes from #2 and #3. <\/p>\n

      The concept of an additional goal as referenced within #3 brings to mind an interesting, under-utilized tool to price-modellers.  A “Linear Program”, best recognized as the “Solver” add-in within MS Excel, allows for balancing and optimizing across multiple linear goals.   Using this capability, price modellers can create multiple (linear) models that each individually optimize a price by a singular goal that can then be consolidated into an overall goal, linearly.  Give it a try.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

      My long-since-retired parents shared with me the other week their ire over a massive price increase for home-delivery of their local newspaper.  The new price of $199\/month was more than an order of magnitude higher than the $19\/month for the online subscription.  Always the problem-solver I told them to cancel their subscription and order the […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-211","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/sherwinlakegroup.com\/P1\/wp-json\/wp\/v2\/posts\/211","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/sherwinlakegroup.com\/P1\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sherwinlakegroup.com\/P1\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sherwinlakegroup.com\/P1\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/sherwinlakegroup.com\/P1\/wp-json\/wp\/v2\/comments?post=211"}],"version-history":[{"count":5,"href":"https:\/\/sherwinlakegroup.com\/P1\/wp-json\/wp\/v2\/posts\/211\/revisions"}],"predecessor-version":[{"id":216,"href":"https:\/\/sherwinlakegroup.com\/P1\/wp-json\/wp\/v2\/posts\/211\/revisions\/216"}],"wp:attachment":[{"href":"https:\/\/sherwinlakegroup.com\/P1\/wp-json\/wp\/v2\/media?parent=211"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sherwinlakegroup.com\/P1\/wp-json\/wp\/v2\/categories?post=211"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sherwinlakegroup.com\/P1\/wp-json\/wp\/v2\/tags?post=211"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}