Funding In-Depth: Our Subscription Model
A behind-the-scenes look at how MVC subscriptions work: how we set pricing, design our marketing, what technology we use, and how to use these tactics for your own media project.
This is part of our series on how we fund Model View Culture: to share what we’ve learned, mistakes we’ve made along the way, and how you can use our strategies and tactics in your own work! Read our other in-depth posts on crowdfunding and sponsorship.
This one is about how our subscription funding model works! We offer a yearly subscription that we sell in the first Quarter or so of the year. Subscribers get four exclusive collections of Model View Culture content – including in-depth cultural analysis, feature articles, interviews, and new images. We deliver them in print or digital formats, and also offer subscriptions for organizations and an option to donate a subscription to someone who can’t afford it.
How do subscriptions play into our overall funding? Well, subscriptions make up the bulk of our revenue: about 70% of all of our funding comes from subscription sales! So it’s our major breadwinner. Since we collect most of this revenue in the front part of the year, it provides the basis of our annual budget, and helps us guide our financial projections, spending, and goals for the year. In this post, we cover some numbers on our subscription sales, how we price them, how we market them, and the tools we use. While this post is mainly about selling media, some of it might also be relevant to people selling other types of products!
DEVELOPING THE SUBSCRIPTION MODEL
There’s lots to be said about how we envision, create and execute on our subscriptions, but for the sake of this post, we’ll focus on the funding and financial aspects.
One of the most important points we made in our funding overview post is the importance of stratifying your product offerings to appeal to people with different consumption methods and different financial statuses. That way, you really optimize your potential paid audience. For us, this entails “slicing and dicing†up our base product – a writing collection – into a series of different form factors: print, digital, organizational, and donation subscriptions; and even within those categories, we provide variant price points to allow people with higher income levels to contribute more if they want to.
From our Funding overview post:
“Since print is more expensive to produce and ship, and has a fairly unyielding financial burden even as you scale, our print Quarterlies cost more, starting at $60 plus shipping and handling, for a total of around $70 base. On the other hand, you can get our digital subscriptions for $50 for the full year. For larger teams, organizations, startups and companies, we offer organizational subscriptions starting at $180 plus shipping and handling for a three pack. We also have more expensive price points to ship 5 and 10-packs. While our organizational subscriptions only comprise 10% of our total subscription revenue, it’s still a good chunk of money and makes an important contribution to our bottom line…
In addition to offering various ‘products’ with different price points, you should also offer different levels of pricing for the same material, and then people can choose the level they want to contribute at. This obviously works well for crowdfunding, but can also work extremely well for products themselves: we offer both a ‘supporter price’ and ‘super supporter’ price for our subscriptions, so people who are able and willing to contribute more can do so at a higher level. The price difference doesn’t have to be huge – our super supporter tier for print editions costs just $15 to $25 more per subscription – but has a big impact on our overall revenue: about 40% of individual subscribers pick the ‘super supporter’ tier, and the overall revenue they contribute is almost the same amount as base supporters.â€
Considerations for developing your own variable model:
- How can you offer lower-cost products by reducing the labor, materials and delivery cost of fulfillment? I.e., digital production is cheaper than physical printing.
- How can you develop higher-cost products by tailoring to groups, adding extra or advanced features or more content, or creating a higher-quality version?
- What price points are people willing to pay? You can figure this out in the early days by doing a short survey of your audience by email or on social media. Develop both a base price and a higher-priced “hypothesis†to try out, then see how it goes.
- Set a target % or dollar amount of people you want to be contributing at the higher levels: if you exceed that goal, maybe your pricing is too cheap! If you don’t meet it, consider adjusting your high price point to be more accessible. Â
- You don’t have to stick to your pricing model. Experiment! Start with something basic and then get more elaborate over time. When MVC first launched, we had just a subset of the pricing and product options we now offer. Taking it slow ensured we could meet our commitments, and develop our model as more information became available. You’ll never know as little as you do at launch!  Â
DIGITAL GOODS… ARE GOOD
One of the mistakes we made in the early days of the company was not immediately launching with a digital version in addition to our print issues. For one, it’s a huge accessibility issue, and cut off the interest and access of many of our readers. (Sorry about that, everyone!) Expanding to digital goods if you have a core print product does take more time, but it absolutely pays off in terms of the increased audience and revenue we’re able to access. Digital subscriptions let us reach and sell to our non-US audience, to people who don’t want print media, people who want to read on popular platforms like Kindle and iBooks, and people who use screenreaders and other assistive technologies.
About 30% of our overall orders are digital subscriptions, comprising about 20-25% of our total subscription revenue. Digital goods also let us offer a more affordable price point to our customers: since the overhead is cheaper, we can offer a lower base price. And, you don’t need to collect taxes or shipping and handling on digital goods! A win for all.
We don’t offer our products directly through vendor platforms like iBooks and Amazon. Offering the .epub and .mobi formats means that people can still use apps like the Kindle app to read the work, but we don’t end up having to fork 30% of our revenue over to these tech giants! At our size and operating margin, that would be too prohibitive. Especially since our main audience is within industry, trade, academic and some social justice circles — certainly not a “mainstream†audience — the higher fees that it would entail likely wouldn’t be worth the gains in “exposure†and discoverability.
THE TECH
If you have a very small operation and limited funds, it’s almost certainly not worth it to home-roll your own storefront and payment flow, especially when there are a number of available solutions out there already. You want to be spending most of your time on creating and marketing the products you want to sell, not wrestling with inventory management, payment platforms and coding your own UI/UX.
At Model View Culture, we use Shopify for our store front, payment processing and order management. They have a number of built-in tools that made it possible for us to meet our immediate backend needs at launch, as well as expand/diversify over time with platform integrations: we eventually added the SendOwl app which lets us automatically fulfill our digital orders, and it also has apps for international shipping, for example, if we wanted to add that in the future.
We pay Shopify about 80 bucks a month for their “Pro†tier. In addition, they take a fee off of all the payments they process. We also have the plug-in which allows people to check out with PayPal. (About 50% of our customers check out with this option). We could probably swing it using the cheaper plan, but this gives us access to advanced reporting tools that makes it easier for us to check our records, see our progress and make sure our books stay straight. This saves us quite a bit of time and makes it really easy for us to see how much money we’re making and how many orders we’ve sold, so we can see what’s working and what’s not. That ability to quickly do calculations and analysis is worth the cost at our level of maturity.
LOOK AND FEEL OF THE STOREFRONT
One nice thing about Shopify and other ecommerce platforms is that it provides most of the UI/UX things you need to get up and running, and has a number of theme options so you can pick one that fits your look and feel.
We recently did an upgrade on the look and feel of our storefront to be a little more sleek, look better on mobile and present our products in a more attractive way. While there’s tons of better resources than this post on ways to optimize your online storefront, the main advice I would have is:
- Keep it super simple, especially at launch. Product photos, descriptions, and a check-out flow: nothing too fancy. You can optimize, tweak and A/B test your heart out later. For now, just get the basics done right.
- Take some attractive and fairly high quality pictures, drawings or composites of your product so it looks enticing. For our most recent photos, I used an iPad and took some close-ups and spreads. It’s not perfect or super professional, but it’s clean, neat, looks OK, and gets the point across.
- Keep your descriptions short and to the point. More on messaging in the next section.
- Be clear and up-front in the description about what the buyer is getting, and when and how it will be delivered.
- CLEARLY OUTLINE any limitations on the shipping or availability up front – i.e., we only ship print subscriptions in the US at this time, so we put that right at the top so we don’t let anyone down.
- Have a big, obvious “buy†button – reduce visual clutter on the page and make your product and your buy button the stars. Â
- Offer a way to sign up for your newsletter as part of the purchase flow – this will help you stay connected to buyers on an ongoing basis.
- Make sure it looks good on mobile: test it on a few phones and tablets. (You don’t need to own these yourselves – just ask a friend or family member to give it a quick whirl and report back.)
DESIGNING MESSAGING
The most important thing to keep in mind when developing your messaging is that, just as you have different products to appeal to different people, different messages will resonate with different parts of your audience. Try to develop a few strong, core messages that you can use throughout your promotional efforts.
How do we do this at Model View Culture? Lots of our messaging is focused on the overall benefits that Model View Culture provides to the community, and the fact that we need our subscribers to provide financial support so we can continue that work. We use a lot of values-based messaging that revolves around our ethics and practices: for example, our commitments to editorial independence, supporting diversity in tech, highlighting diverse voices, and fundraising for marginalized members of the community. Now that we’ve been around for awhile, we can also talk about things that we’ve achieved to demonstrate our ability to execute on our promises to subscribers: like how many articles we published last year, how many authors and projects/organizations we featured, etc.
Of course, a major selling point is that subscribers have access to more – and exclusive – Model View Culture content. We also highlight the quality of our print production – printed by 1984 Printing, a local, woman-owned printing press that makes a beautiful product using ethical and environmentally friendly materials.
We use a slightly different set of messages for our subscription packs, which are designed to be read and shared by larger groups – startups, hacker spaces, indie groups, tech organizations, etc. For that, we focus on the educational aspects of the material, and how it is informative, relevant and useful for team discussion and decision making.
Overall: settle on a set of 3-4 message points that you can use on different platforms, and that appeal to different aspects of people’s interests – content, quality, group use, etc. There are usually at least a handful of reasons why someone would want to buy your product, so figuring out what those are and getting them out is key.
THE SALES WINDOW
One key consideration for your operations and marketing material is your sales window(s). It’s important to think about how you want to sell your product: do you want to sell your products year-round, or just for a set period of time? Or sell some products for an exclusive period, and make others available year-round?
At MVC, we offer our print subscriptions only for the first part of the year. This lets us figure out our budget for the year, how many copies we’ll need to get from our printer and how much that will cost, and how much time we can expect to be spending on packaging and shipping. Selling our print copies for a limited time makes sense for us for a number of reasons. For one, people are more likely to buy – and not put it off for some indefinite and often never-arriving point in the future – if there’s some level of urgency. Second, marketing our subscriptions is really labor intensive and draining, and this schedule lets us focus heavily on marketing and promotion for a few months of the year, and then have the rest of the year to focus more narrowly on our core goals and producing content. Third, because we ship four times each year, having to send out back-issues regularly would be disruptive to our presently well-oiled shipping cycle.
However, even if there’s a product that you want to sell for only part of the year, it’s important to have ways for people to contribute to you year-round! That way, there’s always a way for new community members, readers and fans to contribute. It’s also healthy for your budget, so that you can adapt to meet unexpected costs and new goals. That’s why we offer digital subscriptions all year, and also have sponsorship and crowdfunding revenue streams.
CONCLUSION
Subscriptions are an AWESOME, time-tested way to monetize your media company. And, rumors of the death of print media are much exaggerated – while this model is failing lots of the old-school, mainstream giants, the rules are very different for focused, independent media. People love getting our print copies in the mail, sharing them with family, friends and colleagues, and even sending us pictures with their pets. And our digital versions are read and enjoyed by people all over the world.
The most important considerations: pricing, an attractive storefront, simple technology, straight-forward messaging and creative, informed growth so your subscription model can mature along with your organization.
Make sure to check out our other post in this series on our overall funding strategy, as well as in-depth posts on how we do crowdfunding and sponsorship. And, if you liked this post, consider subscribing to us today, too!Â