Dumb Agent alerts us to an interesting pricing scheme at the Economist:
- Subscribe to a full year of online access to The Economist for $59.
- Subscribe to a full year of the print edition of The Economist in print for $125.
- Subscribe to a full year of both the online print editions of The Economist for $125.
Essentially giving two options: spend $59 or spend $125.
Now, if you were to come across this you might think they hadn’t put much thought into it at all, right. More importantly, however, if a magazine you enjoyed had this pricing structure, which option would you choose? Well, since online access costs $59 and the print edition costs $125, the smart money would decide to purchase both, where the entire cost of online access is done away with, right?
Since the majority of the cost of providing content, online or in print, is the cost of writing the articles, it costs virtually nothing to add one new print or online subscriber once the issue is written. So the marginal cost of adding one more subscriber, print or online, is close to zero. But the Economist has discovered that folks who want a hard copy to read are willing to pay over twice as much as online subscribers. So this is a good old-fashioned price-discrimination scheme, with the Economist making it seem to print subscribers that they are getting a good deal by getting online access at no extra charge.