I came across the pricing list for print and online versions of The Newport Daily News through Consumerology blog. The most interesting aspect of their pricing is how they priced the online only version (highest) vs. online plus print combo (lower). Why would they give away the version that includes print newspaper at lower price than online only version? The reasons could be:
- Their online Ad revenue may not be significant and advertisers do not think the readers respond to the Ads. Hence they want to compensate for lost revenue opportunities.
- There are additional revenue opportunities from print version, for example different types of Ads, inserts etc
- More people read the print version, either within households or it is bought by local businesses for their customers. In addition readers may spend more time reading the newspaper. Together these two factors increase the Ad reach and hence the price Newport Daily News can charge their advertisers.
But this pricing is unsustainable due to following reasons:
- Since the combo price is lower, those who prefer online version will buy this version and may simply throw away the print version. While the newspaper may claim higher “print impressions” with their advertisers, there is no net increase in reach for the advertisers.
- The pricing also goes against customer expectations and assumptions – customers believe online only version should cost lower than print version because of cost difference. To a marketer cost has nothing to do with pricing which is purely based on value, but customer perceptions set a low reference price for online only version. This low reference price prevents the marketer from capturing all the value.
The Newport Daily News may now be employing behavioral economics to nudge customers to pick the print only or the print + online combo over the online only version, but sooner or later they are going to find resistance or backlash to their high priced online only version.