Discover the Secret to Successful Substack Pricing

Have you heard of this price strategy? Because I hadn’t...

Dec 03, 2024

The other day, someone told me they’d unsubscribed from my paid subscription and decided to go with another one. Their reason seemed straightforward:

They wanted to focus on just one paid subscription that helped them move forward on Substack (which is totally fair).

But something about it didn’t sit right with me. Why didn’t they choose mine?Curious, I did some digging, and I’m now pretty sure it came down to the pricing model of the other subscription.

That’s when I stumbled upon a pricing strategy called

Price Anchoring.

Never heard of it? Neither had I. But once I looked into it, I realized how clever it is. And how it might be worth considering for my own Substack pricing.

That’s why in today’s newsletter, I’m diving into price anchoring: what it is, why it works, and how we can apply it to our own subscriptions.

I’d be thrilled to have you as a paid subscriber. Here’s what’s waiting for you:

Personal support to answer any of your questions
Individual feedback tailored to help you grow
Full access to my Substack course
A community of like-minded, supportive people who truly care

Sounds good? Come join us 🚀

Price Anchoring for Newbies (like me)

In marketing, there’s a concept called price anchoring. If you’re unfamiliar with it, you’re not alone. It’s a subtle but effective strategy many businesses use, and it could be a game-changer for your own subscription model here on Substack.

What is Price Anchoring?
Price anchoring works by presenting a higher price first (the "anchor") so that subsequent options seem like better value by comparison. This taps into a cognitive bias where our brains judge value relative to what we’ve just seen.

Here’s how this often looks on platforms like Substack:

Monthly Subscription: $15–$20 per month.
Annual Subscription: $60–$70 per year (which breaks down to just $5–$6 per month).

At first glance, $15–$20 a month might feel like a lot. Then you see the annual option, and it suddenly feels like a bargain to indeed choose the annual option. It’s less than half the monthly price when averaged out. This encourages users to opt for the annual plan because it feels like the smarter choice.

Why Does Price Anchoring Work?

It Frames the Value
The higher monthly price sets a mental "anchor," making the annual price seem like a steal in comparison. People tend to avoid what they perceive as an overpriced option, gravitating toward the better deal instead.
It Encourages Long-Term Commitment
When someone opts for an annual plan, they’re committing to your content for a year. Plus, it saves them the hassle of monthly renewals, which is another appealing factor.

Examples of Price Anchoring in Action

Streaming Services: Platforms like Netflix and Spotify often use this tactic. For instance, Netflix may charge $19.99 per month for its premium plan but offer an annual subscription with a noticeable discount when calculated per month.
Software Companies: Tools like Canva or Grammarly often present a high monthly price (e.g., $12.99) alongside a much cheaper annual option billed upfront (e.g., $120/year).

How Can You Use Price Anchoring on Substack?

If you’re a writer building your subscription model, here’s how to apply price anchoring effectively:

Offer a Significant Discount for Annual Subscriptions
Set your monthly price at $15–$20, but keep your annual subscription at $60–$70. This highlights the value of the annual plan without making it feel "too cheap."
Use Visual Cues
When presenting options, highlight the annual plan as the "best value." Use color, icons, or text like “Save 50%!” to draw attention to it. Substack makes this one easy as it shows automatically the huge discount in the subscription page.
Communicate the Benefits
In your description of the annual plan, emphasize not just the savings but also the benefits of long-term access. For example:
- "With the annual plan, you get a full year of exclusive content at less than half the cost of monthly subscriptions."
- "Lock in your subscription and avoid price increases for the next 12 months."
Experiment and Optimize
Every audience is different, so test different pricing tiers to see what resonates. Some creators might find that a $10 monthly price works better, while others can go as high as $20 or more depending on their niche and perceived value.

Why This Matters

By using price anchoring, you’re not just setting prices. You’re guiding your audience toward a choice that benefits both them and you. They feel like they’re getting great value, and you gain a more predictable revenue stream from annual subscribers.

For example, let’s say you have 100 subscribers:

If they all choose the monthly plan at $15, you’re earning $1,500/month.
But if half of them switch to the annual plan at $70/year, you get $3,500 upfront from those subscribers alone, plus the remaining $750/month from monthly subscribers. That’s $4,250 in your pocket, simply by offering a compelling annual option.

Action Step for You

In the end, price anchoring is all about psychology. Once you understand how it works, you can use it to make smarter decisions for your subscription model.

Personally, I do want to try it. As I just changed my payment model, I might not do it right away, but eventually I might.

Recap & Learnings from Our First AMA Call 🎉

I know some of you couldn’t make it, and since I chose not to record the session, I’ve summarized the key takeaways here instead:

1. Not Every Post Needs to Be Emailed

You can publish posts without sending them to your email list. Just disable the "Send via email" option after hitting "Continue" when writing your post. This way, the post will only appear on your homepage without flooding inboxes.

2. Dealing with Shady Messages

It’s okay to ignore or block unwanted or uncomfortable messages immediately. The internet can attract all kinds of people, and you don’t owe anyone your energy. Protect your space.

3. Low Conversion Rates Are Normal Early On

It takes time to build trust with your audience. Focus on growing your free subscriber base first, and stay consistent. Paid subscriptions will come eventually. For me, it took building up 300–400 free subscribers before I started seeing paid conversions. Everyone’s journey is different, so be patient with yourself.

If you missed the call, I hope this recap helps. Let me know if you’d like me to expand on any of these points. Also, thank you for those showing up and being active, vulnerable and supportive. What a community we’ve got here 🧡.

I'd like to be part of it 🧡

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