Are Cover Price Increases the Answer to Publisher Woes?

By Chandra Johnson-Greene
Friday, August 29, 2008

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We asked circulators from three top publishing companies if cover price increases were part of their near-term budget strategy. Opinions vary, but all agree the concept is definitely on the table.

Holly Klingel,
VP, consumer marketing, Sunset

With Sunset, we feel our cover price is already a fair deal at $4.99, given the current economy, our competitors’ prices and the consumer price sensitivity to traditional avalanche prices above $4.99.

We do some special issues where we’ve decided to invest in thicker paper and cover stock and increase the cover price from $4.99 to $7.99.  In this instance, the product quality is going up at the same time the cover price is increasing. Given the improvement in the quality of the product, and the unique nature of these specials, we don’t expect any adverse reader reaction.

On the newsstand, rather than cutting costs, we’re focusing on increasing sales. Our editorial product has never looked better, and strong cover images and easy-to-read benefit-oriented cutlines have improved our newsstand sales year-over-year.

We are working with our PR team to use the cover whenever possible as another form of promotion that has no cost to us, yet helps to drive better newsstand sales. We’ve recently had two editorial segments on “Good Morning America” and both times they began with a full cover shot of the issue currently on newsstands, and this appears to have increased our sales of that issue.

Ken Sheldon,
Executive Director of Circulation, New York

[Ed. Note: According to ABC’s Fas-Fax Report for the first-half of 2008, New York saw a 3.4 percent increase in single copy sales over the same period in 2007, even with a 20 percent cover price increase.]

Our cover price has always been on the low side, but since New York doesn’t have any direct competitors, we figured that we could test a higher price. Based on prior experience, cover price increases generally don’t hurt sales significantly, so we thought it was something we could evaluate.

We decided to do a directional test, not a full A/B split, during the second quarter of last year. We raised the price on four issues for most of the draw, and kept the price the same for 10 percent of the draw. It wasn’t a perfect test, but it gave us a directional read. We looked at those four issues versus the issues before and after. Every issue had either single-digit falloff, or none at all. In all, there was a 4-6 percent falloff.

Despite that, our single-copy sales increased by 20 percent [with regular issues at $3.99 from $2.99 and double or perfect-bound issues at $4.99 from $3.99]. The test showed that if you can raise the price and only lose about 5 percent of your sales, you could still come out ahead. For us, it was the right decision.

Vicki Weston,  Single copy sales director
and Bruce Miller, VP, consumer marketing 
Bonnier Corporation

Weston: We are considering some increases for two or three titles, but nothing has been decided. The objective is to help with lost revenue, but there are many concerns to whether or not an increase will effect sales, and ultimately, not contribute positively to revenue. If the decision is made to increase, we will just do it without testing because retail market makes it very difficult to do that.

Miller: The industry has seen relatively little price resistance to cover price increases, so we might try it. We’ve talked generalizations and we’ve put some numbers out there for planning purposes, but we won’t be putting out any increases next year.

I’ve resisted it over the years, so we are behind the curve for that reason. But when you’re facing the magnitude of cost increases, it’s difficult to ignore. You have to think about passing some of the cost along to the consumers, not just the advertisers.