Simple napkin math to help with strategic decisions
thanks for this. for my newsletter I end up taking just over 85% net after stripe/substack/refunds. I have a higher price point 15/168, and have a decent % of annual subs. When I run special offers I usually limit the discounts to annual subs only, as I want the one time charge, more cash upfront, and when renewal hits after 12 months at the non-discounted rate you get a nice bump.
This is pretty detailed and understandable. Thank you for writing Growth Croissant. I'm binge reading forward from the archives right now, and am looking forward to reading more about what initially attracts customers, and how to maintain them.
This was awesome because it used tangible examples. And the point around one ten dollar sub versus two five dollar subs hits home. Not all revenue is created equal when you factor in processing fees (and timing)
It made me think - Substack should also show the actual cash earnings in the door. Not just forecasted gross ARR (since all the monthly’s have the ability to bounce) and bc it doesn’t include the processing fees (which add up). Because of these two points the ARR writers see is kind of a vanity metric, not a true reflection of net revenue or real cash flow in their pockets. But hey, I guess that’s what the stripe dashboards are for 😂
Another great one. Thanks! :)
I'm at 160 paid subscribers at $7/month. It's definitely a grind. Maybe in a year or two I will hit 500 or even 1,000, if I am lucky.
Awesome, Reid! You're definitely expanding my sense of possibility -- of what's possible with Substack -- and getting me to think about my future as a writer in ways I never would have thought about without your writings here. Thanks!
Reid, I really enjoyed this post. My takeaways were:
-I hope the inspiration for Big Dean’s Boardwalk wings was Big Deans on the Santa Monica boardwalk. One of the best places to get a cold beer on the west side...
-The examples you used drove home that you don’t need a massive paid subscriber base to make a healthy amount of monthly revenue. Small but highly engaged newsletter can be just as powerful as a newsletter with thousands of subs but low engagement
-I liked the point about stripes processing fees and how a single higher paying sub contributes more to your bottom line than two subs at a lower price point....net net interesting to think about creating enough value to charge at a higher level
-I hope an upcoming edition talks about reducing churn!
I did take note of the price point that you picked for your own newsletter and this was revealing us to perhaps why. There was a huge emphasis in substack grow on charging less and getting a higher quantity faster, however, when you compare the going rate and say the culture category versus the going rate in the investing category, it's a very different ball game.
In the technology category I'm probably under charging at $8 a month. My way around this was to create more than one newsletter, however it doesn't seem to scale as I had anticipated.
Another equation is the actual time it takes to scale to the desired amount. If my subscription was as low as I was recommended it would take me too long to keep the damn thing up. I think here we have to build data on the creators own life cycle in the platform. The creator evolves or will burn out or may just up and leave for whatever reason in their lives.
So from Substack's own point of view and considering inflation, writers should likely be increasing their subscription amount. But are they?
I have a question, shouldn't Big Dean also look at the income tax in this planning?