Latest / The Newsletter Podcast with Fexingo: Substack, Beehiiv, and Email Newsletter Business / How Newsletters Use Paid Membership Tiers to Monetize
Transcript
- Lucas: So Luna, we talk a lot on this show about converting free subscribers to paid. But what happens after someone says yes to your newsletter? Once they're in, how do you grow the revenue per subscriber without just jacking up the price? Luna: I've been thinking about that too. It feels like the next frontier is tiers. But I'm not sure how many writers are actually pulling it off well. Lucas: That's exactly what I want to dig into today. Tiers. The idea of offering not just one paid subscription but two or three levels, each with a different price and a different set of benefits. And it's not as common as you'd think. Most newsletters just have one paid tier, and that's it. Luna: Right. So what's the case for adding a second tier? I mean, if you're already charging, say, eight bucks a month, why complicate things? Lucas: Well, the classic argument is that one price forces you to choose: either you keep it low enough that a broad audience can say yes, or you charge a premium that a smaller, more dedicated core will pay. A tiered model lets you do both. The Browser is a great example. It's a daily digest of the best writing on the internet, curated by Robert Cottrell. For years it had a single subscription price, something like five dollars a month, and then they introduced a higher tier. Luna: I remember that. They added something like a two-hundred-dollar-a-year tier. That's a big jump. What did you get for that? Lucas: So the high tier, which I think they call the Browser Member, gives you everything in the standard tier, plus a monthly live Q&A with the editor, access to an archive of past issues, and maybe some other extras. The point is, it's not just a donation. You're getting something tangible, but the real value is the feeling of being part of a smaller club, a community. Luna: That's interesting. So the high tier is almost more about status and access than content. Do you think that works for a typical niche newsletter, or is it only for established brands with a big audience? Lucas: I think it can work for anyone with a loyal, engaged audience. But you have to be honest about what you're offering. If you're a small newsletter about, say, urban gardening, you might not have a famous editor to do Q&As. But you could offer a monthly group call where subscribers can ask you questions directly. That personal access can be incredibly valuable, even for a niche topic. Luna: That makes sense. But I'm wondering about the risk of cannibalization. If you offer a higher tier, won't some of your existing subscribers just downgrade? Or feel like they're missing out if they don't upgrade? Lucas: That's a real concern. The key is to make the base tier still feel complete and valuable. The high tier should be an addition, not the 'real' product. If you make people feel like they're getting the watered-down version, you'll have churn on your hands. But if the base tier is already great, then the high tier is a bonus for the superfans. Luna: So how do you decide what goes in each tier? Is there a framework? Lucas: A good starting point is to think about what your most engaged readers actually ask for. Do they want more of your content, or more access to you? For example, a lot of writers add a tier that includes a weekly 'behind the scenes' email or a monthly video where they talk about their research process. That's not for everyone, but for the people who want it, it's worth paying extra. Luna: So it's about identifying the superfans and giving them a reason to pay more. But what about the price points? How do you set them? Lucas: The Browser went with a two-hundred-dollar-a-year tier on top of a much lower standard subscription. That's a classic strategy: anchor the high price, make the lower one seem like a bargain. But you don't have to go that extreme. Some writers do ten dollars a month for basic, twenty-five for premium. The key is to test and see what your audience responds to. You can always adjust. Luna: I've also seen newsletters offer a 'founding member' tier that's only available for a limited time, like the first month. Does that work with ongoing tiers? Lucas: That's a great point. Founding member tiers create urgency and reward your earliest supporters. They can be a one-time thing, and then you settle into your permanent tier structure. That's a good way to test the waters without committing to a multi-tier system forever. Luna: So what's the actual upside? If I'm a writer with a few hundred paid subscribers, is it worth the effort to add a second tier? Lucas: Let's do a quick math example. Say you have three hundred subscribers paying eighty dollars a year. That's twenty-four thousand dollars in annual revenue. If you add a premium tier at one hundred eighty dollars a year, and just ten percent of your subscribers upgrade, that's another five thousand four hundred dollars. That's a twenty-two percent bump in revenue without adding a single new subscriber. That's meaningful. Luna: That's a solid chunk of change. And it's not like you have to create a whole new newsletter. You're just repackaging what you already have. Lucas: Exactly. And the nice thing is that the cost of serving a premium member is almost nothing, especially if you're offering things like community access or exclusive calls that don't require much extra production. The margin on that incremental revenue is very high. Luna: But I imagine there are some pitfalls. What are the mistakes you see writers make when they try to do tiers? Lucas: The biggest one is overcomplicating. If you have three tiers and each one has a confusing list of benefits, people will just pick the cheapest one, or worse, not subscribe at all. You want to make the decision easy. One base tier, one premium tier. That's usually enough. And make sure the benefits are clear and easy to understand. Luna: So simplicity is key. But what about the platform? Substack and Beehiiv both support tiers now, right? Lucas: They do. Substack made a big push into tiers a while back, and Beehiiv has been adding more features too. The mechanics are pretty straightforward. The bigger challenge is the psychology of your existing subscribers. If you've been charging one price for years, suddenly offering a higher tier can feel like a cash grab if you don't frame it right. Luna: So how do you frame it? I mean, you don't want to say 'now pay more' to your loyal readers. Lucas: Right. You want to frame it as an expansion, not a price increase. Something like, 'We've heard from so many of you who want a deeper level of engagement, so we're launching this new premium option.' And you should always grandfather your existing subscribers into their current price for as long as they stay. That builds a lot of goodwill. We actually talked about grandfathering a few episodes back. Luna: Yeah, that was a good one. So tiers are really about giving your most engaged readers a way to support you more, without alienating the rest. Lucas: Exactly. And that's the thing that gets overlooked: your paid subscribers are already your biggest fans. A tiered model just gives them a chance to go further if they want to. It's a win-win if you do it right. And you're not just making more money, you're building a stronger community around your work. Luna: And that community can feed back into your content, too. You get ideas from the premium members, and you can create stuff that's even more in tune with what they want. Lucas: Right. And that's something we value here as well. We don't have tiers, but we do have a community of listeners who support us in other ways. You know, we keep this show ad-free because we believe in the value of clean, focused conversations about business and marketing. If you've gotten something out of these episodes, and you want to help us keep doing this without ads, you can support the show at buy me a coffee dot com slash fexingo. It's a simple way to say thanks, and it genuinely keeps us going. Luna: And we don't have any premium tier for the podcast, but we do love hearing from listeners who've tried some of these tactics. So keep those messages coming. Lucas: So, back to tiers. The last thing I want to say is that you don't have to get it perfect on day one. Start with a simple two-tier structure, test it with your audience, and iterate. The data will tell you if it's working. And if you're not sure, just ask your subscribers. They'll tell you what they want. Luna: That's a good note to end on. Ask your audience, not just your intuition. Thanks for joining us, and we'll catch you next time.