Latest / The Newsletter Podcast with Fexingo: Substack, Beehiiv, and Email Newsletter Business / How Newsletters Use Grandfathering to Retain Subscribers During Price Hikes
Transcript
- Lucas: Last month, the fintech newsletter 'Money Stuff' raised its paid tier from $15 to $20 a month. But existing subscribers? They stayed at $15. Luna: So no one got upset? That's rare for a price hike. Lucas: Exactly. The newsletter's founder, Matt Levine, didn't even announce it — he just quietly grandfathered everyone. No emails warning of a price change, no grandfathered period. It was seamless. Luna: That's a bold move. Most newsletters I've seen either announce a price increase with a grace period or just hike everyone at once. Lucas: Right, and that's what we're digging into today. Grandfathering — the practice of keeping existing subscribers at their original price when you raise rates for new ones — is a powerful retention tool, but it's not free. You're essentially leaving money on the table from your loyal users. Luna: But if it prevents churn, the lifetime value might actually go up. Do we have data on that? Lucas: We do. A 2023 study from the Subscription Trade Association found that newsletters using grandfathering saw a 9 percent lower churn rate over 18 months compared to those that did a blanket increase. The trade-off is that their average revenue per user grows slower. Luna: How are you supposed to balance that? I imagine the decision depends on how price-sensitive your audience is. Lucas: Exactly. If you're a niche newsletter like 'Stratechery' — Ben Thompson's tech analysis — his subscribers are largely professionals expensing the subscription. He's raised prices multiple times without grandfathering, and his churn stayed below 5 percent. But his audience has high willingness to pay. Luna: Whereas a consumer newsletter like 'The Browser' — which curates five articles a day — has a more casual audience. They did a grandfathering approach when they went from $5 to $7 a month in 2024. Lucas: And that move saved them. Their founder, Robert Cottrell, told me that without grandfathering, they would have lost an estimated 15 percent of their subscriber base. Instead, they lost less than 2 percent. The revenue hit? About 8 percent less in the first year, but they more than made it up with new subscribers at the higher price. Luna: So the math can work if you're growing. But what about a newsletter that's plateaued? If you're not adding many new subscribers, grandfathering just caps your revenue. Lucas: That's the rub. And it's why some newsletters choose a hybrid model: grandfather for one year, then convert everyone to the new price. Or offer a 'lifetime' tier at the old price as a one-time purchase. Luna: Lifetime pricing is interesting. I've seen a few Substackers do that — lock in early supporters at a fixed fee. But doesn't that create a long-term liability? Lucas: It does, but if you're raising prices significantly, it can actually be cheaper than grandfathering forever. For example, the newsletter 'The Overflow' — which covers software engineering — offered a lifetime deal at $200 when they raised their annual price from $50 to $80. About 10 percent of their subscribers took it, giving them immediate cash flow and removing the need to honor the old price for decades. Luna: And those lifetime buyers often become your biggest advocates — they feel like they got a deal. Lucas: Exactly. Psychological ownership. Now, there's a new wrinkle: California's automatic renewal law, which took effect last year, requires that any price increase be clearly communicated and that subscribers can cancel easily. That's pushed more newsletters toward grandfathering, because the alternative — sending a mandated notice — can trigger churn. Luna: So regulation is effectively nudging newsletters to be more subscriber-friendly. That might actually be good for retention. Lucas: It is. But it also means you can't just silently grandfather like 'Money Stuff' did. You have to send that notice. The key is to frame the price increase as a value-add: 'We're investing in better content, and as a token of appreciation, your price stays the same.' Luna: That's smart phrasing. So what's the takeaway for a newsletter founder listening? Should they always grandfather? Lucas: Not always. If your churn is already low and your audience has high price tolerance, a clean increase might be better. But if you're a growing newsletter with a loyal but price-sensitive base, grandfathering can be a retention lifeline. The real art is in communicating it. Luna: And maybe offering a lifetime option as a middle ground. Lucas: Speaking of getting value from the show — if today's episode was useful to you, these conversations stay ad-free because of listener support. You can keep that going at buy me a coffee dot com slash fexingo. Luna: Yeah, it's a small way to say this content matters to you. We really appreciate it. Lucas: Exactly. So back to grandfathering — one last piece: if you decide to grandfather, make sure you track the cohort. You want to know how long those grandfathered subscribers stay versus new ones at the higher price. If they stay longer, the lifetime value gap might be smaller than you think. Luna: That's a great metric to watch. And if they do churn, you've at least learned something about price sensitivity in your market. Lucas: Right. So whether you're a Substack, Beehiiv, or homegrown newsletter, the next time you're planning a price increase, consider the grandfather clause. It might just save your subscriber base. Luna: And your sanity. Lucas: Yeah. That too.