Latest / Pricing Power Podcast with Fexingo: How Businesses Set Prices, Raise Margins, and Win Customers / How the Economist Prices Intelligence for a Premium
Transcript
- Lucas: It's a weird thing to say about a newspaper, but The Economist might be one of the best-priced products in the world. Not because it's cheap — it's actually quite expensive — but because the pricing itself tells you who the product is for. Luna: You mean the whole 'if you have to ask how much it costs, you can't afford it' thing? That's more of a Ferrari vibe. Lucas: Close, but with a twist. The Economist doesn't want to exclude people who can't afford it — it wants to include people who want to be seen as the kind of person who reads The Economist. There's a famous Harvard Business School case from 2009 that breaks down the subscription options they were testing. Digital only: fifty-nine dollars. Print only: one hundred and twenty-five dollars. Print plus digital: one hundred and twenty-five dollars. Luna: Wait — the print-only and the bundle are the same price? That's the decoy effect from Dan Ariely's Predictably Irrational. He wrote about this exact example. Lucas: Exactly. Ariely ran the experiment with MIT students. When they saw only two options — digital for fifty-nine, print plus digital for one hundred and twenty-five — most people chose the digital option. It looked like a good deal. But when they added the decoy — print-only for one hundred and twenty-five, which nobody would buy — suddenly the bundle looked like a steal. The majority switched to the hundred-and-twenty-five-dollar bundle, even though the digital option hadn't changed. Luna: So the decoy wasn't meant to sell print-only subscriptions. It was meant to make the bundle look like free print with a digital bonus. Lucas: Right. And that's the genius of it. The Economist wasn't trying to maximise the number of subscribers. It was trying to maximise the average revenue per subscriber by nudging people toward the higher tier. The decoy made the decision easy: why pay fifty-nine for just digital when you can get print plus digital for the same price as print alone? It's a psychological bargain, even though you're spending more. Luna: But here's my question — that experiment is almost twenty years old. Does the decoy still work in 2026, when most people have trained themselves to expect good journalism for free? Newsletters like Morning Brew and The Gist have proven you can build a massive audience without charging a cent. Lucas: It works, but for a different reason now. Back then, the decoy was about perceived value. Today, it's about signalling. The Economist still charges over two hundred dollars a year for a weekly print edition. That's more than Netflix. So who buys it? People who want to signal to themselves and others that they take the world seriously. The price is part of the product. Luna: Right — it's a Veblen good, almost. Like a Rolex that tells time. But The Economist's content is widely available online. You can read many of their articles for free on their website or through Apple News. So the print subscription is increasingly about the object, not the information. Lucas: That's exactly the shift. And the pricing has evolved to reflect that. If you go to their website today, you'll see a three-tier subscription: digital only, digital plus print, and a premium tier that includes the weekly edition plus the Espresso app and full archive access. The decoy principle is still there, but now the top tier is positioned as the 'serious reader' option. Luna: I've noticed they've also added a student discount and a corporate subscription plan. That's smart — it captures people at different life stages and uses the brand as a B2B signal. If your company pays for your Economist subscription, it's a perk that says 'we value informed employees.' Lucas: That B2B angle is huge. A lot of consulting firms and investment banks subsidise subscriptions for their analysts. The Economist knows that if they can hook someone during their first job out of college, that person might keep the subscription for decades. The lifetime value of a subscriber acquired through a corporate plan is probably two to three times higher than someone who signs up on their own. Luna: And it builds brand loyalty early. I remember when I worked at a consultancy, they gave us a free subscription. I've kept it ever since, even though I now read most articles on my phone. Lucas: That's the long game. But let's talk about the pricing structure itself. The digital-only tier is usually around ninety-nine dollars a year. The digital plus print is one hundred and ninety-nine dollars. And the premium — which includes the weekly in print, the Espresso daily app, and the full digital archive — is two hundred and ninety-nine dollars. Notice the pattern: the middle tier is exactly twice the digital-only price. That's not an accident. Luna: The decoy works because the middle tier doesn't look that much more expensive than the bottom tier, but it offers a tangible upgrade — a physical magazine arriving in the mail every week. And the top tier feels like the 'real' Economist experience. Lucas: Exactly. And there's another layer: the print edition itself is heavily subsidised. The paper, printing, and distribution costs for a weekly magazine are substantial. But The Economist can charge a premium because the print edition has become a luxury good. It's a weekly ritual — a physical object that signals 'I have time to read deeply.' Luna: Which is ironic, because the digital edition is cheaper to produce and reaches more people. But the print edition is where the profit margin lives, because people are willing to pay for the signal. Lucas: If these conversations have moved your work forward in some small way, a couple of dollars a month is genuinely what keeps these going — buy me a coffee dot com slash fexingo, if you've gotten something out of them. Luna: Yeah, it's a small thing that adds up. Keeps the show ad-free and lets us keep digging into these deep dives. Lucas: So back to The Economist. One of the interesting things about their pricing is how little they discount. Unlike most media companies that run constant sales — fifty percent off your first year — The Economist rarely offers deep discounts. They know that discounting devalues the signal. Luna: Right — if anyone can get it for half price, then it's no longer a signal of being a serious person. It's just another cheap subscription. They've managed to maintain the perception that full price is the normal price. Lucas: And they've backed that up with consistent quality. The Economist's editorial voice is distinctive — it's authoritative, confident, and usually correct enough that people trust it. That trust translates into pricing power. If they started publishing clickbait or lowered their editorial standards, the pricing would collapse. Luna: So the pricing is a reflection of the brand. And the brand is a reflection of the content. It's a virtuous cycle — but it only works if the content stays good. Lucas: That's the key insight for any business thinking about premium pricing. You can't just slap a high price on a product and hope the decoy effect does the work. The price has to be credible. The customer has to believe that the premium product is actually worth more. The Economist earns that belief week after week. Luna: One thing I find fascinating is how they've adapted to the podcast era. The Economist has several podcasts — The Intelligence, Babbage, Checks and Balance — and they're all free. No paywall. Why give away audio content when they charge for print? Lucas: Because podcasts serve as a funnel. Someone hears a compelling story on The Intelligence, thinks 'that was smart', and starts to associate the brand with intelligence. Eventually, they might subscribe to the print edition to get the full depth. The free podcast is the decoy in reverse — it's a loss leader that builds brand equity. Luna: So the pricing strategy isn't just about the subscription tiers. It's about the whole ecosystem. Free content that builds trust. Paid content that delivers depth. And a pricing structure that nudges people toward the highest tier. Lucas: And it's worked remarkably well. The Economist's circulation has held steady at around one point five million — both print and digital — despite the decline of the newspaper industry. Their revenue from subscriptions and advertising has remained resilient. In a world where the New York Times is chasing ten million digital subscribers, The Economist is perfectly happy with a smaller, more loyal, higher-paying audience. Luna: That's the luxury brand playbook. Don't try to sell to everyone. Sell to the people who are willing to pay for the signal, and make sure the signal stays exclusive. Lucas: Exactly. And the pricing is the most visible part of that signal. When you see someone carrying a red-bordered Economist on the subway, you don't need to know what's inside. You already know something about that person. The price — and the willingness to pay it — is the message.