Latest / The Newsletter Podcast with Fexingo: Substack, Beehiiv, and Email Newsletter Business / How Newsletters Use Tiered Pricing Without Confusing Readers
Transcript
- Lucas: There’s a moment almost every newsletter writer hits about six months in, where they look at their single subscription price and think—should I offer more options? Luna: And the immediate worry is: if I give people too many choices, they’ll just freeze and not pick any. Lucas: Exactly. Choice paralysis is real. But I’ve been looking at a case from a sports newsletter called J’s Daily Rally. They went from a single $10 monthly tier to a three-tier model—basic at $5, premium at $10, and patron at $25—and their conversion rate jumped 34 percent in six weeks. Luna: Thirty-four percent is big. But was it purely the extra tiers, or did they change the way they presented the offer? Lucas: Great question. The tiers themselves were part of it, but the framing mattered just as much. They didn’t just list prices. They named each tier by the value they deliver: “Basic” got the full newsletter and a weekly roundup, “Premium” added deep-dive analysis and a monthly Q&A thread, and “Patron” included everything plus a one-on-one call each quarter. The names tip the scales. Luna: So the naming frames the decision. “Basic” sounds like you’re getting the essentials, “Premium” feels like the standard, and “Patron” is for people who really want to support. Lucas: Right. And crucially, they put a comparison table on the pricing page. It wasn’t just a bulleted list. It was a three-column table with checkmarks and dashes. That visual instant comparison is what reduces cognitive load. You don’t have to remember what’s in each tier, you just scan across. Luna: Was there a specific tier that most people picked? Lucas: Premium—the middle tier—accounted for 62 percent of new paid subscribers. Which is textbook pricing psychology. When you offer three options, people tend to avoid the cheapest because it feels like you’re missing something, and they avoid the most expensive because it feels extravagant. The middle becomes the safe, sensible choice. Luna: So the middle tier is the anchor. But doesn’t that make the top tier almost irrelevant? Lucas: Not at all. The top tier serves a different purpose. It makes the middle tier look reasonable. If the patron tier is $25, premium at $10 feels like a deal. It’s the decoy effect. Plus, the patron tier still pulls in about 9 percent of subscribers, which is high-margin revenue because the cost to serve a patron isn’t that much higher. Luna: Interesting. So the decoy tier works even if very few people pick it. What about the basic tier? Five dollars is low. Did they worry about cannibalizing premium subscribers? Lucas: They did worry. But their data showed that about 40 percent of basic subscribers would not have subscribed at all at $10. So it’s incremental revenue. And a few of those basic subscribers eventually upgrade to premium after a month or two. They tracked a 12 percent upgrade rate within three months. Luna: That’s actually a solid funnel. Get them in the door at $5, then prove the value so they move up. Lucas: Exactly. And they made the upgrade path obvious. Every basic subscriber gets a one-time email on day 30 that says “You’ve been reading for a month—here’s what you’re missing in premium.” It’s a specific prompt, not just a generic “please upgrade” banner. Luna: Let’s talk about a common mistake. I’ve seen newsletters offer a top tier with too many features—like five or six additional benefits—and it actually makes the middle tier look weak by comparison. What’s the right number? Lucas: Three differentiating features per tier, max. J’s Daily Rally stuck to two or three per tier beyond the base. The patron tier had exactly three extras: the quarterly call, a patron-only Discord channel, and early access to episodes. That’s it. When you add more, you actually blur the value proposition of each tier. Luna: So the listener is thinking: “If the top tier has eight things, maybe I need all eight, but I don’t want to pay $25, so I’ll just stay free.” Lucas: Exactly. And that’s the paradox. The richer you make the top tier, the less attractive the middle tier looks. The goal is to make the middle tier feel complete, not compromised. So the top tier should feel like “extra support for superfans,” not “the real product.” Luna: What about the pricing itself? Is there a rule for how far apart the tiers should be? Lucas: The golden ratio is roughly 2x between the bottom and middle, and 2.5x to 3x between the middle and top. So $5, $10, $25. Or $7, $15, $39. The key is that the top tier is noticeably more expensive, but not absurdly so. If the top tier is $50 when the middle is $10, it feels like a gimmick. Luna: That makes sense. And the middle tier should be the price you would have charged if you only had one tier. Lucas: Exactly. That’s the anchor. Your original price should be the middle tier. That way, you don’t alienate existing subscribers who are used to $10. They automatically land in premium, which feels like a win—they’re not downgraded to basic. Luna: Let’s talk about how you actually roll out tiers. Do you announce it to your list or just change the pricing page and see what happens? Lucas: J’s Daily Rally did a soft launch. They updated the pricing page, then sent a single email to their free list saying “We’re testing new options—check them out.” They didn’t make a big production of it. And they monitored the data for two weeks before making any tweaks. Luna: Did they A/B test the tier structure at all? Lucas: Not in a formal split test, but they did test the naming. They originally called the tiers “Starter,” “Standard,” and “VIP.” Those names actually underperformed “Basic,” “Premium,” and “Patron” by about 8 percent conversion. “Standard” sounded too generic, and “VIP” felt like a club they weren’t sure they belonged to. Luna: So the naming should signal exactly what you get. “Basic” is honest, “Premium” is the core, “Patron” is for supporters. Lucas: Right. And one more detail: they put a small note under each tier that says how many subscribers are currently in that tier. Like “Joined by 1,200 readers” under premium. That social proof nudges people toward the popular choice. Luna: I like that. It’s subtle but powerful. So what’s the one takeaway for a newsletter writer who’s considering tiers right now? Lucas: Start with your current price as the middle tier. Add a lower tier that reduces the barrier to entry, and a higher tier that makes the middle look like the obvious choice. Keep the feature list simple—no more than three differentiators per tier. And wait at least four weeks before judging the results. Luna: That’s solid advice. And if these conversations have sparked something you’ve actually used in your own newsletter, that’s exactly why we do this. The way these stay ad-free is listener support—buy me a coffee dot com slash fexingo. Just a simple way to keep the show going. Lucas: Yeah, we appreciate that. And it lets us keep digging into real cases like this one. So if you try a tiered pricing model, let us know how it goes. We’d love to hear your numbers.