Putting a value on a cover price

Putting a value
on a cover price

In theory, it should say something. Does it?

By Jeff Bercovici

    The relationship between a magazine's cover price and the amount of money, on average, that its subscribers actually fork over for a subscription is often a pretty tenuous one.
     It's also a delicate one.
    Publishers must balance the conflicting imperatives of keeping the rate base up for advertising purposes, generating circulation revenue, and maintaining an appearance of high value for the publication.
   Now that relationship has come out into the open thanks to regulations adopted last year by the Audit Bureau of Circulations.
    Under the new rules publishers can count as paid circulation subscriptions sold for as little as a penny.
But there is a tradeoff: Publishers must also report the average price of a subscription.
   Which is to say that if a magazine is giving away subs that fact will be easily discernable in the average price the publication reports to the ABC.
   Among its other effects, the new system has given publishers in the ultra-competitive men's category something new to argue about.
    Just as you would expect, those publishers whose magazines have a high average subscription price say it's an important indication of how much readers value the magazine, while those whose price is lower say it's the big picture that matters.
   "Good magazines get real money for their subscriptions. They don't have to give it away," says Gear founder Bob Guccione Jr.
   At $1.39, Gear has the second-highest per-issue subscription price of any non-nude men's magazine.
    In terms of both publisher's suggested one-year subscription price and average annualized subscription price, Gear, which publishes 10 issues a year, ranks third after Men's Health and GQ.
   "The reader who would pay $7 for a subscription but wouldn't pay $15.97 is probably not really our reader," says Guccione.
   "When a magazine proudly announces 'It's like getting nine issues free!,' that's like saying 'Three-quarters of what we do is rubbish' -- which is usually pretty accurate for the ones that do it."
   "The only people who don’t think [average subscription price] is a measure of wantedness are the people who don’t get a lot for their magazines," agrees Mary Ann Bekkedahl, publisher of Men's Health.
   "The more a consumer is willing to pay for a product or service -- be it a car, a watch or a magazine -- the more valuable it is to them. It’s Economics 101."
   With an average net subscription price of $24.61, Men's Health pockets more than twice as much per subscription as, say, Esquire ($11.13) or FHM ($11.73).
   Bekkedahl says it's largely a question of Men's Health having a different business model from those titles.
   "We leverage our circulation for circ margin and profits, which I think is different than many of the other men's magazines we compete with, where circulation is simply something you have to do to get advertising."
   "Magazines are an impulse item. They've always been an impulse item," says GQ publisher Ron Galotti. At $16.56, GQ has the second-highest annualized subscription price.
   "That said, common sense would tell you that you sell your magazine for the highest price that you can."
   At the other end of the spectrum from Men's Health and GQ is Men's Journal, which has both the lowest average subscription price per issue ($0.89) and the lowest annualized price ($10.68).
   Those numbers have to be taken in context, however, says associate publisher Bill Shaner.
   For one thing, Men's Journal raised its suggested one-year price -- the price of all direct-to-publishers subscriptions -- from $15 to $20 at the beginning of the year.
   "We've actually been driving our basic price up and our renewal price up, and that's our strategy going forward," says Shaner.
   Also, Men's Journal has a cover price of $3.95, which means that the 82,000 or so guys who buy it on the newsstand each month are paying nearly a dollar more than they would for GQ or Esquire.
   "And we've been fairly successfully testing $4.95, which is a possibility."
   Then there's the question of premiums, those freebies that publishers throw in to sweeten the deal for iffy subscribers. Men's Journal, says Shaner, almost never uses them.
   Nearly half of Men's Health subscriptions, on the other hand, come with free booklets on topics like fitness, nutrition and relationships.
   Bekkedahl points out that the booklets contain nothing more than repurposed editorial that has already appeared in the magazine.
   "There's no football phones here."

Average Men's Magazines' Subscription Price
Book	Avg. sub. price per issue	Cover price	Avg. annualized sub. price	Publisher's suggested 1-year price	Issues per year
Esquire	0.94	3.00	11.13	15.94	12
GQ	1.38	3.00	16.56	20.00	12
Maxim	1.19	3.99	14.29	17.94	12
FHM	1.17	3.50	11.73	14.97	10
Stuff	1.25	3.99	15.00	17.94	12
Gear*	1.39	3.99	12.51	15.97	10
Men's Journal	0.89	3.95	10.68	14.97	12
Men's Health**	2.46	3.79	24.60	24.94	10
Gear's single copy price increased from $3.50 to $3.95 in August 2001. *Prices are net, not gross.

-Jeff Bercovici is a staff writer for Media Life.

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