Customer case: Price Optimization sharpens newspaper’s profits

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Customer case: Price Optimization sharpens newspaper’s profits

Large daily paper with national circulation booms with PriceGain.

Newspapers everywhere are under incredible pressure, but with the right pricing strategy, they can still produce excellent returns for their owners.

Situation: New competition leads to declining sales.

Our client is the largest daily newspaper in its home country. Prices had not changed for a long time but volumes were shrinking due to competition from new media and free newspapers. Could price changes for the paper and its supplements drive additional profit? How would that impact circulation? What sort of price changes would be most acceptable to readers?

Solution: Research indicated pricing variations could maximize profit.

PriceGain conducted a Price Optimization project where consumers’ buying preferences for the newspaper and its competitors were established in different regions. The resulting model was used to find optimal prices on the paper and its supplements with the possibility for regional differentiation.

Results: 37% profit improvement with no loss in circulation.

Using our Price Optimization model, the client found the ideal mix of price points for the main paper and its supplements. The model takes into account buying habits across multiple regions as well competitor pricing. Upon implementing the optimized price changes, our client immediately realized a profit improvement of 37% equal to over $15 million in additional profits per year! from newsstand sales without any loss in circulation. Reaching consensus on price changes had historically not been possible at the paper, but the results of the analysis made the decision straightforward. Subsequently, the client used the PriceGain model to further improve business results.