How To Raise Prices (the Right Way) — Reid DeRamus, Substack

Primary metric was paid subscribers, with an assumption that price could rise gradually later. Crunchyroll deliberately did not raise price for a long time, trying to exhaust every way of adding new subscribers first (marketing, partnerships, more shows, side products for people who were cancelling). The first price increase came only after six or seven years of scaling paid subscribers.

Most paying subscribers were the most hardcore anime fans. Crunchyroll adjusted how it welcomed new anime fans: a branding and 'vibe' change that showed up in marketing, and required a cultural shift inside a company made up of diehard fans. Goal: reinforce the value core subscribers get while slowly expanding beyond the core audience.

Built a brand around the shows and the fan identity (the 'T-shirt test': would fans wear your brand's T-shirt). Introduced other revenue streams around subscribers: merch, events, gaming and more. Also tried products solving tangential needs for people who were cancelling.

Sort cancelling users by what they ask for: ignore requests far from the product; for close requests (popular or under-the-radar shows Crunchyroll could reasonably license), go get the content. If acquired, email those users: 'Hey, this is now on the service. Do you want to come back?', sometimes with a discount or a trial period to return.

Done consistently in streaming: take users who cancel during the free trial (or first billing month) and users who make it through, and look for behaviors that differ between the two groups early on. Label risky vs valuable early behaviors and bend the product and onboarding (first day, first session or first month) toward the valuable ones. Pair with surveys: Google Forms or Zoom calls with long-tenured subscribers and fast cancellers.

Ran many pricing surveys, not only to set the core price but to estimate what the most passionate fans (top 1%) would pay relative to core subscribers, since they may pay more for a barely different product. Results treated with caution because stated and actual behavior differ.

Substack runs business reviews with writers covering retention, growth rate and other health metrics against peers. When paid retention is far above peers (some writers retain 90% after a year), the message is 'your health metrics are too good': the product is likely underpriced or the writer is not pushing growth hard enough. Many writers set a price long ago and never revisit it. Host's counterpart: at ~20% annual retention (median ~30%), don't raise price on existing subscribers.

Apply the increase to existing subscribers, since new-subscriber-only increases leave most of the gain on the table (host caveat: grandfather early supporters when the base is small). Keep increases marginal, e.g. $1-2 like Spotify and Netflix, never doubling. Model impact separately for existing subscribers and the future flow of new ones; track year-over-year growth in paid subscribers afterward. Expect a step down in acquisition (e.g. 100K/month to 80-90K after +10%) but little extra churn if executed well.

Disney+ announced its price increase two to three weeks before premieres of Ahsoka and a big Marvel series, with the new price taking effect mid-series, so the bad press landed first and subscribers were engaged in new shows when it hit. Guest's version: tease or ship features that materially improve the product, reaffirm the value prop in the comms, say how the money improves the product, and never blame inflation.

Disney+ launched at about $5/month, was given free to many Verizon customers via a partnership, offered heavily discounted annual plans at launch, and bundled with ESPN+ and Hulu. Price increases came later once growth slowed.

Substack newsletters have a founding member tier where subscribers fill in their own price above the retail price, capturing the top ~1% of fans with higher willingness to pay.