It was some time between issue No8 and No9 that I became a little more comfortable. I was preparing my quarterly business activity statement for my accountant, sitting at one of my regular cafés in Melbourne. Crunching numbers isn’t one of my strengths, but I don’t mind doing the necessary admin work. After all, as a sole trader I should keep an eye on how well (or badly) I’m doing, right? I realised then and there that I’m doing just fine. Not amazingly well, but not too badly either. I could order another coffee with confidence, for sure.

But having earned a little more money that quarter compared to the previous one was not what made me feel comfortable. It was the following thought process and the answer I arrived at.

For most entrepreneurs, the idea of having to do better this month than last is constantly on their mind. If you spend much of your working day online like I do, you’re frequently reminded of how much everyone focuses on getting bigger and more profitable. Growth hackers. Content marketing. IPOs. Everyone is chasing the hockey stick. And everyone is anxious about being left behind.

I get a lot of “How is the magazine going?”-type of questions when I meet readers in real life. I always wish I had some astounding numbers to report. How the magazine subscribers have quadrupled in the last quarter. How the new issue sold out over night. How I’m struggling to hire enough people in order to keep up with demand. It’s what we’ve come to expect from internet success stories. But that’s not the truth in Offscreen’s case.

The truth is that Offscreen has seen very slow growth. I started with 3000 copies and it took me 11 issues to justify a 5000 print-run. The truth is that some issues do better than others depending on a range of factors, none of which seem very predictable. The truth is that the magazine still doesn’t make enough money to hire more than a few temporary freelancers. (More on that in coming blog posts).

I love going back to an essay in issue No7 titled “Human Scale”, written by fellow Australian and Icelab co-founder Michael Honey. He writes:

‘It doesn’t scale’ is a criticism levelled at many new ideas. (…) But how many things which are good when small get better by becoming bigger? (…) Humans are good at family, middling at community, dysfunctional as nations, and self-destructive as a planet. What doesn’t scale is our ability to relate to each other as human beings instead of target markets — as eyeballs to monetise.

And then there is this recent interview with Jeff Sheldon of Ugmonk fame in which he talks about being proud of staying small:

We’re not growing a hockey-stick growth, but we’re growing enough. We’re building that fan base and are in it for the long haul, so I’m able to keep it really small and handle every part of the business or almost every part of the business, which does limit me on the creative side sometimes. I can’t release a hundred products every year. I can’t speak at dozens of conferences. I have to limit everything I do. (…) But I’m okay with all those things right now. I choose to keep it small, to keep it lean, to keep this business profitable where it is. (…) I’m much more focused on building that tribe of core followers that cares about what I do, than having ten thousand, one hundred thousand, or one million people that kind of like the cool shirt today, and then they totally forget about it tomorrow.

So here I am, working long days (and sometimes sleepless nights) to make a thing with a growth trajectory slightly more optimistic than the mom-and-pop shop down the road. And I’m finally ok with it. Don’t get me wrong, I don’t mind growing, but I do mind growing for growth’s sake, which is what seems to happen a lot with tech companies these days.

There is a saying that you only need 1000 true fans to make a living from your work. Going through my reader database I can recognise almost all of my ‘true fans’ because we are in touch regularly via email, Twitter, Instagram or in real life when we finally meet at conferences. There is something quite beautiful in knowing your core readers personally and establishing an honest feedback loop that helps improve the magazine with every issue.

So the ‘answer’ I arrived at is the following question: as long as I can make a decent living, create work I’m (mostly) proud of, and get so much heartfelt feedback from people I respect, why add the pressures and headaches that come from chasing mainstream success?

After reading Robin Sloan’s fantastic piece about rethinking the idea of the static price tag, I came back from my holidays dying to experiment with flexible pricing myself.

From reading about other experiments I knew that giving people the choice to pay (next to) nothing usually attracts a lot of opportunists that care more about scoring a bargain than paying for something they really appreciate. So I was expecting the average price paid to be well below the standard price for a copy. And so, in order to decrease my chances of losing a lot of money in this exercise, I decided to set a few limits. Here is what the experiment looked like:

The Setup

I designed a simple page with a three-step checkout process:

In the first step, visitors could pick one of the available back issues. I intentionally didn’t make future issues available for pre-sale because, well, selling things I haven’t even produced yet for potentially less than cost price is a pretty dumb thing to do.

The second step offered a slider to define your own price — from $5 at the minimum to $38 at the max. With $5 as a minimum I could at least minimise the impact of a worst case scenario and have some of my shipping cost covered. I chose $38 as a maximum amount simply because it would put the handle of the slider right in the center at $22 (the regular price), which was also the default setting when opening the page.

Just below the slider I offered a bit of insight into how the chosen price affects Offscreen as a business. Here are the tiers and their message:

• $5 – $7: Significant Loss
  If all copies sold at this price, Offscreen would generate a significant loss, killing the magazine instantly.

• $8 – $10: Small Loss
  If all copies sold at this price, Offscreen would generate enough money to cover shipping, but would still struggle to pay for other expenses.

• $11 – $13: Break-Even Point
  If all copies sold at this price, Offscreen would generate enough money to break even on expenses, but the publisher would essentially work for free full-time.

• $14 – $20: Small Profit
  If all copies sold at this price, Offscreen would generate a small profit, enough to operate as a side project producing 1-2 issues per year.

• $21 – $23: Sustainable Profit
  If all copies sold at this price, Offscreen would generate a sustainable profit, allowing the publisher to create at least 3 issues per year full-time.

• $24 – $30: Profit for Growth
  If all copies sold at this price, Offscreen would generate enough profit to hire a part-time editor to increase quality and content for at least 4 issues per year.

• $31 – $37: Profit for Expansion
  If all copies sold at this price, Offscreen would generate a enough profit to hire 1-2 people full-time to increase quality and frequency, and the brand could expand to events and other projects.

• $38: Offscreen Venture Capital Inc acquires News Corp for immediate sunset.

Step three had a simple PAY NOW button with this message next to it: “To make this experiment fair and available to as many people as possible, we kindly ask you to order one issue at your custom price only.”

I also decided to limit the availability of this offer to 18 hours (with a countdown displayed on the page), largely for two reasons: once again to limit my chances of losing a lot of money, but also to create a sense of urgency and scarcity, one of the oldest tricks in the marketeer’s book.

The Result

I launched the experiment on a Wednesday night at midnight local time (Melbourne, Australia) when most people in Europe and America are awake or waking up soon. After a fairly restless night worrying that the experiment would somehow take off on social media and I’d become a victim of my own success, the counter stopped at a total of 71 sales the next day.

Here are the sales according to price paid:

Take-Away

First off all, my assumptions about people taking the opportunity to grab a bargain were validated. 21 people paid the minimum price ($5), compared to just one person sliding it all the way up to $38. (If you are reading this: you are awesome!)

Several people either disregarded or didn’t see my request to order one issue only. 6 customers went through the process several times and ordered all available issues at the lowest price (only shown as one order in the graph). I followed up with them and informed them that I had to cancel all but one of their orders and to my surprise their response was polite and apologetic, and a few of them even asked me to cancel these orders, but keep the money as a donation.

Several people that ordered their copy at the minimum price emailed me to tell me that they would love to give more, but can’t for personal/economic reasons. They explained that this was a unique chance for them to ‘test’ Offscreen. Unsurprisingly, many of these orders came from countries where the economy is not doing so well (e.g. Spain, Portugal, Brazil, Ukraine, Italy). And there was the occasional student in that group too.

The average price paid ends up being $12.40, which is just above my break-even point as stated below the slider. I don’t think this is a coincidence. Most sales congregated around the ‘break-even tier’ and I like to believe that knowing where it ‘doesn’t hurt me’ influenced customers’ decision. Though paying the ‘break-even’ price doesn’t make Offscreen sustainable, for the customer it’s a seemingly fair balance between scoring a bargain and not leaving the maker out of pocket.

Other than that, I don’t think there is much else to take away from this experiment. Considering that I offered back issues only, my existing and most loyal readership didn’t participate and hence didn’t get a chance to express how much they value Offscreen. I’m not sure exactly how many of these orders come from new vs. returning readers, but a few random checks showed that many of the customers in the lower pricing tiers are buying Offscreen for the first time (which is great).

Is such an experiment worth the effort? I believe so. There are a lot of variables that could be changed to see how it affects people’s decision to pay a higher or lower price. How did my messages/tiers influence their decision? Should I have made a future issue available for purchase and thereby encourage existing readers to have a say? Should I have run it for longer than 18 hours in order to have a bigger sampling group? How could I change the UI/UX to encourage a higher price?

Rather than making decisions about ‘the ideal price point’ based on one such experiment, I think you’d have to run several campaigns like this for it to be a reliable and realistic source for your pricing strategy. And of course, there will always be opportunists and poor students. ;-)

At the fantastic The Modern Magazine conference here in London yesterday, I had a brief conversation with another publisher whose magazine no longer exists. She said that when she announced the release of the final issue earlier this year, suddenly a lot of support in the form of emails and tweets came flooding in from readers she didn’t know she had — people expressing their disappointment and sadness that one of their favourite magazines was closing its doors.

What surprised her most was the fact that more people were actually reading the magazine than buying it (assumingly getting it handed down from friends or finding it in cafés and other places). Apparently, there was also a large group of supporters that bought the occassional issue and followed the project online, but never really committed to being a regular reader. And they, too, were sad seeing a project disappear that they appreciated, even if they just followed it from the sidelines most of the time.

The overwhelming response to her announcement of bringing the magazine to an end surely made the decision more difficult, but “nice words don’t really pay the bills”, she said frustrated. It reminded me of something Cameron Moll mentioned in his interview with Offscreen. He said: “There’s an opportunity for a Buy Bootstrap movement along the lines of Buy Local or Buy Organic.”

The ‘passive supporter problem’ (if it can/should be called that!?) is, of course, not only prevalent in the magazine scene, I think it can be applied to all ‘indie’ makers out there. I can easily think of a handful of app developers and bloggers with tons of supporters that really want to see the project grow and succeed, but that rarely take practical action (in most cases by signing up for a paid account, paying a small membership fee, etc.) to actively enable the creators to continue the work they appreciate.

Of course, there is a lot of great ‘indie’ stuff out there and you can’t throw your money at them all. So what to do?

In the last few years, I’ve made a conscious effort to find out more about my favourite products and services, by following them online, by signing up to their newsletter, and by meeting and talking to them in person when I get a chance. If I’m convinced that their values and efforts align with my own, I try to be an active supporter and pay my fair share. This doesn’t just apply to the digital world, of course, I try to apply the same principles to, say, charities or my local shops down the road.

I guess it all comes down to being an informed consumer. Take a moment and think about the tools, products, and services that really make a difference in your life, and then show them your appreciation through proactive support, which in most cases (but not always) means adding them to your list of things worth paying for.