Why Do Magazines Charge Existing Customers More?

It's an issue that's existed for many, many years, but I've never understood the logic: Why do magazines charge existing subscribers a premium to renew, compared to the price a brand new subscriber would pay?

Yeah, I've heard the logic that they want to lure in the new customer so they're willing to possibly lose money the first year for that new subscription.  OK, maybe that makes a bit of sense, but is it worth alienating your existing customer base?! After all, isn't it equally (if not even more) important to make sure you're not losing existing customers in the process?

My latest example is with BusinessWeek magazine.  I've been a subscriber for many years now and it's time to renew.  As a "valued customer", they wanted to charge me $60 for a one-year renewal.  I visited their website and saw that a new subscription is only $45.  I decided to ask them why I'd want to renew when it would be better for me to let my current subscription lapse and sign up as a new customer for $15 less.

Their answer, and I'm not making this up, is as follows:

Your subscription renewal has been entered to our files for the number of issues you requested, and service will start with the June 18, 2007 issue.

You will receive an invoice in the near future, and upon receipt of your payment of $45.97 your subscription will continue for the full number of issues ordered.

How about that?!  I ask them to clarify their terms for new vs. existing customers but they ignore my question and renew my subscription without even asking me!

Comments

[Randy]

I never renew a magazine subscription. I almost always let the subscription lapse and sign up for a new subscription through a promotion.

[Jim Minatel]

It's the same model for any subscription business: cell phones, cable TV, DSL internet, whatever. There's ALWAYS an enticement to sign-up with a lower cost initial subscription price. That initial discount though prices the subscription or service below the cost the company has to charge to survive. They count on existing subscribers reupping at a higher price once they are hooked. Can you game the system? Sure, especially in magazines. DSL, cable, etc tend to put more restrictions on who can get the initial discount when. Is it worth the effort? Come on Joe, I know you won't fill in a $15 rebate but you went through this hassle to save $15?

It is a customer service disaster though that they would respond to a question about pricing by automatically renewing you at the lower price. Wow, that's BAD!

[Morgan Ramsay]

The beauty of being a sole proprietor is that you don't ever have to pay for magazine subscriptions, and being a student, too, means having free access to academic research databases where you can fulfill all of your journal or other publication needs.

[Joe Wikert]

The saga continues... I found an invoice from BusinessWeek in my mail yesterday and it's for the original renewal offer of $60 instead of $45! Although I plan to ignore it, I couldn't resist asking their customer service team about it. Here's their response:

"Please check the document, if you see that there is a option to be billed at a later date. This is just another different offer. We are currently billing you for $45.97 plus tax for a total of $48.73."

Um, OK...so you're just bombarding me with "another different offer" even though we've already agreed I should get the lower-priced rate you give new subscribers. Maybe you guys should get your systems in synch...