In business, many companies focus on a metric called customer lifetime value, which basically means:
How much revenue, on average, will each customer bring to the company?
This metric is especially useful to companies that offer subscription services or their customers are very likely to be repeat buyers.
For newsletter creators, we can adjust this slightly and call it subscriber lifetime value (or subscriber LTV). In other words, how much are you likely to earn per subscriber that makes their way onto your list?
The formula for calculating Subscriber Lifetime Value is:
Average Subscriber Revenue per Month x Average Subscriber Lifespan
To calculate subscriber revenue, pick a timeframe of at least six months. Divide your total revenue by how many subscribers you had during that time.
Your average subscriber lifespan simply means how long your average subscriber stays on your list. If your unsubscribe rate is 5%, you lose 1/20th of your subscribers monthly. Your average lifespan is 20 months.
If your average subscriber earns you $0.75 per month and they stay 20 months, then your subscriber LTV is $15. Knowing that number opens a whole world of marketing options.
Here are some of the best ways to increase the value of your leads.
Much of your success with a newsletter starts with your first few interactions. If you plan to send every day but your subscribers don’t understand that, you’ll likely have some disgruntled readers complaining about crowding their inbox.
In addition, ensure that people understand what they’re opting into. It’s a great strategy to offer a freebie to entice people to opt in, but make sure to let them know they’ll be getting your newsletter as well.
This can be as simple as a quick mention in your welcome email.
This is a big topic that could warrant a 4k-word article all on its own. We’ll keep it simple with a few tips:
The more your subscribers interact with your newsletter, the more likely they will add to your bottom line.
We put together a list of 16 ways to increase engagement, but here are a few of the highlights:
Now, the rubber’s hitting the road! If your average paid subscriber brings in $100 in revenue, your entire bottom line is dependent on converting free subscribers to paid ones.
If your conversion rate is currently 5%, you need to bring in 20 more subscribers to get a paid one. However, it’s usually cheaper and more effective to up your current conversion rate than find 20 more subscribers.
How can you turn more of your list into paying subscribers?
The Honest Broker newsletter has a link right in their welcome email to encourage subscribing to the paid version:
It goes without saying that the more targeted your leads, the more likely they are to resonate with your newsletter.
If that happens, they’ll be more likely to stick around and eventually be worth more money to you—whether that’s as a paid subscriber, someone who purchases products from you, or helps you earn higher ad revenue.
Your best leads will usually be ones that have a chance to engage with your content first. For example, they may opt into your blog or find your newsletter after following you on LinkedIn.
Referrals are also high quality because that person received a recommendation from a friend.
Paid advertising tends to be lower quality, although the quantity you can generate will often more than make up for a lower lifetime value.
According to Paved, most newsletters command $10 - $30 per thousand subscribers in advertising revenue per send. Where do you stack up?
If you’re currently on the low end of that spectrum, try raising it. If you are still selling out your ad slots, try raising it again. You’ll eventually find an equilibrium that earns you the most money.
More ad slots generally result in advertisers willing to pay less per spot because they’re now competing with others.
However, adding more slots can still result in a net increase for you.
Let’s say you have one advertising slot that earns you $100 per send.
You decide to add a second slot, and each advertiser pays you $60. Now, you’ve earned $20 more than you were earning before!
Sports Collectors Daily has plenty of sponsors in their newsletter:
They’ve definitely tested one ad slot versus many, and discovered they could make more this way.
Not all ad slots in your newsletter are worth the same. A banner at the top will command much more than something near the bottom.
Here’s how Morning Brew, one of the largest newsletters in the world, displays their sponsors right at the top of each edition:
Another high-value option is to include a native content section for a sponsor—meaning the ad slot actually looks like it could be content in your newsletter.
Morning Brew has those, too:
If you’re earning a certain amount of ad revenue per email, there’s always the simple option to send more newsletters!
Of course, you need to figure out:
According to Kit, the average paid newsletter charges $11 per month. Newsletters rarely go below $5 per month, while high-value newsletters can charge $40+ per month.
Here are a few of the indicators to help you decide what you can charge:
We’ll call this the “Wikipedia” method. Once a year or so, Wikipedia asks people to donate money to help them provide their service.
Many newsletter creators do this, too. Many have CTAs asking you to “become a paid subscriber to support my writing.”
Some Substack newsletters have an option where people can choose how much they pay—which is essentially asking for a donation.
Here’s an example from The Stein Line:
The Today in Design newsletter displays the “Buy me coffee” button—the internet shorthand for asking for donations. Here’s the button at the bottom of the newsletter:
This can work really well if you represent a cause. For example, the Red Cross or Boy Scouts of America could easily ask for donations or have a subscription option that amounts to a donation.
Typically, newsletter creators who earn the most per subscriber are those who are skilled at selling their own products.
Some of these people sell high-value items to a carefully cultivated email list. Many don’t even have large lists, but they’re incredibly picky about who’s on their list.
These are the people who have 6- and 7-figure product launches.
If you only sell one product over and over again, you’re going to be reminded of a lesson from Econ 101: diminishing returns.
But, if you have the capacity to create a new product each quarter, your best customers will continue to buy from you.
Alex Mathers from Untethered Mind offers several products in most of his newsletters:
Sometimes, he goes all in on promoting one of them, while other times, it’s just a passive mention in the footer, like the example above.
An affiliate is where you sell someone else’s product and get a commission for it. If you’re not familiar with this business model, it might sound scary—like you have to form a legitimate business partnership.
However, plenty of affiliate options are out there, set up and ready to go. For example, two of the easiest are probably eBay and Amazon because you can link to virtually any product imaginable.
Those affiliates typically pay 4% or less, so you need a considerable amount of clicks to earn a good income.
However, you can also find products in your niche with larger payouts. Try visiting CJ.com (the world’s largest affiliate network) or search Google for “Affiliate program [Your Niche]” and see what comes up.
No matter your revenue model, more opens = more revenue.
Here are the best send times, as recorded by industry experts:
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Brand |
Result |
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Thursday 8 AM - 9 AM |
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Tuesday 9 AM - 12 AM |
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Tuesday & Friday at 2 PM, 5 PM, & 8 PM |
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Tuesday 1 PM EST |
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Tuesday - Thursday 10 AM |
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Thursday, then Monday, 11 AM - 12 PM |
Of course, the real answer is whatever works best for your newsletter.
While those results would suggest Tues - Thurs around 10 AM, that might not hold true for your specific audience.
For example, some of the biggest newsletters in the world send out the top news stories in an email that arrives before you wake up. That makes sense, as people often like to start their day by knowing what’s going on.
Or, perhaps you write about college football. A Sunday send (after games are played) might make more sense than a Tuesday one.
Use some logic about your industry, and then test from there.
In other words, delete everyone off your list that isn’t engaging with you.
This can include bounced emails, unsubscribes, and (most importantly) people who have stopped engaging with your email.
If you have subscribers who haven’t opened the past 10 newsletters you sent, why are they going to open your next one?
That hurts your overall open and click rates—two metrics that potential sponsors look at.
In addition, the more opens and clicks you get, the higher your sender reputation. The higher your sender reputation, the more likely inbox providers are to deliver your email.
Let’s say that you charge $10/month for your newsletter or $100 per year if they pay upfront.
The $100 upfront can significantly help your business in a few ways:
If you don’t offer annual billing, try adding that as an option. If you already do offer it, perhaps make it the default option.
A newsletter recommendation network essentially means that you can get paid for recommending other newsletters.
Often, this happens in the form of a prompt shown to people after they opt into your newsletter. They see a page where they can elect to opt into other newsletters, and you get paid each time they do that.
Here’s how The Stein Line does this:
Lastly, keeping people on your list will help you earn more money from each subscriber!
Here are a few ways to reduce churn:
If you’re running multiple newsletters, there are a few strategies to help you increase revenue without adding to your (probably intense) workload:
If you’re running multiple newsletters, then you should give Letterhead a try. Our goal is to make life easier for you while simultaneously giving you the tools to manage your content and grow your revenue. Schedule a time to talk here.