I Learn a Surprising Lesson About Human Motivation

Last Chance for $70/Year Pricing

I’ve had a couple of followups about the coming price increase. Subscribe now & pay the current price forever (well, as long as the newsletter lasts) (and as long as you want to keep reading). On Monday the price goes to $25/month or $250/year, in line with other professionally-oriented newsletters.

That’s not what I want to talk about, though. I want to reflect here on a huge misunderstanding I’ve been carrying for 62 years about human motivation, how my mistaken belief has held me back from business prosperity, & what I’m going to do about what I’ve learned.

Naive Model

Here’s how I thought this newsletter would work. I would create some valuable stuff & charge people for it. More value, more money. (You can also change the slope of the line through better marketing & sales, but that’s way outside my bailiwick.)

“The margin” is one of the great concepts of economics—there are some people who will transact for sure, others who will never transact, & a gray area in the middle. Move the margin & some folks will transact who wouldn’t have before.

Naive Model

Once I focused on creating a sustainable business model for this newsletter, my investment became clear—create more value. More value, more customers. More customers, more revenue. More revenue, more focus on stuff that matters to living a good life.

ARR Growing Steadily, Linearly

The more value → more revenue → more sustainability strategy kind of worked. Over the past six months I poured myself into the newsletter, optimized everything I could find to optimize, experimented with different formats & topics. On the scale of my financial milestones the results still weren’t significant, which led to the strategy not being sustainable, but it kind of worked.

Intervention

As part of my optimization, one of my advisers asked me, “Why $7/month? That’s pricing for personal newsletters. Anything that gets expensed is going for $20+/month.” I didn’t have anything to lose, really. I was running out of energy for just trying to pump up the value. May as well try raising prices. (I didn’t consciously choose the $7/month price. It was Substack’s default. I was just trying to shame myself into finishing Tidy First?.)

Two weeks ago I announced the price increase. The results astounded me. Here, I’ll just show you the graph.

Nothing I’ve done to “create more value” has had anywhere near as big an effect on my business than this. 40% increase in 2 weeks. People, apparently, don’t make decisions the way I thought they made decisions.

I was imagining someone “on the margin”, thinking, “Yeah, there’s some value, but not enough.” Then they see more value. Then they think, “Yeah, okay, I’ll sign up.” Nope. Not according to the data.

Re-Interpretation

More value didn’t result in more sign-ups. It was more like, “If I don’t sign up now for this price, it’s going to cost more more later.”

One of the Thinkies (Thinkies are habits of creative thought that I’ve gathered—I publish one to paying subscribers every Tuesday) is called Trust the Market. If the market is acting in a way that doesn’t make sense, back up & ask yourself what would have to be true for the market to be right & you to be wrong. (Markets can be wrong, to be sure, this is just a way to generate an idea that will then be evaluated.)

Folks signing up recently already knew about the value. They are converting from unpaid subscribers. The value didn’t change. Now, though, something is worth $7/month that wasn’t worth it before. What?

This kind of thinking is really, really hard for me. People & their motivations are mostly opaque to me. Not just opaque, actively camouflaged. Cloaked.

I’ll give it a whirl, but this is really raw thinking. One possibility is that they knew that they could sign up at the current price. Now they are faced with the possibility that they couldn’t justify signing up at the new price. They avoid the loss by signing up today.

“I could sign up today & get value but never mind. Oh, I might not be able to sign up tomorrow? I’d better sign up today!”

I think I’ve rediscovered the Going Out Of Business Sale.

Ethics

There are (at least) 2 sets of needs to care for in this situation:

• My need for a sustainable business

• Subscribers’ needs for, well, learning & skills & community & encouragement & …

What I don’t want to do is any of my grandfather’s sleazy car sales stuff. I don’t want to use fear to get my needs met at the expense of subscribers. I don’t want anyone to sign up who is making an objectively bad decision by signing up.

At the same time I’d like everyone to sign up who would genuinely benefit. I suspect that is far more people than have signed up so far.

Next?

First, I’m going through with the price increase Monday as planned. No reason not to. Upside with no downside. Part of me is worried that new signups will drop to zero, but okay. Get your employer to pay for it, folks! They are reaping the rewards!

Second, in a couple of weeks I’ll send a discount coupon with an expiration date so folks who didn’t get $7/month can still pay less than $25/month. (For this to be effective I shouldn’t tell y’all this, but whatever.)

Third, I’m going to think about what I’ve learned about human motivation & decision making. I want to understand how it affects my own decisions. I want to understand how to use the information for mutual benefit. I want to understand the perverse incentives it creates & how to avoid them.