My Rate Card Can Beat Up Your Rate Card!



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Jeff Bruss knows how to stick to his rate card!

As 10-year-old boys growing up in northern Wisconsin, my neighbor and I would often discuss whose dad could most likely beat up the other’s, usually after arguing over a game-winning shot on our driveway basketball hoop.

This has nothing to do with advertising, but it has a lot to do with how you structure your rates. The degree to which we choose to stick to our rate card is an age-old debate among publishers. The great majority of us have some flexibility in our rates, allowing salespeople to determine how bad we want that last quarter-page advertisement through discounts steeper than the smiley face offers at WalMart.

We don’t negotiate our rates at COLE Publishing. That’s not to say we don’t offer discounts, — we do offer them for frequency and early payment — but we don’t stray from our rate card at any time, for anyone. Most of you may be snickering right now, scoffing at the money we’ve foregone by not knowing when to swallow our pride and let some agency beat us up for one last insertion. But here’s what I’ve learned over the past decade of standing behind this no-negotiation philosophy:

Advertisers will respect you more when they know they are paying the same rate as everyone else, especially their competitors. If you charge Company A $2,000 and Company B $2,400 for the same ad, inevitably Company B finds out. Where does that put you on the level of trust for marketing their company, products, or website?

It’s far easier to negotiate discounts than it is increases. If you give discounts to survive a downturn, how long might you expect it to take to get back to the rates you were once charging? Months? Maybe. Most likely, years. Standard rate increases for inflation and cost of living usually run in the 3-6 percent range. However, discounts tend to run much steeper, in the 10-20 percent range.

We’ve got faith in our products, and charge accordingly. By lowering your price, you send the message that your magazines have less value than your competitor’s titles or that your own rate card indicates.

Rate cards capable of offering steep discounts must be inflated to begin with. This is a Selling 101 tip we teach all of our salespeople. We could have easily set our rates at $10,000 a page, then sell them for $5,000, or a 50 percent discount. That would make agencies feel like good negotiators, but it does little to value your true services. Instead, we’ve chosen to price our ads appropriately.

With one rate card, there is never any confusion over what price was quoted.

In hindsight, I think my Dad probably would have gotten beat up. I’m glad he and my friend’s dad never actually fought. I’m also glad I’ve never lowered my rates, or my advertisers’ expectations of what they can expect from our company. Can my rate card beat up your rate card?

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Jeff Bruss is Publisher at COLE Publishing and Niche Digital Conference speaker

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Comments

  1. Bonnie Dodson says:

    Rock on, Jeff. LP Magazine has used this exact philosophy for the twelve years we have been publishing, and it has served us well. Your arguments are spot on.

  2. Well written Jeff and I happen to agree with you. Integrity is becoming a highly perishable commodity in today’s marketplace. And as such only increases in value.

  3. Agreed. I made mor money working for a pub that sticks with the rate card. Everyone’s life is easier all the way through the pipe. And yes, steep discounts relinquish value, add on. PS it also helps to know your audience and have an above-board, audited circ. but those days are long gone, for the most part.

  4. The ideal, of course, is to stick with your rate card and have faith in your product. Once you start discounting just to get the business it becomes a slippery slope – word gets around, and you instantly devalue your product. Once you start discounting it’s hard to get rates backup.

    However, in competitive markets it’s difficult to resist the temptation to cut rates, especially if you have a senior management or board putting pressure on you for results and market share. If you have market leading product producing results and good audience reach, fantastic, lucky you. If not, it’s not so straight-forward. The answer is to set your rate card in accordance with the value you represent to the market. The rates may be lower than that of the market leader, but that’s fine, it’s up to publishers to sell their features and benefits, and the advertisers and agencies to make a judgement call.

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