Hello from Dulles airport in Northern Virginia! I’m writing this while I wait for a flight to London, where I’ll be visiting my brother for the next week. I unexpectedly have several hours of free time after United changed my itinerary twice due to flight cancellations.
When Alan announced his departure last month, he said I would share more about my plans “in the coming days.” That did not happen because I tested positive for COVID the next day. My symptoms were mild and I’m fine now, but that illness, and subsequent summer travel, has delayed the promised update until now.
Anyway, here’s the situation: while I’m proud of what Alan and I accomplished editorially, we fell short financially. When we launched in August 2021, I thought we could get to 10,000 readers in the first year, and that around 10 percent of these readers would become paying subscribers (Substack says 5 to 10 percent is a typical conversion rate, and we thought an economics newsletter would monetize well.) Getting to 1,000 paying subscribers in our first year would have put us on track to build a sustainable business.
Today the newsletter has 7,500 email subscribers—only modestly short of the 10,000 goal. Our larger problem was our conversion rate: only about 5 percent of readers pulled out their credit cards—and many did so only after we offered significant discounts. The result: we earned less than half what we expected to. Alan, quite understandably, decided to take a regular full-time job.
I’m doing fine, financially speaking. My wife, a physician, makes enough to support our family’s needs. I love doing this newsletter, and she's agreed to let me keep doing it despite the modest revenues. But I will need to continue growing our paid readership if this newsletter is going to be financially viable over the long run.
To that end, I’m seriously considering moving from Ghost to Substack. Substack’s brand has become so powerful that a lot of people assume this is a Substack newsletter already. But it’s not. It’s hosted by Ghost, Substack’s open-source, nonprofit rival. I’ve been generally happy with Ghost, but in recent months I’ve seen more and more Substack authors report that Substack’s recommendation feature was getting a lot of new subscribers.
I also plan to lower my prices when I re-activate paid subscriptions later this year. This seems only fair since without Alan there will be less content. But I also think it could be financially advantageous. When we surveyed readers last September, we observed high demand elasticity: 35 percent of respondents (not a representative sample) said they’d pay $8 per month, compared to just 7 percent willing to pay $12. This suggests a price cut might more than pay for itself.
But first, I’m going to take a few more weeks off from posting. If all goes well, I’ll be back in September with a bunch of fresh content, a new platform, and a lower subscription price.
I want to thank Alan for helping me build Full Stack Economics over the last year. I enjoyed collaborating with him and learned a lot in the process. Also, a bunch of this newsletter's readers found us through him.
I also want to thank you, the readers—especially to those of you who supported us financially over the last year. It means a lot.