How to work out what to charge for ads

Magazines provide a fascinating problem for anyone interesting in the mathematics of costing production. That's because there are so many variables.

Think of this: you plan a new magazine and you follow the usual practice of giving discounts for larger advertisements. Or maybe you work it out the other way: $500 for a full page, $260 for a half, $150 for a quarter, $80 for an eighth-page. Now you reckon that most of your ads will be small sizes, but then in come the orders for full pages and someone asking what's your discount for a double page spread (a "truck" they may call it). Instead of celebrating you suddenly realize that instead of getting upwards of $650 a page, you are giving discounts below $500.

That truck is driving straight through all your cost estimates, accompanied by a dozen Humvees. You may save a little on the time of putting one ad on a page instead of placing 6 or 8 little ones, but you may also find that the advertisers or their agents are ultra critical on proofs and the quality of the final job. Then you realize that those full page advertisers placed orders for 3 or 6 or even 12 months and your revenue is disappearing fast. Your costs may be going down a little, but they'll still want to keep changing their copy.

Fortunately there is a calculator around to help. The Adrates calculator is not completely free - it comes as a free download with copies of How to Start and Produce a Magazine or Newsletter and is an Excel spreadsheet that lets you do all those what-of calculations before you start telling people what your rates are (or helps you work out what they will have to become if you already have a publication).

Enter your suggested full page rate and the percentage extra you will charge for smaller ads and the discount you will give for series ads. Guess the percentages you may get in series bookings (you can play around with all these figures as much as you like) and the spreadsheet will give you a guide to what your rate card might look like.

Then, and this is the clever part, it will tell you, based on what percentage of pages you intend to devote to ads, how many pages of ads you will need. Then you can enter all kinds of combinations of the sizes they might be. If you go over the total it will tell you and it will give a cumulative total as you enter the numbers of ads.

Finally it gives you the total income at full rates, and then, the really important figure: based on your previously entered proportions of repeat ads, it gives your likely revenue per issue. And that is the figure which may come as a shock.

Of course you can then work out what happens if you get an extra full page. Sure, the revenue will shoot up but there is the calculation this spreadsheet does not do for you: what effect does it have on your printing and other production costs (especially if it takes you into the next postage category and you have a lot of mail subscribers).

This isn't a magic solution, but it will help with calculations that every magazine and newsletter publisher has to do at some stage, even if it is on the back of an envelope.

The book is available from Worsley Press or from Amazon, at US$26.95 and there's a lot more help than just this spreadsheet.

But first, have a look at the Adrates file (Download Adrates) which shows how the spreadsheet works.

 

Comments

[Safiya]

Hi Gordon, Your blog has been so helpful to me I just want to thank you. I purchased the book and have been following it as well, though I have not been able to use the ad calculator because our magazine is seasonal. Do you have any suggestions as to how we can still make use of the calculator.

Thanks

[Gordon Woolf]

Thanks for the comment Safiya. When you say seasonal do you mean 4 a year or that it has some large issues and some smaller ones (I'm thinking a surfing mag I know which has, I think, 8 issues a year with monthly ones in spring and summer and then autumn and winter issues. In either case the answer would be to let you override the W/M option with a number of issues. I can't promise anything but I'll put that on my unfortunately rather long to-do list.

[Safiya]

Sorry for being vague, we have 4 issues per year. if there is a way for me to override the system and enter the correct number that would be great...What do you think?

Thanks Safiya

[Gordon Woolf]

Just a thought: The monthly setting shows four columns of suggested ad rates; if you imagine those as being the rates for 1,2,3 and 4 issues, that might help.

But I have not forgotten my promise to try to find time to add the right entries for quarterlies.