And then I get a big fat one from the Atlanta Journal and Constitution or the Athens paper for 50 cents, and it's really discouraging. Low prices contribute to growth in market penetration, but if they sink too low, they don't sufficiently assist overall profitability. High prices can lead to a decline in sales such that revenue fails to cover the cost of producing the paper. If a publisher wants to serve the masses, he or she must set the price low enough to grow circulation. If the goal is reaching affluent readers, a price increase exerts less influence on circulation because the affluent show less sensitivity to price.
Competition emerges as another factor.
Managers in many monopoly industries assume that price does not affect product demand. Publishers don't have that luxury, because of the swelling competition from other media. Hiking prices in response to rising newsprint prices constituted the overall trend of the mid-1990s. Higher labor and distribution costs also pushed prices upward. During this period, circulation and penetration continued to decline nationwide.