Substack Payments: Everything You Need to Know Before You Go Paid

Substack’s built-in payment feature is one of the top reasons you should be using Substack for your newsletter. Their payments system is simple, even for non-techy writers.

But there are a few things you need to know upfront to get the best out of Substack payments.

In this post I’m going to cover:

• When to turn on payments

• Who shouldn’t use payments (and who can’t use payments on Substack)

• What you need to know about Stripe

• Whether you should use the local currency feature

• What to offer paying subscribers

• How to tell your subscribers

• Pitfalls to avoid

When to turn on payments

In the early days of Substack, their advice was to wait until you have 1000 subscribers before you start accepting payments.

This has changed. Many Substack writers now recommend that you turn on payments BEFORE you get 1000 subscribers, perhaps even from day one.

Payments from Day One

The most compelling reason to turn on payments from the beginning is that every day you don’t have a paid option you are potentially leaving money on the table.  You can’t know who would be willing and ready to pay straight away, so it’s smart to give them the option. 

Terry Freedman of∙Eclecticism: Reflections on literature and life agrees.  He turned on payments just a few weeks after starting his Substack and does not regret it.

Another good reason to turn on payments early is that your first few paying subscribers will act as a strong motivator to keep going.  Consistency is important for success, and motivation is needed to stay consistent.  Your first paying subscribers will help. 

Zane Dickens, of The Reader Experience said his new publication had attracted paying subscribers early and he found that to be a source of motivation, despite not having fully ‘locked’ down his format and frequency.

Waiting to turn on payments

There are, however, some downsides to turning on payments from day one.  The process of setting up and connecting financial accounts can distract you from writing and sending high-quality content.  It can also be demotivating if early payments don’t meet your expectations.  Finally, you may feel less inclined to experiment, tweak or pivot your publication if you have paying readers.

Whether you wait until you have one subscriber or one thousand to turn on payments, expect the process to be nerve-wracking. 

You will never be properly ‘ready’ to start accepting payments.  The secret is to do it anyway.  It won’t be easy but the worst that can happen is nobody will pay.  So what?!  You will still have learned something. 

Best Advice?

My advice is to start now.

I have never heard a single publication owner say they wish they had turned on payments later, but I have heard hundreds say they wish they had started earlier.

Who should not use payments (and who can’t use payments) on Substack?

Substack’s business model relies on writers creating direct-subscription newsletters - that is, newsletters where readers pay directly for the newsletter.

Other models for monetizing a newsletter include using it to boost sales of a book or or monetizing with advertisements or sponsorships. Newsletters monetized that way don’t need to accept payments from direct subscriptions, and don’t need payments activated.

Substack pays writers using a software called Stripe. Stripe collects credit card payments from subscribers, holds them in an account for the writer, and then distributes them to the writer’s bank account. This makes Stripe a financial services provider - essentially, a ‘bank’.

Stripe is not licensed to act as a bank in all countries and it will not pay out to writers from every country. If your country is on the list below, you can accept payments from Stripe and you will be able to activate payments in Substack. If not, you can’t use payments in Substack.

If you can’t use Stripe, you can ask for one-off payments using tip jars, Patreon or buy-me-a-coffee-style sites.

What you need to know about Stripe before you start

Stripe provides all the computer code and security features that allow your subscribers to pay with a credit card.  Stripe also automatically extracts Substack’s fees from your subscription revenue before sending the rest to you via your Stripe-connected bank account.

Stripe is regulated under “Know your customer” rules in the same way as banks, so setting up a new Stripe account involves significant identity checks. You can work with Stripe as a business or as an individual.

Although it is perfectly fine to have a pseudonym for your publication, you will need to disclose your legal name to Stripe if you want to activate payments.

If you already have a Stripe account - say if you have a Shopify store - Substack allows you to connect your publication to an existing Stripe account. However, I recommend you create a new account for your publication. This will allow you to make sure that your newsletter name appears on your subscribers’ credit card statements, which might not be possible if you use a pre-existing Stripe account. 

Show me the money! Photo by Paul Felberbauer on Unsplash

Payments settings

Activating payments is a two-step process: 

1.     Create and/or link a Stripe account.

2.     Choose settings including prices and currency settings.

To activate paid subscriptions, navigate to the payments section of your Substack dashboard. 

Dashboard > Settings > Payments

You will see a big button to prompt you to connect a Stripe account to your Substack publication.  

After you’ve created and linked your publication to a Stripe account you will be shown options for payments in your publication settings. 

For example, you can:

• Choose prices;

• Choose currency options;

• Change the name of your ‘founding member plan’, or remove it altogether;

• Set group discounts, activate trials, choose whether to paywall archived posts;

• Create and manage special offers;

• and more.

Substack has intuitive instructions for all these features built in to the settings section. 

Pledges and payments

If your publication had pledges active before going paid and if the prices in your pledge settings are different from your subscription plan prices, Substack will alert you. 

You will be given the option to either accept subscriptions at the pledged amounts or tell the people who pledged that there has been a price change. 

Local currencies

Within payment settings, you can choose whether to use ‘Localized pricing’. This feature automatically converts your subscription plan to your customer’s local currency.

I recommend you use this feature. My paid newsletter experienced a noticeable increase in conversions from British, European and Australian customers when Substack introduced the localized pricing feature.

Once you are happy with the payment settings, activate payments by clicking the toggle ‘Enable payments’.  Your publication will then be able to accept paid subscriptions.

What to offer paying subscribers

There are many different benefits you can offer your subscribers, from extra emails to emails with more specific or different information, live events like Zoom sessions, e-books, audio versions, or a combination of these.

For example, Nishant of The SneakyArt Post offers paying subscribers front-row seats to online workshops, plus a special Sunday edition called the SneakyARt (Insider) post and “Good karma for supporting SneakyArt and my work”.

I recommend you check out a few successful Substack publications to see what benefits might resonate with your readers.

Offer nothing (extra)?

Many successful Substack publications offer nothing extra to their paying subscribers.

For example, Robert Leonard of Deep Midwest: Politics and Culture uses a model where everything is free to everyone always.  In June 2023 he reported that, with this model, he had 8 – 10% of his 1,300+ subscribers choosing to pay to support his work.  He was already known as a journalist before he started which helps of course.  He emphasizes that it’s important to create content that is high quality and that “people want to read”. 

Ask people to support you and some of them will. Photo by Volodymyr Hryshchenko on Unsplash

How to tell your readers

Unless your publication is brand new, you should tell your subscribers about your plan to introduce paid subscriptions at least a few weeks beforehand.

For example, one month before, add a note to an email saying “I have exciting news, changes are coming to this publication.  Stay tuned.”.  One week before, tell them you will be offering the chance to get more value or a chance to support your work and that they should look out for the big announcement next week.

Your announcement should explain exactly what your paid subscriptions will look like, why this is important to you (and to them), and what you will do with their money. 

It should also include the “nuts and bolts” of paid subscriptions, like how they can sign up, when they should expect to receive emails and what they will get for their subscriptions.  If your newsletter is for a professional audience, include information about invoices so they can expense their subscriptions.

Always explain that paid subscribers are not locked into any contract and subscriptions can be canceled any time.

It’s a great idea to clearly tell your readers how their payments will be used.  If it is going to support a cause your readers care about, be sure to tell them.

Palisatrium of Short Story tells his readers “My [Sub]stack's goal is to revive the art of the short story and 50% of the revenue goes to authors. I think that this makes people feel like they are doing something worthwhile with their money rather than just adding to someone's bank account.”

Judd Legum of Popular Information says he gives readers “An opportunity to support and participate in an effort to hold powerful people and entities accountable for their actions.

Hint: Don’t forget to edit the welcome email for paying subscribers, plus headers and footers for paying subscribers after you enable payments.

Pitfalls to avoid

(1) Watch out for Substack’s refund policies

If you turn off paid subscriptions or delete your publication, Substack automatically sends refunds to your paying subscribers from your Stripe-connected bank account.

That could mean thousands of dollars of funds being removed from your bank, especially if you have a lot of annual subscribers.

(2) Overwhelm

The process of setting up payments is not difficult, but it takes time. You need to go through identity checks (‘know your customer’) with Stripe, choose price points and benefits and then create new welcome emails, headers and footers for your paying subscribers.

Once you have paying subscribers, you might find you put extra pressure on yourself. I definitely did this! 

When people started paying me, I felt like I had to make every email perfect.  I tried too hard and set myself impossible standards.  My emails got longer (and less interesting!), and I started to burn out.

In the process of trying too hard to please my new paying fans I made my newsletter worse!

A little extra stress can be stimulating and motivating, but be prepared to experience more excitement when you turn on payments.

(3) Fear

When you launch paid subscriptions you are putting yourself in front of your audience at a whole new level.  With paying subscriptions, you are creating a specific way for people to reject your newsletter, by deciding not to pay.  That’s scary!

It’s okay to be scared. All good writers have doubts about their abilities and their projects. Fear is not just common, it’s present for all serious creators.  And being scared is actually a good sign, says Steven Pressfield in The War of Art.

“Are you paralyzed with fear? That’s a good sign. Fear is good. Like self-doubt, fear is an indicator. Fear tells us what we have to do. Remember our rule of thumb: The more scared we are of a work or calling, the more sure we can be that we have to do it … If it meant nothing to us, there’d be no Resistance.” - Steven Pressfield in The War of Art: Break Through the Blocks And Win Your Inner Creative Battles.

Final thought: a contrarian way to deal with the fear of going paid

What if you made a commitment to yourself to ‘quit’ your paid newsletter if it didn’t work out? 

According to Chenell Basilio of Growth in Reverse, the $1 million newsletter creator Gergely Orosz began his paid newsletter The Pragmatic Engineer by committing to just 6 months.  If, after 6 months, he wasn’t enjoying the process of having to create something each week, he decided he would turn it off and refund everyone their money, says Basilio.  This removed some of the overwhelm that writers feel when they commit to writing for paid readers.

After six months, Gergely had more than 1000 paid subscribers and was enjoying an annual revenue of $150 K.  He did not switch it off. Two years later, it is the #1 technology newsletter on Substack.

Are you ready? How do you feel about going paid on Substack? Or have you done it already? Let me know in the comments, and have a great weekend.