How Much Money Can You Really Make on Substack?

Considering Substack’s low-entry costs, a paid subscriber base that’s nearly doubled over the past 12 months, and the news that its top writers make up to a million dollars a year, you might be wondering: Can I really make a living publishing on the newsletter publishing platform? If you have an established audience willing to pony up for your content, then yes — but the fees are no joke, either. Here’s a look at how much you could make.

How Substack works

Substack is a newsletter tool that allows you to manage subscribers, send emails, and track your engagement through an analytics module logging total clicks, your email open rate, when people share your posts, and more. The platform also has a paid subscription model that allows you to charge subscribers a monthly or annual fee (a minimum $US5 ($7) per month or $US30 ($39) per year), while also giving you the flexibility to paywall your posts, leave them public, or choose a hybrid of both. Another nice feature is that your archive and email lists are portable, which means that you can quit and move to another platform later, if needed.

How you can make money on Substack

Using the paid subscription model, the maths to determine your potential earnings is actually quite simple: Multiply your subscription price by your number of paid subscribers. For example, a steady base of 1,000 subscribers paying $US5 ($7) each month will earn you $US60,000 ($70,000) per year from Substack — before fees and taxes, of course (more on those in a second).

There is also the Substack Pro program, which pays creators varying cash advances along with a reduced percentage of subscription revenue generated over a limited term, usually 1-2 years. It’s invitation-only, however, and likely not an option for you unless you’re already an established writer with a large following.

Fees and taxes will cost you

While it’s easy to see how you can make money off the platform, there are also fees and taxes to consider, and they can be substantial. Substack takes a 10% cut of all subscription revenue, and the platform’s financial service provider, Stripe, takes another 2.9%, plus a 30-cent transaction fee for each subscriber.

According to Financial Times estimates, the fees actually total something closer to 20.7% of your revenue. That means if you made $US60,000 ($70,000), your earnings would be closer to $US47,580 ($55,510) — before taxes. Tax rates vary, but assuming an average rate of 27%, you’re ultimately looking at $US34,733 ($45,511) in take home pay, a far cry from that initial $US60,000 ($70,000).

General, you should expect to lose almost half of your Substack earnings, as the popular Substacker Lenny Rachitsky confirms in this tweet thread:

9/ The money is real, but your take-home income is lower than you’ll expect

After the Substack fees (10%), Stripe fees (2-4%), and taxes, you’re lucky to see half of what you think you will make (1,000 subs at $10 is closer to $5,000/month after fees and taxes).

— Lenny Rachitsky (@lennysan) May 26, 2020

The bottom line

As is the case with social media platforms like TikTok or YouTube, if you can’t build an audience on Substack, you won’t make a lot of money. To really make a living off of a newsletter, you’d need to shoot for around 500 paid subscribers you can keep on the hook for their $US5 ($7) per month by offering them frequent, original content. Given that Substack estimates only 5-10% of a newsletter’s readership will be paid subscribers, that means you’ll need actually need a readership base that’s closer to 10,000 people.