09 April 2013

Price of a book

Very interesting article about the price of a book, and more importantly setting expectations around the price of a book. The key point of this is about perceived value. If we are willing to pay $5 for a cup of coffee, drunk and gone in minutes, why do we want to pay less for a book, potentially hours of pleasure (possibly even re-read pleasure)?

Why are there so many $0.99 books out there - shouldn't that price be reserved for deep promotion only? The more consumers see cheap, cheap pricing, the more they expect it. Also the more they perceive the product as being cheap.

"You are always educating the consumer as to what your product is worth. The regular price will come to be perceived as its true value. You don’t want to set that too low. You steal from the consumer the thrill of getting a deal, you steal from yourself the flexibility to build and expand your brand appropriately... The first and last tool of the unsophisticated sales-person is always to reduce the price. Like a chain-saw, price reduction is a powerful tool, but if it is not used carefully you can cut your own leg off."

This article made me think about what I expect both as a consumer and as writer. It reminded me of a project I worked on (mortgage paying "real" job work, not writing project).
          It was for a client who supplied a good product that they sold at an above average price (it wasn't the best or the highest price). The retailer decided that a product like that, sold as a loss-leader, would get people into their store. i.e. they would sell it at so low a price they would lose money, but it would increase foot traffic and consumers would buy other, higher margin, products while in store.
          They were right, it did seem to drive people into store, thrilled with the idea of a bargain. So, despite the fact that the supplier objected to the low price, the retailer did the promotion again... and again... and again.
         By the time I arrived on the scene the supplier had a real problem. Their product was no longer perceived as a good product that was worth paying and above average price for, it was now perceived as cheap. Consumers no longer bought the product unless they could pay bottom dollar for it.
        Worse, the retailer also realized it wasn't selling at anything except the low price - the problem was the retailer made no money at the low price (loss-leader remember).  The retailer went to the supplier and said unless the supplier sold it to them at the cheaper price (so they didn't make a loss), they would no longer stock the product.
         The problem - the supplier would make a loss if they sold it at the price the retailer demanded, but if they didn't reduce the price they lost the product. How could they overcome the price perception in the market?

That's the question booksellers (retailers, publishers & self-published authors) need to answer. How can they raise the perceived value, and therefore price of, books?

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