Today’s feature article at Publishing Perspectives is an interview with Rafi Mohammed about pricing, specifically about the “1% windfall” (increase prices by 1% make $$$$) and “dynamic pricing” for books. Here are a couple choice excerpts:
PP: Author Cory Doctorow has framed this debate as price elasticity versus price discrimination, with Amazon believing that lower prices create more demand and publishers holding on to the belief that differing products released over time maximizes profit. Does this properly characterize the actions these companies have taken?
RM: I disagree with Cory on both accounts. On the Amazon side, price elasticity is about choosing the right price to make the most profit. Amazon has been choosing to sell e-books at a loss for some time. That decision indicates to me a different strategy. Could it be about the profitability of selling devices and taking a loss on the content? Maybe it is about capturing market share while the e-reader market in its infancy and creating lock-in with consumers?
On the publisher side, price discrimination doesn’t exactly describe the choices they are making either. Price discrimination implies that prices fall over time as perceived value of the product falls and the choice by several publishers to create a second window for e-books, their most profitable product, after the release of the hardcover, doesn’t match up. There are again other motives at play. Windowing e-books protects hardcover sales and the retailers that depend on them.
PP: Digital distribution creates a variety of new opportunities for how products can be priced including the price of free. What sort of experimentation should publishers be considering?
Dynamic pricing is the biggest opportunity for publishers. For example, if a new release catches on, the price of the book should be increased. I am not suggesting doubling the price, but adding one or two dollars to the retail price creates a huge impact on the profitability of that title. Hospitality managers change the price of the rooms at their hotels constants to match current demand. Publishers should consider the same.
Yeah, I’ll bet that would be a breeze. And that readers would totally love watching prices fluctuate based on how many times they see someone reading a book on the subway. You could join a book club and pay $2 more for a title than you would’ve had said book club never existed. Dynamic pricing would be a lot simpler with ebooks, especially those sold directly from publisher to reader, but I get a headache just thinking about implementing something like this with print books, bookstores, and wholesalers with constantly fluctuating prices. And looking to the hospitality industry as an example of what publishers should do made me vomit a little bit in my mouth. Next thing you know we’ll all be aping the airline industry and charging extra for the cover or page numbers or some such thing . . .
At 30, the Mexican writer Valeria Luiselli is already gathering her rosebuds. Faces in the Crowd, her poised debut novel, was published by Coffee House Press, along with her Brodsky-infused essay collection, Sidewalks. The essays stand as a theoretical map. . .
Fantomas Versus the Multinational Vampires: An Attainable Utopia (narrated by Julio Cortázar) is, not disappointingly, as wild a book as its title suggests. It is a half-novella half-graphic novel story about . . . what, exactly? A European tribunal, Latin. . .
Marie NDiaye has created a tiny, psychological masterpiece with her Self-Portrait in Green. In it she explores how our private fears and insecurities can distort what we believe to be real and can cause us to sabotage our intimate relationships.. . .
Reading a genre book—whether fantasy, science fiction, crime, thriller, etc.—which begins to seem excessively, stereotypically bad, I have to make sure to ask myself: is this parodying the flaws of the genre? Usually, this questioning takes its time coming. In. . .
The Sicilian Mafia has always been a rich subject for sensational crime fiction. The Godfather, Goodfellas, and The Sopranos worked the mob’s bloody corpses and family feuds to both entertainment and artistic value. Giuseppe di Piazza’s debut novel attempts this,. . .
Antoine Volodine’s vast project (40 plus novels) of what he calls the post-exotic remains mostly untranslated, so for many of us, understanding it remains touched with mystery, whispers from those “who know,” and guesswork. That’s not to say that, were. . .
It hasn’t quite neared the pitch of the waiting-in-line-at-midnight Harry Potter days, but in small bookstores and reading circles of New York City, an aura has attended the novelist Elena Ferrante and her works. One part curiosity (Who is she?),. . .
From the late 1940s to the early 1950s, Egypt was going through a period of transition. The country’s people were growing unhappy with the corruption of power in the government, which had been under British rule for decades. The Egyptians’. . .
Miruna is a novella written in the voice of an adult who remembers the summer he (then, seven) and his sister, Miruna (then, six) spent in the Evil Vale with their grandfather (sometimes referred to as “Grandfather,” other times as. . .
Kamal Jann by the Lebanese born author Dominique Eddé is a tale of familial and political intrigue, a murky stew of byzantine alliances, betrayals, and hostilities. It is a well-told story of revenge and, what’s more, a serious novel that. . .