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Archives for March 2010

Price, Profit and Market Size

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I am publishing a collection of short stories as an e-book. Continuing a series from last week, I’m trying to work through the relevant pricing issues and set a price for that content.

Assume for the moment you know beyond a shadow of a doubt that at least one person will buy your book no matter what the price is. What price would you set?

Obviously, $AllTheMoneyInTheWorld.

Unfortunately, history suggests a shifting relationship between price and demand (sales), meaning you may not always be able to employ this pricing strategy. As a fallback, it can help to imagine how the relationship between price and sales might play out for your product, given multiple variables. Unfortunately, doing so usually involves a great deal of market research, lots of wild guessing, and facility with a spreadsheet that I don’t have.

One thing I can say about the relationship between the price of my short story collection and sales of my short story collection is that my ability to maximize profit is not a pressing concern. To whatever extent I might be able to squeeze a few more dollars out of the market by endlessly worrying about price, I’m confident the variance between that maximum profit and the average profit is going to be fairly small, simply because the total number of people interested in the product will be small.

Thus liberated by my own limited appeal, it still seems valid to assume that setting a lower price will move more copies, while pricing the content at higher levels will decrease the number of people who buy the e-book. This is obviously why people advocate for the free/freemium pricing model: it promises that the price of your product will not negatively affect demand.  [ Read more ]

Paying a Psychological Price

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I am publishing a collection of short stories as an e-book. In this week’s blog posts I’m trying to work through the relevant pricing issues and set a price for that content.

When the stock market (meaning of course the industrial segment of the Dow Jones averages) passes through a big round number like 1,000 points, or 5,000 points, or, more recently (and repeatedly, in both directions) 10,000 points, everybody pays close attention. Why? Because people are stupid.

Okay…maybe that’s a little harsh. Better would be to say that people are conditioned to pay attention to such numbers. For example:

  • 4,294? That’s just a number.
  • 4,444? Wow!
  • 9,303? Nothing.
  • 9,000? Wow!
  • 10,605? ZZZZzzzzzzz…..
  • 10101? Spooky! Digital! Buy tech!!!

Numbers in and of themselves usually have no meaning. They quantify, but they do not evoke. Precisely because of the abstract relationship between our numbering system and the way we usually employ it (to count things) the door is left wide open for extraneous associations to creep in, even if we are guarded against them.

As you can see from the above examples, our psychological make-up affects how we view numbers in a variety of ways. Some of these misplaced associations may be obvious, some may be obscure, but it should be quite clear that none of them have anything to do with what the numbers actually mean.

The people who sell you products know all about these extraneous associations and routinely use them to advantage. Some of this is simple deception. When you buy gas at $2.82 per gallon, you do know from previous experience that there’s an itty-bitty, ninety-nine-hundredths-of-one-cent hiding at the end of that price, but because it’s such a pitifully small number it doesn’t seem important. Which is why the gas industry adds that almost-penny. The big sign says $2.82 per gallon, but the other signs at the pump remind you that the actual price is $2.8299, meaning the seller is making almost a full cent more than the stated price. Why do gas sellers do this? Because it works.

But it’s not just the fact that the amount is small that convinces you it isn’t important. It’s the number itself. Anything ending in ’99’ is considered a de facto savings, because ’99’ so immediately evokes ‘100’. Not only is that ‘100’ a big round number, but it include an entirely new digit. ’99’ is a miserly two-digit number, whereas ‘100’ is a budget-wrecking three-digit number. The actual difference between the two numbers for any unit is 1%, but the psychological difference is closer to 100%.

And you know this. It’s why the couch you just bought was selling for $999 instead of $1,002. It’s why the car you’re thinking of buying costs #29,860, instead of $30,081. It’s why the bottled water you grabbed is selling for $0.99 — even though it’s going over $1.00 with tax. As a consumer you see these numbers everywhere, you figured them out a long time ago, you know what the pricing elves are up to, and yet it still works.  [ Read more ]

Reader-Sets-the-Price Pricing

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I am publishing a collection of short stories as an e-book. In this week’s blog posts I’m trying to work through the relevant pricing issues and set a price for that content.

One way to get around the problem of choosing between giving your stuff away (which theoretically induces the greatest demand) and the unseemly desire to make money by selling your work, is to hand that problem to your customers. Instead of setting your price at zero and accepting the fact that you’re going to make no money no matter how much demand you have, the set-your-own-price option (or Radiohead model, as it’s often called) leaves the door open for various levels of economic gain.

If you’re really lucky Bill Gates will drop by, sample a few paragraphs of your latest flash, and be so moved as to drop $500,000 on you via PayPal. Or, maybe a class of third-graders will save up their quarters and buy a copy of your book, even though they could have had it for free, giving you one of those life-affirming moments to cling to when events turn life-denying. Or maybe you’ll connect with a number of readers who genuinely love your content, who truly get you and your business philosophy, and who honestly want to put their e-wallets where their e-reader are.

Believe me: I love a feel-good story as much as the next person (okay, maybe a little less). At the end of the day, however, Radiohead pricing still means setting your price at zero, then brandishing an emotional crowbar at anyone attracted by your sweet deal. In effect, the set-your-own-price option says, “Yes, it’s yours free…but if you really wanted to…if you believed in what I’m doing…you could send me a few dollars…although any guilt you feel about being put in this position is obviously your own problem.”

Believe me, I support the co-op model of business. But even your average co-op doesn’t leave it to individual members to show up and get to work every once in a while. Normally there’s a minimum number of hours to be worked (a price) in order to gain the benefits of the co-op, because if there was no minimum all those socially-conscious consumers would take the benefits and run.  [ Read more ]

Book Price Research

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I am publishing a collection of short stories as an e-book. In this week’s blog posts I’m trying to work through the relevant pricing issues and set a price for that content.

If you’re bringing your first crop of parsnips to market, at some point you find out what everybody else is getting for their parsnips. Maybe you randomly phone-check prices in several locations, or maybe you do insanely-thorough research down to the type of parsnip sold, the number sold and the time, date and weather conditions of each sale, but in the end the idea is the same: you try to figure out what your parsnips are worth based on what other parsnip growers are getting paid.

As noted in yesterday’s post, I’m not a big book buyer, so I don’t have a lot of real-world experience to draw from in pricing a short story collection. From the reading I’ve done over the past six months or so I’ve learned something about the price ranges for publishing products, with the emphasis on general, but I don’t know much beyond that. So doing a little product research seemed like both the obvious and easy way to go in resolving my pricing questions.  [ Read more ]

Price Ranges

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I am publishing a collection of short stories as an e-book. In this week’s blog posts I’m trying to work through the relevant pricing issues and set a price for that content.

More than once in my life I’ve had someone tell me they would like to own ItemX. When I asked how much ItemX cost, however, the person replied with, “I don’t know.”

Now, it’s not very often in our commercially saturated lives that we encounter a product which is outside our pricing experience. And that’s particularly true if we know enough about the product to know we want it. Which is why, when this scenario unfolds before me, I invariably respond like this: “Is it a dollar? A million dollars? Ten dollars? A hundred dollars? Ten hundred millions dollars?” And on and on, until the person calmly replies that one of those numbers is close to the mark.  [ Read more ]

The iTunes Pricing Model

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I am publishing a collection of short stories as an e-book. In this week’s blog posts I’m trying to work through the relevant pricing issues and set a price for that content.

In the comments to my initial post on this subject, Will Entrekin talked in part about pricing his own content using what he called the iTunes model:

When I first published my collection, I used what I called the iTunes model: I priced the flash fiction at 99 cents, the short stories and essays at $1.99, the poetry as an EP (5 or 6) at $4.99, and then the collection at $9.99.

As I noted in my response, for a while I’ve been subconsciously thinking about the idea that 1 short story = $1. I don’t know that twelve short stories necessarily compels or justifies a $12 price for the whole collection I want to publish, but I can see selling individual stories at $1 each and feeling as if that’s somehow fair. (I use the word ‘fair’ here in the naive humanistic sense, not in the savvy cannibalistic marketing sense. Obviously a product is worth whatever you can get for it, and any sale justifies whatever lies you need to tell or relevant information you need to withhold in order to induce that transaction.)

One practical problem with selling individual stories for $1 is the difficulty of providing a sample by which the reader can judge your authorial skill. I’m not saying that each story should be partially revealed, but I do think that readers deserve some reassurance that you can execute a story from beginning to end. My intent with the collection was to make some percentage available for preview, but to sell the entire collection for one price. (I’m not sure of the mechanics of this, but that’s the idea.)

If I were also to sell each of the the twelve stories as singles for $1 each, it seems at first blush as if the sample portion I was giving away should also be available for free. Yet the more I think about it the more I don’t think I would do that. I would still make the sample available relative to the collection, but if you wanted to purchase the sample as a distinct piece of content I think it would be sold at the same $1 per-story price.

Does that seem incongruous? In a weird way I think it actually makes sense, but maybe I’ve already become deluded about these issues.

In any case, I think there’s much to recommend the idea of a collection of short stories being sold like an album of songs. To the extent that the mediums are different, making the analogy less than perfect, I agree. But in terms of practical solutions it seems like a workable idea, and one that’s already being demonstrated in a similar market.

— Mark Barrett

Pricing Wolf Parts

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I am publishing a collection of short stories as an e-book. In this week’s blog posts I’m trying to work through relevant pricing issues and set a price for that content.

On Twitter yesterday @leadigloo pointed me to Matt Bell’s Wolf Parts web page, where Matt talks about the sale and price of his upcoming book by that same name:

…this edition of Wolf Parts will only be available to people who pre-order the book before its print date of March 21, 2010. The book costs $8 (with free shipping), for which you’ll receive the perfect-bound minibook, plus an audiobook version that you’ll be able to download immediately upon completion of your order. As an added bonus, you’ll also receive an e-coupon for $3 off my full-length collection How They Were Found when it becomes available for pre-order later this year, sometime before its October release.

Now, obviously there’s a lot of stuff here in this limited-time offer: a perfect-bound minibook, an audiobook and a $3 coupon off the price of another book. Embarrassingly, I have to admit that I have no idea what a ‘pefect-bound minibook’ is, so I’m going to have to look that up. I was also a bit confused by some of the details, but Matt added an explanatory note:

Basically, if you order Wolf Parts during the next three weeks–the only time it will be available for purchase online–you’ll receive the audiobook immediately, the print minibook in early April, and, should you later choose to order How They Were Found directly from Keyhole, you’ll get that book for just $11 (instead of the usual $14), plus some pre-order bonuses for that book that we’re not ready to talk about yet.

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Pricing A Short Story Collection

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I am in the process of readying a collection of short stories for online publication. The stories are literary, and focus on one character (a young boy) over the course of a year. I hope readers connect with these stories emotionally. If not, I failed to hit what I was aiming at.

I will be posting the collection first on Smashwords. I have decided that I will not be posting the collection for free, but rather will be setting a price. I do intend to allow readers to sample the collection to demonstrate that I can, at the very least, carry a tune.

The question before me now is what the price should be. It’s a question everyone is wrestling with, so I don’t feel alone in my consternation. Whatever your feelings about the fluctuating price of gasoline over the past few years, at least there’s a constantly-updated market price for that product. If I was trying to unload a gallon of gas right now I’d know where I stand. Twelve literary short stories? Not so much.  [ Read more ]

Name That Author

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Approximately twenty years ago a female author published a novel that began something like this (paraphrasing):

“In the idealized image of mapmakers, New Jersey is always pink.”

Do you know the title of the book or the name of the author? Do you know someone who might know? Would you ask them?

Because I can’t remember and it’s really, really irritating me.

— Mark Barrett

The Empire Strikes Back

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Whatever else may be happening in the book business these days, it’s now clear that the publishing industry has decided to fight back on the fundamental issue of pricing its products. It’s also clear that this is a concerted effort, as against the general aimless flailing demonstrated over the previous six months.

After a protracted price decline took hold last fall and accelerated toward the holiday season, the core issue of product pricing came to a head at the end of January when Amazon pulled Macmillan’s titles from its site rather than agree to Macmillan’s demand that e-book prices be raised. (Amazon has an interest in keeping e-book prices low because it spurs demand for Amazon’s e-reader, the Kindle.)

Despite Amazon’s large customer base and beloved-brand status, after only a few short hours people began excising Amazon’s dead links from the consumer loop and pointing those links to other sites carrying Macmillan’s products. Demonstrating once again the shallow loyalty of online associations, as well as the vast difference between hosting and controlling a social network, Amazon was also reminded that even though it is (or rather was; more on this in a moment) one of the publishing industry’s biggest wholesale customers, from the point of view of the end user it’s just another easily replaced retailer. (Because of its Kindle e-reader Amazon is also a direct competitor for publishing dollars, further weakening the publishing industry’s interest in supporting Amazon’s pricing decisions.)

Sufficiently humbled by the experience, Amazon relented, providing everyone an opportunity to draw the wrong conclusions about who won and who lost even though the jury is still out. The only issue that was settled was the question of who will be calling the shots on pricing. Whether those prices will be met or rejected by consumers remains undecided, and it remains the obvious basis on which other interested parties can attempt to compete.  [ Read more ]