Text A Marketing Mix—Price and Place1
Marketing will be involved in setting the prices for new books. Factors affecting the book’s possible published price include its perceived value to end-users; their ability to pay low or high prices (for example high-earning professionals); and the price of competitors, books, especially if the book can be easily compared against similar books. Sometimes a book has a uniqueness that can let it command a premium price. Other factors include whether the book will be bought primarily by end-users or by libraries or businesses; and whether there are established price norms in the market which, if ignored, could reduce sales (for example to an impulse buyer, gift buyer, student or school). Trade publishers have to price with a view to the discounts offered by retailers to consumers. Christmas bestsellers will have their recommended price set in the full knowledge that retailers will reduce the price considerably. A hardback priced by the publisher at £25 may be sold at up to half price by retailers if a price war develops in the market.
Pricing strategies include “skimming”2—pricing high a hardback before moving into paperback—through to “penetration” pricing3—capturing market share for a new series through aggressive low pricing. “Competition-based” pricing4 is common and it is essential to review the prices of competitors’ products. Sometimes this can lead to counter-intuitive outcomes, as in the case of the independent bookseller Daunt Books. Daunt Books5, an independent bookseller in London, UK, isn’t likely to win a price war against Amazon or Barnes & Noble; it doesn’t even try. Instead, the shop relies on its personal approach, cosy atmosphere and friendly and knowledgeable staff to turn local book lovers into loyal patrons, even if they have to pay a little more.
The raising of the recommended retail price for a book would usually lead to a fall in demand, whereas lowering the price would usually (but not always) lead to a rise in the quantity sold. Products which are thought to be “price inelastic”—changing the price has only a limited effect on the level of demand—tend to be highly specialist and professional titles. A book or database may convey need-to-know information for which an organization or professional is happy to pay a high price. Top science journals command premium subscription rates. Consumer books, especially paperbacks or ebooks, which may be bought on impulse, and many textbooks tend to be “price elastic”—changing the price has a greater effect on the level of demand. Price elasticities vary according to the type of book and product. It can be difficult, for example, for an editor to persuade an academic or professional book author that lowering the price will not open the gates to a flood of eager readers.
Digital products can be difficult to price when there are no set price points in the market. Publishers may resort to cost-based approaches in order to recoup their investment, or keep prices low initially in order to encourage early momentum. Apps have to be priced in line with market expectations, and face stiff competition from products issued by other media sectors such as games. The prices of ebooks may match those of printed books or be lower, say two-thirds or a half. The pricing of consumer ebooks is in constant flux as they have proved to be highly price elastic, and their prices can be altered almost in real time. When the price of The Hundred-Year-Old Man Who Climbed out of the Window and Disappeared, by Jonas Jonasson6, was reduced in 2012 as part of a Sony promotion to only 20p, it sold nearly 150,000 copies. Occasional flash sales are used by retailers to capture market share.
Publishers and self-publishing authors too may use “pulse” pricing, dropping the title’s price drastically over a short period to increase demand. Larger publishers may employ analysts to work out pricing policies which maximize unit sales or revenue per sales channel. Such “dynamic” pricing7 is automated through the use of algorithms, pioneered by Amazon.
Simon Johnson of HarperCollins8 said in 2013: “We have well over 10,000 ebooks in our catalogue and a significant proportion are re-priced every week. It varies from market to market and partner to partner.”
A cost-based approach to pricing is now much less common—this involves a standard mark-up from the unit cost of the book. Instead publishers will price to the market with a keen eye on the relevant competition. For trade fiction, pricing to market will override