Re: The Psychology of pricing

From: Rob Frankel <rob_at_robfrankel.com>
Date: Tue 03 Oct 2000 15:20:30 -0500

MICHAEL MARTINEZ <Michael_at_xenite.org> WROTE:
> It has been proposed by some science fiction and
> fantasy authors that eBooks are priced TOO LOW,
> and yet most seem to sell for no more than a few
> dollars. When I surveyed ePublisher sites this
> spring, many were selling books for about $5.00
> a piece.

So far, my experience is that there are three ways to
go with e-books:

1. Promotional: I just put together a free e-book
("Cheap But Good: Voulme One") of about 15 pages,
discussing and listing some of the vendors I really
like for small business launches. No big deal. About
15 pages total. But I thought it might be helpful and
could promote The Revenge of Brand X, so I gave it
away for free. It worked. Over 1,400 downloads in
the first 24 hours....

2. Impulse: If your e-book is filled with data that
they just GOTTA have, it's a great way to go -- for a
lot more than $5, too. If you figure that for the
same information, people are going to pay at least
that much for shipping, you can get way more for a
timely e-book than you can for a tree-killing version.
Ask guys like Ken Evoy -- he's found that you can
acutally charge MORE for an e-book for that reason
(and others).

3. Higher Profit: The overhead for laying out an
e-book may be the same, but the cash outlay is way
different. Which means you can charge a little less
for an e-book but take in much higher profits per
book. The trick here is hitting a price that doesn't
motivate buyers to hack extra copies to their buddies
(they're still working on a Napster-proof e-book).

> Now major traditional publishers are moving into the
> marketplace

Don't worry about the major publishers. If you've ever
dealt with one, you know their major talent is for
screwing things up. They are, however, really good at
eating lunch.

> As a consumer I hate to think that things on the
> Internet should be priced higher
> I'm aware of price elasticity, but I know that eBook
> prices can easily swell to $15.00 and remain
> competitive with the hardback industry.

You can go way higher than that: people are selling
e-books for $90 a piece. The flaw I see here is that
you're not basing your price on value. It's not what
YOU think it's worth that counts; it's what THEY feel
it's worth to THEM.

People ask me why I priced my (tree-killer) book where
I did. It was the first book on branding (I think) to
exceed the $30 mark. I priced it at $36.95, a full
$10 to $12 more than other marketing books were going
for, for a number of reasons.

First, I couldn't resist premium pricing my stuff over
my more established competition's. I guess they got
the message, because their latest books are all coming
out at higher prices, too.

Second, I could have priced it for less, but a lower
price would not have necessarily meant more sales. As
it turns out, my high price really didn't affect sales
negatively at all; it did just the opposite: it
attracted serious people who were serious about the
subject and couldn't find the material they were
looking for.

Finally, it also afforded people who had no budget for
my consulting business to get a full day's worth of
stuff from me without having to pay the day rate. Put
into that perspective, $36 looks like a bargain.

That's how I arrived at my pricing strategy -- which,
incidentally, the "major traditional publishers"
sniffed at.

Hope that helps,

Rob Frankel, http://www.robfrankel.com
Big Time Branding Guy and Author of "The Revenge of
Brand X: How to Build A Big Time Brand on the Web or
Anywhere Else" on sale now at
http://www.revengeofbrandx.com
* "The man knows branding." -- UPSIDE magazine





Received on Tue Oct 03 2000 - 15:20:30 CDT