Kindle Review – Kindle Fire Review, Kindle 4 Review

Reading an Ars Technica post on Net Neutrality and this line really hit me -

The dream of most businesses is not to set a single price on an item, but to charge each customer the maximum amount that they are willing and able to pay.

That’s what hardbacks and paperbacks basically are -

1. If you’re willing to pay for the privilege of reading a book as soon as its released (or want a book to treasure) you get a Hardcover that costs only $1-$2 more to manufacture.
2. If you are willing to wait, then down the line you can buy the cheaper paperback.

Can differential pricing work with eBooks?

Yes! Without a Doubt.

You see the beginnings of this in the Kindle Store already – look at the Movers and Shakers list. There are always books priced above $9.99 (For example, E = MC2 by Brian Cox) that are rocketing up the charts because people can’t wait. It’s working.  

Then, if they sell enough (in the real world or the Kindle Store), they make the bestsellers list and Amazon reduces the price. If not, they lower the prices after the initial ‘can’t wait to buy it’ people are done.

With ebooks you have a lot more flexibility.

Lets look at a few of the different options Publishers and Authors have to get differential pricing to work.

Multiple Dimensions of Differential Pricing.

Time Based Differential Pricing 

You basically sell early availability at a premium.  

eBooks actually allow for a few extra options here -

1. Instant tracking to match price with demand. The price changes and monitoring can be minute to minute now.
2. Pre-Release Specials. Get to read the eBook a few weeks before the hardcover release if you’re willing to pay a higher price – perhaps $14.   

Material Based Differential Pricing

Include extra content, specials and exclusives. This includes audio-books.

Video Games and Movies (DVDs) use this – There is bonus material and special items included (Video Games use the term ’Collector’s Edition’).

For Books you could have -

1. Audiobook version read by the Author.
2. Extra Short Stories.
3. Author Interviews.
4. Special Screensavers. Kindle really needs to allow for this.  
5. Ringtones.

Perhaps even physical items to go with the extra Content.

Customer Based Differential Pricing

This will be super contentious.

However, the fashion industry uses labels to differentiate buying capacities. A lot of other industries like real estate function based on customers’ ability and willingness to pay.

Why not in the book industry?

1. Publishers are already labels. Extend it further.
2. Price ebooks according to customer’s behavior patterns. If a user buys ebooks at $8 and not at $12 - then perhaps you’d rather sell it at $8 than not sell it.  

There’s a lot more to Differential Pricing

Just as Apple is catering to people who want a special product with a premium label and better finish and polish, there’s room for Publishers to cater to the audience that is willing to pay extra for a special product offering.

1. Apart from the Movers and Shakers example there is no initiative by Publishers (to the best of my knowledge) to utilize all the different dimensions that are now available.
2. The first book in a series free is a good move. However, it’s just a small step.
3. Even when the boycott $9.99 movement was strongest there were readers irritated by other readers’ obsession with price.

It just seems like Publishers aren’t realizing the options going digital gives them.

Why sell an eBook at the same price to millions of people who all value it differently?

Filed under: books Tagged: | differential pricing, kindle book prices