The second part of our summary of BookNet Canada’s Tech Forum. Today, we delve into the ever-important and puzzling question of ebook pricing with a talk from Ryan James O’Sullivan at Kobo.
Everything You Wanted to Ask a Retailer about Pricing but Your Legal Department was Afraid to Ask
Ryan James O’Sullivan, Kobo
As we’ve mentioned before, ebook pricing is always a hot topic among publishers, and Tech Forum was no exception. There was a healthy crowd for Ryan James O’Sullivan’s talk, humourously (and perhaps accurately) titled “Everything You Wanted to Ask a Retailer about Pricing but Your Legal Department was Afraid to Ask.” Currently the Director of Content Analytics at Kobo, O’Sullivan began by saying he wanted everyone to walk out of the conference feeling like pricing experts. Today, pricing is becoming an ever-more complex issue. Prices now are not only more hypercompetitive in terms of book formats, but they also face constant competition from other media.
According to O’Sullivan, the key to smart ebook pricing in today’s market is to always keep the customer in mind – price needs to be oriented towards the potential customer of each individual title, and publishers need to utilize the diverse data points available to them in order to segment their customers. Some of the customer segmentation categories proposed by O’Sullivan include: genre preference, price preference, promotional preference, competitive risk, and publication age preference. For example, looking at segmented data from the Romance genre, we see that 55% of sales happen below the $5 price point. In order to optimize your ebook sales prices, you need to know your segment as well as your customer.
Another key point that has already come up in our blog post on Digital Book World, and echoed by O’Sullivan at Tech Forum, is the need for experimentation. He urged publishers to think of creative ways to promote their books, and not to be afraid of trying new things, saying that experimentation is the key to success in the ebook game. To prove his point, O’Sullivan provided two examples. The first was of a big-name author whose publisher ran a one-week reduced ebook price promotion three weeks after publication. The reduced ebook price triggered an 800% increase in the sales over the first week post-pub. As a result of the promotion, there was also a 150% increase in readership when compared to the previous book by the same author—the publisher succeeded in drawing in new customers by way of presenting them with a price in line with their expectations.
The second example he provided was one of a debut author where the publisher consistently experimented with ebook price following publication. With the price of the ebook jumping up and down throughout the year after pub, a plethora of customers were drawn to the book. The lesson, O’Sullivan said, is not to be afraid to try different things and see where they take you. Still, he cautioned that most consumers won’t pay above $10 for an ebook. Although it’s true that each customer will have their favourite authors whose books they will buy at any price, “if you are charging more than $10 for an ebook it’s highly probable you are missing a significant chunk of revenue.”
So, what is the optimal ebook price? O’Sullivan finished by pointing out three key characteristics. The optimal price:
- Maximizes long term revenue.
- Is oriented towards the potential customer segment of your book.
- Any given price should be part of a robust pricing strategy that continually experiments and adjusts.