We’re still working on answering the question posed in our last post. In the process, we keep running into the idea of selling more for less. So, we thought we’d think that through a little bit today.
The title of this post is the sort of business “wisdom” one encounters frequently these days. It often comes in the form of analysts giving publishers advice about how they should manage the digital transition, as in “Publishers should move to a high-volume model where they sell more units for less.” (1)
This somewhat clichéd advice made us think…. is that really true for books? Are books—whether eBooks or pBooks—the sort of items that people will buy many more of if the price is lower? Just how elastic are book prices?
Price fluctuations have some impact on almost any product’s sales. However, the extent to which a product’s sales are influenced by changes in its price varies; and we refer to this phenomenon as price elasticity. For some products price elasticity is obvious. Gasoline is something we need, and, despite the price, we’ll buy it. This means the price of gasoline is relatively inelastic. Sure, when the price is really high, we’ll buy a bit less and when it’s really low, perhaps we’ll buy a bit more. Luxury items are examples of the sorts of products with very elastic prices. They aren’t necessities so we tend to buy a whole lot more of them when prices are low and a whole lot fewer when prices are high.
Which brings us to the question: Just how elastic are book prices? Your answer is likely to reflect your attitude towards books. Are they necessities or luxuries? What do you think?
There is another thing that complicates the statement in the title of this post. Just because book prices are low doesn’t mean that I suddenly have lots more time to read and will therefore run out (jump online) and buy four books a month instead of one. Unlike music, which can be enjoyed while doing other things, books tend to be a bit more demanding of their consumers, at least if the books are actually read.
So, demand for books has a different feel than does demand for something like, say, calendars. It is this difference in the market for books that makes us doubt the wisdom of “Sell More for Less.” More accurately, we don’t doubt the theoretical truth of the statement; we doubt the assumption it depends upon–that demand is unlimited.
(1) This is a quote from an interesting article by Rory Maher titled Kindle Fantasies are Running Wild – But, For Now, Amazon Is Losing It’s Shirt, available here.