J.K.Rowling Under Amazon’s Imperius Spell In her eBook Pricing

A while back I wrote about two kinds of companies – Price Setters and Price Takers. Amazon is a Price Setter. When it comes to eBook pricing they have set the definitive reference price that is becoming to harder to break even with magic.

J.K.Rowling, a master business woman and author (I admire her for both), is fiercely protective of her copyrights and monetization. While other authors were happy to get the Kindle version of their book out she held back for a very long time.

If you have been waiting for Harry Potter eBooks the wait is over. These are now available exclusively from her website. Rowling, apparently not happy with Amazon’s royalty scheme, is taking control of her eBook distribution.  By selling direct she gets to keep most of the sales price vs. sharing considerable portion of it with Amazon.

Clearly she is betting that the popularity of the boy wizard will deliver her enough traffic to offset any advantage from a powerful distribution channel like Amazon.com.

A likely scenario. (I cannot afford it.)

She may have wrested control from Amazon but she could not price it much different from  the standard  $7.99 and $9.99 pricing Amazon has set for eBooks.

J.K.Rowling priced the first three volumes in the series at $7.99 and the last four at $9.99 – a pricing model that seem to be based purely on the size of the books (the first three volumes are really thin while the last four are tomes) rather than on any other value factor.

There is no magic in this pricing.

If she had consulted the sorting hat she would have found that the first step with pricing is finding customer segments

  1. Which segments would prefer the eBook over the paper version?
  2. Specifically what is the value of eBook versions of the first three books vs. the later books.

This was a great opportunity for an author (likely the first time in history) to take control of their book pricing, to find customer segments and their willingness to pay and price it accordingly. Instead we have same old boring pricing under the imperius curse of a powerful Price Setter.

Note: Imperius curse is one of the spells in Harry Potter books that allows the one who casts the spell to control the victim’s actions.

7 thoughts on “J.K.Rowling Under Amazon’s Imperius Spell In her eBook Pricing

  1. An idea:

    Assumption: Few of the ones who already have the print books will also purchase it as an ebook. (could be wrong).

    Then the pricing could be:
    #1 Book: $0 (thus luring all those in who never got around to read harry potter in the first place).
    #2-#7: steadily increase price for each because the value for the reader increases. When you are hook on the story “what happens in the next book” equals a constantly increasing value for the reader/customer.

    The increased price would hopefully offset the loss from #1.

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  2. Jeremy
    It is not highly theoretical.
    It is not computationally intensive to find segments that prefer eBook versions of Harry Potter books and set prices.

    That said, while this is child’s play in other industries setting book prices have not been analytical

    -rags

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  3. Anthony
    You do bring up a different explanation.
    Then the argument is are all 4 volumes valued the same?

    On a broader note, it has never been possible to price a book for its value (perceived or realized value)
    -rags

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  4. Rags,

    While it is true the prices seem to rise as the pages increase, I disagree this price increase is based solely on the size of the book.

    As an adult reader of the series, I found the end of the series to be a lot more captivating (and a lot less childish). Also, I was much more invested in the series after reading a few books (and thus willing to pay more).

    Perhaps I give J.K. Rowling too much credit, but isn’t it possible that the value of these books is aligned to the length? Perhaps a relationship between plot density and book thickness means more reader value and higher prices.

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  5. Your prescription is highly theoretical. Yes, in a world of perfect CRM, identifying segments and their motivations, and then using that information to set your segment-specific, profit-maximizing price is the way to go. In the real world, the type of approach you suggest is unrealistic, with numerous shortcuts (i.e., estimates and assumptions) to fill in the missing (or sometimes contradictory) information.

    If an ‘opportunity’ has never been realized, perhaps that’s because it isn’t really an opportunity. 😉

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