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
- Which segments would prefer the eBook over the paper version?
- 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.