Value-based pricing culture in publishing – possible or not?
One of the reasons that publishing companies are now facing so many problems at the hands of internet retailers is that for years they have relied on a symbiotic relationship with the book trade. The problems with this relationship are now manifest: selling to price points has lowered the perceived value of books. Why should a book cost £9.99, £14.95 or £20? What has that price got to do with content? Nothing at all.
As a counter to this trend, publishers are attempting to fight back: some publishers are seeking greater control of pricing for their e-books by signing “agency deals” with e-book platforms so that they take a far greater chunk of the revenue. All fine and dandy save for this: the publishers are still pricing books to price points rather than inherent product value.
How is it possible to create a value-based culture in an industry which has allowed itself to become a parasite of the trade: nibbling the titbits of profit from the muddied fur of the retailing hippopotamus?
Management vision is the starting point. Without vision and drive, management is compelled to accept the status quo: waiting on returns to establish whether the month was a good one or not. So management must understand where it wants to be, creating models in the background, while still servicing the current operation. Clearly not all the balls can be dropped at once.
A vision of course centres on knowing your customers: the value points; their needs; matching product design to consumer needs; communicating brand and value effectively; management of sales channels; control of discounting. The list is endless, well almost! But the key – a key lost to many publishers who sell through the trade – is customers. Who reads your books?
A vision focusing on customers is of course trite. Everyone says “we must meet our customer needs to survive”. But ask yourself whether this is but lip-service? I doubt that many publishers genuinely sell out of all editions of their titles. If they did, then it could be argued that they are indeed meeting customer needs.
But the remainder shelf and a quick study of the dump bins at the distributor soon tell the real truth. Remainders, returns and unsold stock are the legacy of businesses which for too long have ignored their real customers.
Of course, change cannot be affected overnight. So publishers should pick on target niches to develop effective value-based pricing strategies. These niches can become brand ambassadors: products focusing on value-based needs leading to customers responding with purchasing to the levels you need.
Once customers become to like the brand and the deliverable, the brand itself – your brand – becomes one of delivering high value. By value we don’t mean low price of course but value for money: the value delivered by the book is worth more to the customer than the economic sacrifice made to achieve it.
However, a word of caution: some publishers actually believe that a book’s value is defined by price alone: because it costs £30 it is therefore a professional book. This is nonsense: if someone spends £30 on a book which fails to deliver value, the book is as irrelevant as an erotic novel at a Methodist gathering. Price does not determine value – value determines the price.
So, having developed a niche, gather a team of specialist new thinkers around that team. Not the old-time hacks who live in a make-believe world of “we know our customers and they won’t like this” but outward facing staff who say “I know our customers but I don’t actually know them that well. Indeed, I can see if we carry on doing what we do then things are going to fail“.
Visionary staff who can see potential are crucial to delivering value – from commissioning editor to accounts clerk, from copywriter to sales account manager:
- Commissioning staff and publishers must learn to drive content through authors to deliver customer needs.
- Accounts executives must understand the model (including an holistic sense embracing all cost centres to deliver credible metrics).
- Copywriters and marketers must understand product value and communicate it (not just the usual hackneyed marketing catchphrases.
- Sales people must NEVER sell at the lowest price but from a pricing matrix centrally controlled – they must sell value not price.
All your team recruits must have diagnostic skills and be willing to understand what is happening. They must have reflective skills to create solutions to developments. And they must be supported – at all times. In a publishing company (as in any company), some old-timers like nothing better than to watch new ideas fail.
Management support is best offered by installing a mentor figure alongside the niche development to keep things moving. Someone who knows the concepts; can discuss developments; can challenge ideas and can offer solutions that can work within a publishing set-up.
This does not necessarily mean bringing someone in from the outside but it does mean bringing someone in who understands that what you’re doing now is not going to work 10 years hence (or even 5). This person could indeed be an energetic youngster with strong management potential.
Having set up the team and driven the vision, feedback and control are crucial. At the outset, you need to establish some key milestones for the niche: volume of sales in a period at a given price and profit; customer data gathering targets to grow the database; market research findings from initiatives (e.g. conjoint analysis surveys) etc.
Crucially, during the first year, targets must not be so large as to be unachievable. Instead, they must be large enough to provide substantive evidence of the methodology while small enough to manage effectively without sinking. At the same time, once again, top management buy-in is crucial.
No one said that cultural change is easy. But the easiest thing in the world for a publishing company to do is to carry on doing what it’s always done – and fail at the altar of complacency.