How much are customers willing to pay for books?
It’s something I come across quite a lot in the publishing industry: quaint discussions around the pricing table about surveying customers about how much they would be willing to pay for books/e-books/subscriptions etc.
The problem with such survey is this: customers can never know (unless value is demonstrable), how much they would be willing to pay. Indeed, in a situation like this, a customer might say “how many pages, paperback or hardback, e-book etc” and then draw on the perceived substitute price. In this case, the perceived substitute would be the neighbourhood price of similar books available via a bookshop.
In other words, their perception of price will be influenced by the book trade (or Amazon or Book Depository). Their price perception will be the price points of the trade. Consequently, the book you would like to sell at a value-based price will instead be valued at £5.99 or £6.99 or £10.99 or £19.95.
This information will then result in flawed decision-making and a perpetuation of the age old problem in publishing: paring down costs in order to make a profit at the price point.
Instead, any decision on pricing needs to be made from perceptions of value and this value needs to be communicated. In professional publishing, where the metrics of profitability are higher and more reliable than consumer, investment in marketing is focused very much on a direct relationship with end readers. Marketing can indeed be profitable.
In consumer publishing, the problem is more acute but it is not insurmountable. For example, a burgeoning and growing Facebook presence creates its own group of “brand perceivers” (to coin a hideous marketing neologism) where the gestalt of the business is built very much on clear statements of what the business is about. Knowledge of value creates acceptance of price.
Clearly, perceptions of value need to be based on direct relationships; only then can more generic advertising be delivered which further enhance the perception of the offering as “worth the money”.
Nagle and Holden identified the “perceived substitute” way back in the 1990s as a key problem with price definition and today, where online search creates price perception in seconds, the importance of defined value is more important than ever.
So, instead of publishers trying to discover how much their customers are will to pay for books, they should instead be investing heavily in price perception programmes so that customers do not question the price of the value they are being offered.