In the recent burst of interest in e-books, most publishers, retailers, and pundits have assumed that readers are going to choose either a print or digital version of a book title. However, for the right bundled price, readers may purchase both versions of a title.
E-books are often compared to digital music. This comparison generally holds, but one key difference is music's adaptability to consumer usage. For instance, you can burn an MP3 onto a CD, and then play it on your living room stereo, or in your car. Conversely, you can take a physical CD and rip tracks from it so that you can play them on the go, listening to your iPod or other device. Since most people listen to music in both digital and physical formats, this interchangeability is what I like to call a highly valuable attribute. But suppose that music was not interchangeable between formats. Would you pay extra to enjoy your favorite songs on both your iPod and your home stereo? If the price were right, I certainly would.
Books, on the other hand, don't provide this same interchangeability. E-books can't be transformed to print books and vice versa—at least not yet. However, both versions offer readers unique value. E-books are well suited for on-thego reading, have large storage, and provide search capabilities. Also—and don't underestimate this factor—e-reader devices are hip. Print books offer a different—some would say better—reading experience. They're easily bookmarked, and many readers value displaying books in their home libraries and office bookcases. So for the same title, each version offers different benefits and is better suited to specific occasions.
Consider a $27.99 hardcover business book that is also sold as an $11.99 e-book. Publishers can offer a discounted bundle of both for, say, a $35 list price, which some retailers will discount to under $30. It's worth noting that digital/print bundles are better suited for some books than others. There may be more demand for, say, bundled versions of literary classics, business books, travel guides, or reference works than, for example, Candace Bushnell's The Carrie Diaries or the latest installment in James Patterson's Women's Murder Club series. , the value of owning a title in a second format is incremental—meaning, they aren't willing to pay the list price for both formats individually. The bundled discount, however, acknowledges the incremental value of owning a second format. It provides an incentive for readers to also purchase the "other" format.
It makes sense for publishers to at least test market print/digital bundles. First adopters of technology, who are often less price sensitive, may be quite receptive to purchasing bundles. A bundle allows readers to enjoy the digital version in public and hardcover (or paperback) in the comfort of their homes. Just as important, print/digital bundles could be a boon to brick and mortar bookstores, longtime allies of publishers. Through alliances with e-reader manufacturers, customers could both pick up the print book and download the e-book version in a retail store for a discounted price.
Publishers really can't go wrong by offering a discounted bundle price in some cases. For most readers, the value of owning a title in a second format is incremental—meaning, they aren’t willing to pay the list price for both formats individually. The bundled discount, however, acknowledges the incremental value of owning a second format. It provides an incentive for readers to also purchase their “other” format.
Is there a downside to offering bundles? Just like what can happen with any bundle, two people may coordinate their purchases ("I'll take the hardcover, you can have the e-book, and we'll split the savings"). But it's worth trying.
Just as it is for music, consumers may value owning a book title in multiple formats. Before publishers make a potentially wrong "either/or" assumption and close the door to new opportunities, they should recognize that there's value to understanding how consumers will react to various prices and bundles. The potential benefits of offering the right bundle price are significant: a harmonious electronic/print coexistence; better-served customers; a new competitive advantage for brick and mortar stores; and higher profits for publishers, retailers, and authors. ■
Rafi Mohammed, Ph.D., is a pricing strategy consultant and author of pricing strategy books, including The 1% Windfall: How Successful Companies Use Price to Profit and Grow, which Harper Business released earlier this year.