Despite the prevailing notion that pricing for e-books is “a race to zero,” digital publishing actually offers a wide variety of flexible and effective pricing strategies, according to Logos Bible Software CEO Bob Pritchett during yesterday’s O’Reilly Media webcast “Digital Pricing and Lessons Learned,” particularly if the publisher sells direct to consumers. Pritchett offered examples that ranged from limited time offers and preorder discounts to bundling, tiered price options and crowd-sourced pricing.
Moderated by Joe Wikert, O’Reilly Media publisher and chair of Tools of Change, “Digital Pricing and Lessons Learned,” featured Pritchett, who offered a variety of strategies for pricing, driven, however, by the ability of the publisher to sell direct to consumers, develop an on-going relationship to those consumers and in effect, turn a company’s best customers into a kind of combination sales rep and feedback loop.
Cofounded in 1992 by Pritchett, Logos Bible Software is one of the largest producers of religious and Christian reference digital reference works. Right from the start, Pritchett preached “maintaining the value of your content,” emphasized the importance of selling direct to consumers and the need to build “a trust relationship,” with those customers. He urged publishers to offer different price options for academic and trade channels, use twitter and e-mail discount specials in addition to limited time discounts and “best price” quarantees for, say, unique content that is only offered once.
Logos, Pritchett said, offers about 27,000 different e-book products and has about 1 million customers in its database. He said most of them “just want a good deal and we never hear from them again,” but about 100,000 of those are regular return customers, “that we treat with respect. They feel like they have joined our team and they work to help bring us new customers.” Logos’ online store offers consumers seven tiers of pricing that allows “users to self-select” and consumers can upgrade to different pricing options at anytime during checkout.
Consumer behavior on the Logos online store is tracked, and bundling—combining large numbers of e-books in a digital package for a discounted price—is a key retail strategy, he said, emphasizing that there are no incremental production costs for producing more copies of an e-book. “Its good for the consumer, spreads our costs and monetizes our low-volume products,” he said. Logos offers bundles in a range of $50-$150, but he also urged publishers to create exclusive high priced content products—“or you’re leaving money on the table” —after once being asked by a consumer to buy every title they published. “We didn’t know what to tell him,” Pritchett said. Now the company offers a $1,400 e-book bundle with hundreds of titles (“we thought we’d sell maybe 30 in a year”) and has sold more than 1,000 of them and he’s looking to create even higher priced content packages. “Some people will buy books by the pound if the price is right,” Pritchett said.
Logos also uses preorder discounts—the book is priced at a discount off list price if customers buy in advance of publication—and the earlier customers order the book the better the price. “It creates a sense of urgency to buy,” he said, noting that products that don’t attract consumer attention are cancelled. He compared the model to the Kickstarter and Threadless—“we’ve been doing it for 14 years,” he said—two of the current hot online models for crowdsourcing pricing.
But he also emphasized that most of these pricing strategies depend on a direct selling relationship to the consumer. Logos sells direct completely, he said, allowing it to avoid showrooming and gaining the ability to “control access, give better customer service and adjust your margin and pricing.”