Price Segmentation in the Literary Fiction Market

We don’t usually (OK, ever) link to LitKicks, a site that discusses literature, but they have a recent post on the pricing strategy for literary fiction which is quite interesting. The rise of mass-market retailers has created pressure to issue books in paper back, rather than starting in higher-margin hardcover, then going to paperback. Publishers and authors feel the squeeze. Some authors have gone to electronic publishing, which lowers prices, but can improve margins. This currently represents a small part of the market, but as it becomes more common (I’ve bought a couple of electronic books this year), and as increasing display resolutions offer a more pleasing reading experience. However, Richard Nash also notes that their is room to grow at the high end, and indeed, spread out the prices for a book:

Now, I happen to think that it would be rather good if we could engage in a far more sophisticated level of price discrimination, much like the airlines do. Signed limited edition for one price ($100), regular hardcover at another (maybe as a subscription), high-end trade paperback (maybe with flaps) at another ($16, $17?), cheap borderline mass market on 35 lb. paper at another ($9, $10), and electronic at yet another ($5, or also as a subscription). There are so many levels at which a given person might be willing to commit to a book, I feel it behooves us to try to get more of the the dollars that lie below that Economics 101 price elasticity curve. That would sound crass in a business where we’re minting money, but that’s hardly the case in publishing! Plus, it gets more readers.

This is some creative thinking, especially for the stodgy publishing industry, and it offers a good example of spreading out the price curve for what is essentially a “single product.”

One Comment

  1. Amy

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