Pricing

Amazon’s Curious Case of the $2,630.52 Used Paperback

19 July 2018

From The New York Times:

Many booksellers on Amazon strive to sell their wares as cheaply as possible. That, after all, is usually how you make a sale in a competitive marketplace.

Other merchants favor a counterintuitive approach: Mark the price up to the moon.

“Zowie,” the romance author Deborah Macgillivray wrote on Twitter last month after she discovered copies of her 2009 novel, “One Snowy Knight,” being offered for four figures. One was going for “$2,630.52 & FREE Shipping,” she noted. Since other copies of the paperback were being sold elsewhere on Amazon for as little as 99 cents, she was perplexed.

“How many really sell at that price? Are they just hoping to snooker some poor soul?” Ms. Macgillivray wrote in an email. She noted that her blog had gotten an explosion in traffic from Russia. “Maybe Russian hackers do this in their spare time, making money on the side,” she said.

. . . .

“Amazon is driving us insane with its willingness to allow third-party vendors to sell authors’ books with zero oversight,” said Vida Engstrand, director of communications for Kensington, which published “One Snowy Knight.” “It’s maddening and just plain wrong.”

. . . .

The wild book prices were in the remote corners of the Amazon bookstore that the retailer does not pay much attention to, said Guru Hariharan, chief executive of Boomerang Commerce, which develops artificial intelligence technology for retailers and brands.

Third-party sellers, he said, come in all shapes and sizes — from well-respected national brands that are trying to maintain some independence from Amazon to entrepreneurial individuals who use Amazon’s marketplace as an arbitrage opportunity. These sellers list products they have access to, adjusting price and inventory to drive profits.

Then there are the wild pricing specialists, who sell both new and secondhand copies.

“By making these books appear scarce, they are trying to justify the exorbitant price that they have set,” said Mr. Hariharan, who led a team responsible for 15,000 online sellers when he worked at Amazon a decade ago.

Amazon said in a statement that “we actively monitor and remove” offers that violate its policies and that examples shown it by The Times — including the hardcover version of the scholarly study “William T. Vollmann: A Critical Companion,” which was featured for $3,204, more than 32 times the going price — were “in error, and have since been removed.” It declined to detail what its policies were.

. . . .

Buying books on Amazon can be confusing, because sometimes the exact same book can have more than one listing.

. . . .

“Let’s be honest,” said Peter Andrews, a former Amazon brand specialist who is manager of international client services at One Click Retail, a consulting firm. “If I’m selling a $10 book for $610, all I need to do is get one person to buy it and I’ve made $600. It’s just a matter of setting prices and wishful thinking.”

One of the sellers of Ms. Macgillivray’s book is named Red Rhino, which says it is based in North Carolina. The bookseller’s storefront on Amazon is curiously consistent. One of the first books on the store’s first page was Anthony Bourdain’s “Kitchen Confidential.” It was priced at $607, a hundred times what it cost elsewhere on Amazon.

All the books on the first few pages of the storefront — including such popular standbys as “Fahrenheit 451,” “The Very Hungry Caterpillar” and “1984” — also go for $600.

Link to the rest at The New York Times and thanks to Nate for the tip.

PG says buying dishwashing detergent in Kroger can be confusing because Costco can sell the exact same detergent for a different price. And so can 7-Eleven. With all the confused consumers, it’s a miracle that there are any clean dishes in existence. Maybe that’s why Costco also sells clean dishes.

 

Barnes & Noble Stores are (Finally) Price-Matching Their Website

6 December 2017

From The Digital Reader

For the longest time now B&N has been annoying their few remaining loyal customers by charging a higher price in store than on their website. This negated most of the value in buying a book in a bookstore (hence the ever declining same-store sales ).

B&N has not removed that policy, but they have revised it. A source told me, and I have confirmed with the B&N store in Manassas, that starting today B&N is matching the prices on its website for purchases made in store.

This is not an advertised sale, so there won’t be any signs or emails. But I was told that it is only available to B&N club members when they request it, and that this special will only run through the tenth of December.

Link to the rest at The Digital Reader

PG says this reflects very poorly on the marketing and customer relations savvy of Barnes & Noble management.

Case One: A customer comes into a Barnes & Noble store, browses for 20-30 minutes, then buys a book. Later, a friend tells the customer that Barnes & Noble is selling the same book online at a discount.

Case Two: A customer comes into a Barnes & Noble store, browses for 20-30 minutes, then someone else comes over to the same book section and the two briefly discuss a book. The second customer pulls out a smartphone and consults it for a couple of minutes. “I think Amazon is harming bookstores and other local retailers,” the second customer says, “but I can get this book online from Barnes & Noble for a lower price and I’m still supporting real bookstores.”

Case Three: A customer comes into a Barnes & Noble store, browses for 20-30 minutes, then another browser comes in and the two talk about one of their favorite authors who has just released a new book. The second customer pulls out the smartphone, consults it, then informs the first that Amazon has a better price, so the second customer is going to buy the new book and an earlier book by the same author and spend the same amount of money Barnes & Noble is charging for the new book alone.

PG suggests that all three of these scenarios (and many others) make the first customer feel like a sucker for paying in-store prices for a book at Barnes & Noble. Barnes & Noble is financially punishing her/him for not checking the price of a book online before purchasing it in the shop.

It seems a little sneaky, like Barnes & Noble is trying to exploit its less-knowledgeable customers. The store is selling the same product for two different prices without giving the in-store customer any extra value for coming to the store to make the purchase.

Instead of encouraging customers to come into the store, Barnes & Noble is encouraging at least some of them to go online, where Amazon and its prices are only a click away.

In PG’s ostentatiously humble opinion, these people don’t understand how to run a bookstore in 2017.

Five Years is Forever in Indie Publishing

6 October 2017

From Dean Wesley Smith:

Well, I spent the last two nights going back and trying to update and then even fisk my own post from five years ago about pricing. What a fool’s errand.

The post was so out of date, I just kept shaking my head in amazement and wondering who wrote it.

I was looking at it through 2017 glasses and a ton of new knowledge. Stunning, just stunning how many changes in this business have happened.

. . . .

Electronic Pricing… Novels

Genre matters. Range from $3.99 to $6.99, with romance being on the lower side, mystery on the upper side.

Length does not seem to matter at all.

All the studies have shown that you get above $6.99 and you start hitting price resistance for electronic books unless the book is something really special.

You go below $3.99 and you leave yourself no room for discounting or short-term sales.

You get down into the 99 cent area and you are in a trash ghetto.

And yes, I do know about the stupidity of ever-free. Just say no. However, doing a deep discount on a first novel of a series will get you readers. But make sure those readers pay something otherwise you attract the wrong kinds of readers. And secondly, you have to have the rest of the series priced decently for genre to make the first book discount look worthwhile.

. . . .

Paper Pricing… Novels

The old general rule of $2.00 profit in extended distribution in CreateSpace has become meaningless. Get your price down as much as you can. Under $10 is the best for trade paper. $12.99 is fine as well. Above that you hit resistance unless the book is longer.

Length not only matters, it causes the price to go up. You have no choice, but try to keep the cost down as low as possible.

If you want to try to do some bookstore distribution (a folly in 2017 because as Author Earnings have reported, almost 80% of paper books are sold online these days. But if you want to try, go to IngramSpark to get into the Ingram Catalog. (Yes, you can do two editions, one on CreateSpace just for Amazon and the other at Ingram for larger distribution.

Link to the rest at Dean Wesley Smith

Here’s a link to Dean Smith’s books. If you like an author’s post, you can show your appreciation by checking out their books.

The Visibility Gambit

6 September 2017

From David Gaughran at Let’s Get Digital:

Kindle Unlimited has received a fair bit of bad press over the last couple of years – some of it from me – but I want to balance that by looking at the positives.

Most pertinent is KU’s popularity with readers, meaning there can be huge opportunity for authors. Especially so if you make full use of the tools Amazon gives you, and understand that it’s all about visibility.

Enrolling in KU comes at a well-documented cost: exclusivity. But it’s the potential benefits I want to focus on today because some of that might be getting lost in the (well justified) complaints about scammers, transparency, and falling pay rates. Even though those rates have dropped by around 20% this year alone, KU is still paying out more dollars to indie authors than all non-Amazon retailers combined. And I think indies need to be selfish and do what’s best for them – whatever they decide that may be.

The other price of staying out of KU is arguably the bigger one: visibility. Each borrow is counted as a sale for rank purposes, and borrows can make up 50%-80% (or more) of a KU book’s rank – unless you are down in the telephone number rankings and invisible to everyone.

Borrows Cannibalizing Sales

When KU first launched the big debate among self-publishers was whether borrows would cannibalize sales – an important consideration when sales are more lucrative and puny humans tend to need food several times a day.

And it turns out they do, but of the books not enrolled in KU.

Think about it from the reader’s perspective, where the experience really is frictionless. Let’s say you have already shelled out for the KU subscription. You go scooting around the charts on Amazon looking for a new read and spot a few books that look interesting. One is $2.99, the next is $7.99, and the other is in KU. Which do you download?

The answer is obvious.

Link to the rest at Let’s Get Digital

Amazon’s Naggar tells publishers to slash e-book prices

5 September 2017

From The Bookseller:

Amazon’s publishing chief David Naggar has said publishers should slash their e-book prices to 99p to sell more books. However, publishers have retorted that this move would be “economically unwise” and would damage the whole book supply chain.

Speaking to the Daily Mail, David Naggar, v.p. of Kindle Content at Amazon.com, suggested that traditional publishers should follow the lead of self-published authors when setting e-book prices, arguing that a lower price point is a form of marketing which would encourge more people to buy digital books.

“I look at price as a tool for visibility. You can either spend a lot of money on marketing or you can invest it in a super-low price until they get the flywheel going of the recommendation engines – and this is just for Amazon”, Naggar said.

He added: “What self-published authors will do is they will publish a book and sell it for 99p right out of the gate… Publishers [with new authors] could much more afford to do that than self-published authors. If I have two books in front of me and I don’t know either author, and one book costs £9.99 and the other is £2.99, which one am I going to take?”

However, professionals in the industry have pointed out there are big differences between traditional and self-publishing business models, with Nicola Solomon, chief executive of the Society of Authors, branding Naggar’s comments as “naïve”.

“He makes a direct comparison between publishing companies and self-published authors, but conveniently avoids the fact that the economics are completely different”, she said. “Self-published authors on the Kindle Direct Publishing (KDP) platform earn between 35%-70% of the e-book retail price (where traditionally-published authors earn 25% royalty on e-books)– that’s why they can discount to that level and still enjoy a decent income if their book is successful. But I doubt Naggar has considered the likely impact on the incomes of traditionally published authors if their e-books were discounted to 99p as standard. The routine discounting and implied devaluing of printed books – often at the authors’ expense – is already a big problem. The last thing we need is to encourage even more discounting on digital platforms.”

Stephen Lotinga, chief executive of the Publisher’s Association, also noted the difference in business models and added that Amazon thinks they have publishers “over a barrel” because of its high e-book market share – estimated to be around 90% in the UK.

. . . .

According to statistics from the Publishers Association’s Annual Yearbook, sales of trade e-books fell by 17% in 2016 to £204m.

Alessandro Gallenzi, publisher at Alma Books, argued that publishing books and nurturing authors requires long-term investment and that lowering the selling price of titles is “not only economically unwise”, but “damages the whole book supply chain – author-agent-publisher-wholesaler-bookseller-end user”. He added that cheap prices damage authors the most because it “devalues” and “homogenises” their work.

He added: “It is damaging also, in the longer term, for Amazon, because it is devaluing its offer across the board, when in fact it should be looking at encouraging publishers to increase their available e-book range. I think some publishers (and authors) are still reluctant to see their books be digitised, and perhaps Amazon’s drive towards skeleton pricing is one of the deterrents. I know I have already said it, but I’ll say it again: a book is not like a banana!”

. . . .

However, Matthew Lynn, c.e.o. of e-book publisher Endeavour Press, which recently launched a print arm, on the contrary maintained that “the market decides the price, and it’s the job of the publisher to make money at that price”, adding: “If you can’t make money, then lower your costs”.

. . . .

Andrew Franklin, m.d. of Profile Books, added that the self-published 99p Amazon e-book “bears no comparison whatsoever to a real book properly published”, and alluded to Amazon’s unwillingness to share data about the e-book market.

“The self-published 99p Amazon e-book bears no comparison whatsoever to a real book properly published. That is why the successful self-published authors will always move to mainstream publishers when they have a chance,” he said. “And there are almost no examples of people moving the other way. Of course I respect David Naggar’s position.  He has access to an enormous amount of data that nobody else ever sees. But I wholly disagree.”

Link to the rest at The Bookseller

PG says:

  1. Amazon sells more books than anyone else.
  2. Amazon sells more ebooks than anybody else.
  3. Amazon owns the world’s largest cloud computing system, Amazon Web Services.
  4. Among many other things, Amazon uses AWS to track:
    1. the impact of pricing upon the behavior of hundreds of millions of customers
    2. choosing from about 400 million different products (including books)
    3. sold and priced by hundreds of thousands of independent merchants (and Amazon)
    4. on a world-wide basis

But the chief executive of the Society of Authors (who hasn’t performed a math calculation beyond determining the amount of a restaurant tip in dozens of years and who calls tech support to reboot his iPhone several times a week) knows more about the optimum price of a book than Amazon does.

The cruelest insult of all was mentioning that self-published authors understand ebook pricing better than the humphing old boys of British publishing.

PG suggests that when someone says Amazon is devaluing books, what they really mean is Amazon is devaluing publishers.

But, nurturing!

It costs money to nurture. The price of nurts has soared over the past several years. Amazon is a mortal threat to nurticulture.

.

.

Save the Nurts!

What I’ve learned from giving my ebook away

18 August 2017

From Chris Meadows via TeleRead:

So, I gave away a total of 703 copies of my ebook, The Geek’s Guide to Indianapolis, over the last five days, Friday through Tuesday. That’s considerably more than the 200 or so I gave away the last time I made it free, over just a Saturday and Sunday. What did I discover over the course of this giveaway?

For one thing, giving your ebook away only over the weekend might be a mistake; my two busiest days, in which I gave away nearly 200 copies each, were Friday and Monday. Saturday, Sunday, and Tuesday all hovered around the 100 mark.

Out of the giveaway, I picked up seven more five-star reviews, for a grand total of ten. It’s really rather impressive. I’m surprised i haven’t picked up any one-star “spoilers” yet, from people who weren’t as impressed—especially after I was fairly blatant in promoting it some places, such as Reddit. (But please don’t consider this an invitation!)

. . . .

And the promotion has had some other rewards as well. For one thing, I did pick up 1,353 total Kindle Unlimited page views over the weekend. Part of the reason I’d put the book up for free was that I’d heard that might happen. The only thing is, I’m not sure how much actual cash those reads are likely to translate into. How can I tell?

That’s not the only reward, either. A bit of an unexpected one is that I picked up $58.50 in Amazon Affiliate referral fees over the last week. That’s about half of what I’ve made from the book itself since first publishing it. A few of those are recognizably from Teleread articles I’ve done, such as Ready Player One or a SanDisk 32 GB SD card, but most of them are completely unfamiliar. I can only imagine that a lot of the people who followed the link to my book—which had my affiliate code built in—ended up making other purchases while they were there.

Link to the rest at TeleRead

Amazon’s Taking Another Bite of the Publishing Pie

10 May 2017

From The Authors Guild:

The Authors Guild is deeply disturbed by Amazon’s new policy of allowing third-party book resellers to claim featured status in the “buy boxes” on Amazon. In a move that’s very likely to cut into publishing industry profits even more, Amazon will no longer automatically assign the main buy box for each hard copy, paper, audio and Kindle edition to the copies that Amazon distributes on behalf of the book’s publisher. Rather, a secret algorithm—which reportedly weighs factors such as price, availability, and delivery time, will now decide which seller (i.e., Amazon or a third party re-seller) gets the buy box. Amazon’s new policy states that “eligible sellers will be able to compete for the buy box for Books in new condition.” What this means is that second-hand book distributors—who often sell at extremely steep discounts—will be able to claim that premium real estate if they can beat out the publishers’ copies under the algorithm.

Until now, the second-hand book sellers, who offer books for as little as a penny, have been listed below the featured option, in much smaller font, as second-tier “Used” and “New” copies on a book’s product page, never as the default seller. While Amazon alone has the statistics, common sense tells us that the vast majority of purchases are made via the main buy buttons and not through the links to the other “new” and “used” copies. So, when the buy button is assigned to a third-party seller because its prices are lower and it can deliver quickly, most of the sales will be redirected to that third-party seller. In other words, those $.01 “new” or “new condition” copies that seem to be available for almost every book may well end up featured. (As a practical matter, most second-hand sellers today are slower than Amazon at fulfilling hard-copy purchases, but that could change and we do not know how Amazon weighs the factors.) The problem with this outcome from an author’s perspective is that neither the publisher nor the author gets a cent back from those third-party sales. Only Amazon and the reseller share in the profits. This has the potential to decimate authors’ and publishers’ earnings from many books, especially backlist books. (If you’ve noticed this happening on your own books’ product pages, please let us know at staff@authorsguild.org.)

One might wonder how there can be “new” copies offered by someone other than the publisher and how they can be sold for $.01 plus shipping (the high shipping costs are apparently where these sellers make their profit). The Authors Guild has spoken to several major publishers in the past year about where all these second-hand “new” copies come from, and no one seems to really know. Some surmise that they are review copies, but there are far too many cut-rate “new” copies for them all to be review copies. Could they be returns from bookstores that never made it back to the publisher? Did they fall off the back of a truck? We don’t know. What we do know is that the resellers must be acquiring them at cut-rate price and that there appear to be enough of these copies available that they could replace sales for the truly new copies—those that bring money to the publisher and royalties to the author.

. . . .

Publishers and authors report that Amazon’s justification for its new move is that every other product sold on Amazon works this “best offer” way, and that Amazon has treated books in a special way—until now, that is—by maintaining the publisher’s copy as the first listed seller. In reality, that is not the case for other copyrighted works.

Link to the rest at The Authors Guild and thanks to Jacqueline for the tip.

After everything Big Publishing and The Authors Guild have done to help Amazon over the years, how could Amazon possibly do something like this?

And, of course, Amazon invented the practice of selling books for less than their list price so more readers would buy them.

PG says this couldn’t happen to a more deserving group of people than those who inhabit the traditional publishing world and have been mistreating authors for years.

In point of fact, Amazon knows far more about pricing books to optimize sales and profits than Big Publishing does.

The biggest threat to the future of Big Publishing is the people who run Big Publishing.

How Online Shopping Makes Suckers of Us All

28 April 2017

From The Atlantic:

As christmas approached in 2015, the price of pumpkin-pie spice went wild. It didn’t soar, as an economics textbook might suggest. Nor did it crash. It just started vibrating between two quantum states. Amazon’s price for a one-ounce jar was either $4.49 or $8.99, depending on when you looked. Nearly a year later, as Thanksgiving 2016 approached, the price again began whipsawing between two different points, this time $3.36 and $4.69.

We live in the age of the variable airfare, the surge-priced ride, the pay-what-you-want Radiohead album, and other novel price developments. But what was this? Some weird computer glitch? More like a deliberate glitch, it seems. “It’s most likely a strategy to get more data and test the right price,” Guru Hariharan explained, after I had sketched the pattern on a whiteboard.

. . . .

The right price—the one that will extract the most profit from consumers’ wallets—has become the fixation of a large and growing number of quantitative types, many of them economists who have left academia for Silicon Valley. It’s also the preoccupation of Boomerang Commerce, a five-year-old start-up founded by Hariharan, an Amazon alum. He says these sorts of price experiments have become a routine part of finding that right price—and refinding it, because the right price can change by the day or even by the hour. (Amazon says its price changes are not attempts to gather data on customers’ spending habits, but rather to give shoppers the lowest price out there.)

. . . .

It may come as a surprise that, in buying a seasonal pie ingredient, you might be participating in a carefully designed social-science experiment. But this is what online comparison shopping hath wrought. Simply put: Our ability to know the price of anything, anytime, anywhere, has given us, the consumers, so much power that retailers—in a desperate effort to regain the upper hand, or at least avoid extinction—are now staring back through the screen. They are comparison shopping us.

. . . .

“I don’t think anyone could have predicted how sophisticated these algorithms have become,” says Robert Dolan, a marketing professor at Harvard. “I certainly didn’t.” The price of a can of soda in a vending machine can now vary with the temperature outside. The price of the headphones Google recommends may depend on how budget-conscious your web history shows you to be, one study found. For shoppers, that means price—not the one offered to you right now, but the one offered to you 20 minutes from now, or the one offered to me, or to your neighbor—may become an increasingly unknowable thing. “Many moons ago, there used to be one price for something,” Dolan notes. Now the simplest of questions—what’s the true price of pumpkin-pie spice?—is subject to a Heisenberg level of uncertainty.

. . . .

The Quakers—including a New York merchant named Rowland H. Macy—had never believed in setting different prices for different people. Wanamaker, a Presbyterian operating in Quaker Philadelphia, opened his Grand Depot under the principle of “One price to all; no favoritism.” Other merchants saw the practical benefits of Macy’s and Wanamaker’s prix fixe policies. As they staffed up their new department stores, it was expensive to train hundreds of clerks in the art of haggling. Fixed prices offered a measure of predictability to bookkeeping, sped up the sales process, and made possible the proliferation of printed retail ads highlighting a given price for a given good.

Companies like General Motors found an up-front way of recovering some of the lost profit. In the 1920s, GM aligned its various car brands into a finely graduated price hierarchy: “Chevrolet for the hoi polloi,” Fortune magazine put it, “Pontiac … for the poor but proud, Oldsmobile for the comfortable but discreet, Buick for the striving, Cadillac for the rich.” The policy—“a car for every purse and purpose,” GM called it—was a means of customer sorting, but the customers did the sorting themselves.

. . . .

Thomas Nagle was teaching economics at the University of Chicago in the early 1980s when, he recalls, the university acquired the data from the grocery chain Jewel’s newly installed checkout scanners. “Everyone was thrilled,” says Nagle, now a senior adviser specializing in pricing at Deloitte. “We’d been relying on all these contrived surveys: ‘Given these options at these prices, what would you do?’ But the real world is not a controlled experiment.”

The Jewel data overturned a lot of what he’d been teaching. For instance, he’d professed that ending prices with .99 or .98, instead of just rounding up to the next dollar, did not boost sales. The practice was merely an artifact, the existing literature said, of an age when owners wanted to force cashiers to open the register to make change, in order to prevent them from pocketing the money from a sale. “It turned out,” Nagle recollects, “that ending prices in .99 wasn’t big for cars and other big-ticket items where you pay a lot of attention. But in the grocery store, the effect was huge!”

The effect, now known as “left-digit bias,” had not shown up in lab experiments, because participants, presented with a limited number of decisions, were able to approach every hypothetical purchase like a math problem. But of course in real life, Nagle admits, “if you did that, it would take you all day to go to the grocery store.” Disregarding the digits to the right side of the decimal point lets you get home and make dinner.

Link to the rest at The Atlantic and thanks to Nirmala for the tip.

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