Price Elasticity Can Work: Dropping Ebook Price To $1 Catapulted Year-Old Book Onto NYT Best Seller List

from the look-at-that dept

Last month, we wrote about continuing confusion by the major publishers about ebook pricing, and how many wanted to keep them artificially high, because they still think that's the best way to maximize profits. However, in that post, we also noted that Rob Reid's funny sci-fi novel about aliens wanting to destroy the earth over our copyright laws (they owe all the money in the world to the record labels because they've been infringing), was being price-tested for a while at $1. The book had been out for over a year, and apparently Random House was willing to do some price experimentation. The result? The book that came out 15 months earlier jumped back in the NY Times best seller list, coming in the 22nd spot on the ebook fiction list.

Of course, anyone who's followed Gabe Newell at Valve knows all about how price elasticity works. Dropping your price significantly doesn't always mean a decrease in revenues or profits -- and can actually mean an increase due to significantly greater volume. So, again, this isn't revolutionary, but it's still quite amazing how resistant so many publishing companies are to this idea that selling for less might actually be a good idea. For all the talk about "devaluing the book," who is actually going to complain if lower prices bring in both more readers and more money?

Filed Under: ebooks, price elasticity, rob reid, year zero
Companies: random house