Publishing companies need to innovate regularly to create new value for their customers. But innovation in itself should not be the final goal. Not only must you spot opportunities, but you should capture value so you get paid for it, too.
There are two kinds of innovation. One is in value creation and the other is in value capture. Many businesses stop the creative process when a good idea is developed, believing that once it is implemented it will generate money. But unless value capture –maximizing the return on your idea – is also contemplated, you can leave money on the table.
For example, publishers look to authors as the source of ideas. But when a significantly new concept is acquired, the process typically falls back into a routine. The content is published and distributed as has always been done — through bookstores (bricks and clicks). After a certain period the tome is relegated to backlist status, profit is not maximized and potential gains lost forever.
As revenue decreases, thoughts of increasing sales often fall back on pricing issues. But changing the price of a book from $15.95 to $14.95 or running a special offer for a limited time do not constitute pricing innovation. When sales and revenue bottom out, the blame is placed on the product life cycle, the belief that the book has run its course and it is time to replace it with a fresher title.
But a key to increasing revenue and profits is not to publish more books, but to sell those you already have on hand. Here are some ways in which you can apply a little strategic thinking to increase the return you get from your ideas about selling your existing books.
The most familiar is value-based pricing. This occurs when the publisher charges according to the content’s worth to the customer and stops setting prices by simply marking up production cost or calibrating against competitive prices. The challenge is how to determine the perceived value. When selling to corporate buyers you can use your presentation and negotiating skills to communicate the benefits of your content, increase the value of your proposal, and subsequently the amount of money you receive for the sale.
Change the value carrier. What is the value carrier in your offering? It is the part of the experience on which you hang your price tag. This could be your slogan (“The only book that gives you…”), or it might be your author’s reputation. Ask yourself two questions, “Is my price tag affixed to the right part of the package?” and “What would happen if I moved it?”
Bundling represents another way to change the value carrier. In this practice you offer several products as a package, and the total price is less than purchasing each individual piece separately. You could bundle a backlist title with a popular one in your frontlist (or perhaps from a different author). A variation is the all-inclusive offer. Here you include a book (or books) as part of a seminar or consulting package. These actions make price comparisons more difficult.
In addition, you can increase the value of your book to those who are mentioned in it. When you name a person or company in your text, it becomes worth it for them to help you promote it. You might even get people or companies to pay you to include their name in your book.
Get a corporation to sponsor your book. Two bachelors researched a book about why some marriages last so long. In Project Everlasting they induced a company to give them a motor home in which they could travel the country interviewing people in successful marriages. They also received sponsorship money from hotel chains, jewelers and 800-FLOWERS.
Another technique is to auction your books. This could work not only on an auction site, but if your book is being used as a fundraiser by an association or school. The downside of auctioning is that the final price may be below what you had expected. You can eliminate that problem by setting a minimum bid as Association of Publishers for Special Sales (APSS) did when auctioning seats to its annual Book Selling University. The auction for each day began with a minimum bid.
Demand-driven pricing relies on fluctuations in demand to drive changes in price. This could apply in cases where you are selling seats to your seminar or workshop. An early-bird special might entice early adopters to register, with later deals to lure laggards.
You could also mimic Priceline and allow prospective buyers to name their own price. You might use this technique as the starting point when negotiating with a corporate buyer interested in purchasing a large quantity of your books. The buyer will start with a low offer, expecting you to respond with a higher price. Generally the final price is somewhere in between the two.
Use your book in a razor-and-blades model similar to a company like Gillette selling a razor inexpensively (or giving it away) to lock you into years of purchasing blades for it, thus securing a future revenue stream. An example is to give away the first chapter of your book through your website, enticing people to purchase the remaining chapters. A continuity program is another example of this technique, as is giving your book away as an enticement to attend your workshop.
Change the segment to which you sell. Instead of selling your children’s book through B&N and Amazon.com, sell it to children’s hospitals, children’s libraries, Parent-Teacher Organizations, private schools, home-schooling groups, daycare centers and moms’ clubs. When selling directly to buyers in these categories you might price your books based on the quantities purchased. Since there are no distribution discounts or returnable books you can be more profitable even at a lower price.
Sell books in large quantities to corporate buyers, associations or even the military. This introduces pricing incentives such as coupons and self-liquidators. See several articles on this topic at Book Marketing Works among many other free articles.
The lesson is not to set a price and live with it for the life of the title. Be innovative. Devise new ways to present the value you offer buyers and charge an amount that reflects that value. You should see a profitable return on your ideas.
Brian Jud is the Executive Director of the Association of Publishers for Special Sales and author of How to Make Real Money Selling Books.