Tuesday, July 19, 2011

TUESDAY TIPS AND TIDBITS – The Dollar Menu

McDonald’s has a ‘Dollar Menu.’ Two pies for a dollar. Any size soft drink for a dollar. McChicken or McDouble sandwich for a dollar. Small fries for a dollar. You get the idea ... and so did a lot of other fast-food restaurants. Wendy’s and Burger King have a Dollar Menu too – great for hungry customers on a budget needing a quick meal on the go. Not a whole lotta food, but enough to get you by. And sometimes the food is not that bad, as far as fast food goes. Other retailers have tried the same approach. One is the Dollar Store, where almost everything in the store is priced for just a dollar. Need a toothbrush and a tube of toothpaste to go with it? A dollar each. How about a brand-name candy bar or a bottle of your favorite carbonated drink? At the Dollar Store, they’re just a dollar. But, of course, the Dollar Store has other things for sale, and those items are more than a dollar. And a lot of time some of those dollar items can be found elsewhere for less than a dollar. But the ‘almost everything’s a dollar’ ploy gets you in the Dollar Store with that unbelievable promise of finding lots and lots of everyday stuff for just a dollar. Most people fall for that lure without stopping to consider that these days a dollar doesn’t buy you much. That candy bar is gone in a few bites. And that tube of toothpaste is only good for a few squeezes. It’s just enough to get you by.

The online retailer Amazon has also seen the value of offering a Dollar Menu to its customers. Books for 99-cents, and many, many books for free are now being offered on Amazon, and the online giant hopes these ‘loss leaders’ will lure customers into buying companion or related items that are priced more in line with their usual retail offerings. This ‘lure ‘em in’ ploy may backfire for a while, resulting in sales only of the cheap stuff, to the detriment of sales of regular-priced items. But every once in a while, customers will want more that a McChicken or a McDouble, yearning instead for a Big Mac combo complete with fries and a drink. Maybe they’ve read that 99-cent first installment of a series and really liked it – liked it so much that they want more and are willing to pony up two, three, or four times as much to see how that series plays out. So, even though the Amazon retail planners may seem to be losing their britches on this Dollar Menu ploy, they are in fact gambling that their customers will find enough wheat within the chaff to spend some serious bread.

But what does this mean for authors? Well, there’s good news, and then there’s not so good news. But ultimately, whether it’s good or bad depends on how you choose to look at it.

Here’s the kind-of-good news first. Best-selling authors who have a great readership are not going to have to offer their current or recent work for little or nothing because, for the most part, their sales will not be adversely affected by all this cheap and free reading material. Why? Because they already have a loyal readership who will buy their books on name recognition alone. However, their publishers may be tempted to offer ‘teaser’ ebooks for 99-cents ... just a few chapters of a larger book, or a short-story tie-in for a popular series with a new full-length installment debuting. These teaser books help introduce bargain-hunters to their series, readers who may not already be reading these series. However, serious bargain-hunters will be annoyed at spending 99-cents for a short story when they are actually looking for full-length novels.

The authors who may benefit from pricing their novel-length ebooks at 99-cents are the unknown authors who can’t seem to catch a break with readers. But they’re more likely to benefit only if they price a lead-in book for a series at 99-cents. If authors have more books to offer at more reasonable retail prices, and readers like their 99-center, then this loss-leader might actually create a following for the entire series. This ploy worked for Amanda Hocking. However, she had several books and series available, and she busted her butt chatting and blogging and making a presence on forums to create a following among readers. Plus she stayed true to her genre and offered a whole slew of books to the same kind of readership without starting fresh by reinventing the wheel with every new series.

The not so good news is, a one-trick-pony author who has only one book for sale would only benefit by reducing the price temporarily to 99-cents in order to spur sales and readership. But price alone may not be enough to get readers’ attention, especially if there are thousands of books for free or 99-cents for readers to choose from. Further, other relatively unknown authors who choose not to reduce their price on their books may suffer a slump in sales as more and more desperate authors try the 99-cent pricing ploy just to get someone to read their books.

The end result is that readers may actually come to expect all unknown authors’ work to be offered for less, and equate it as being worth less than the work of more popular and better-known authors. Think candy bar at the Dollar Store versus a premium packaged select box of chocolates at an exclusive chocolate retailer like Godiva. The fact is, the surge in the free or 99-cent market has cut into book sales of many lesser-known authors who want to price their books similar to the pricing structure of popular authors.

Ultimately it’s the readers who benefit from this a boon of cheap books. And the dynamic of this pricing scenario is in fact the well-known model of supply and demand. As supply increases above consumer demand, prices go down to create sales incentives. With more and more self-published authors making their books available, the supply of books has increased. And with copyright-free material flooding the market (think old classics and public domain books offered through the Gutenberg Project), readers are inundated with choices. Not to mention all the desperate lead-in bargains offered by traditional publishers relatively new to the game of ebook selling.

Still, the truth remains that not all readers can read 18 hours a day. Many can only read during downtime, like during commuter train rides or while waiting for a doctor appointment, and their reading choices must necessarily be extremely selective. So, not everyone will sample free and 99-cent books willy-nilly, just because the price seems too good to pass up. Readers who read constantly and can’t keep up with their own consumption will naturally sample the free or 99-cent selections first before shelling out ten bucks for an ebook by a best-selling author.

In the end, most readers will judge free and 99-cent books by the same standards they judge any other book, regardless of the price, while still believing that in the world of fast food and economy merchandise, you get what you pay for. A mass-produced candy bar is not going to have the same flavor and consistency of an exquisite – and expensive – piece of chocolate. Yet inevitably the candy bar will be compared to the fine chocolate, despite the relative price and manufacturing differences. Because the mass-market candy is priced lower, people may automatically assume it is of lower quality, when in fact that is not always the case. But subconsciously this type of price and quality comparison cannot be avoided.

Truthfully, no author should bargain-price a book because it is not well written, but that is exactly what many readers may believe and expect from a 99-cent book. Why? Because many self-published authors don’t know the first thing about good writing, or don’t care. They just want their book out there, not realizing that putting a book out that is not of publishable quality hurts their reputation as well as every other author who legitimately tries to achieve quality writing to produce a quality book. Authors who price their books at 99-cents or for free should be prepared for these oftentimes uncomplimentary comparisons and reader assessments, even when they are not warranted.

Given all these considerations, and the fact that royalties on sales will be minimal because of Amazon’s 35% royalty pricing structure for books priced below $2.99, many authors may be hesitant to price their work at 99-cents or free. It is a difficult decision to make. The up-side is that the price can always be changed within 48 hours. So, if your books aren’t selling, or sales are nearly nonexistent, consider picking a ‘loss leader’ in your collection of work and try bargain-pricing it for a month or two to see if this helps. If it doesn’t, you haven’t lost much of anything. You can also try other tactics, like ebook giveaways on blogs or getting your book listed on bargain-book blogs. By closely tracking your daily sales, you can experiment freely to see what works for you and what doesn’t. The Dollar Menu is just one of many promotional options, and every author should consider it, even if there’s no plan to implement it ... at least for right now.

Patricia Morrison, Penumbra Publishing

1 comment:

Chaz Wood said...

Interesting piece...somewhat inspirational too as my own digital sales are virtually non-existent these days, and am scratching my brain trying to find new ways to catch any passing trade I can.