Pricing and Licensing

[republished due to wrong location]


For everyone creating a product, pricing is a a very important issue. You don’t want to scare customers away but at the same time you want to get as much profit as you can. There are books and certain academics devote their whole lives to the creation of right pricing theories. I am not going to pretend like I know much about the subject. Basically, these are just my thoughts on the subject and that’s all.

Recently it’s becoming quite an issue for content publishers too. Publishing materials in a digital format brings it’s own set of issues. You see paper publications never last forever and often last for roughly 5-10 years. Electronic ones on the other hand could last forever! Also you can easily copy them and have multiple people using the same initial document at the same time. Now that is something new and causes quite a big problem for publishers. There is no longer the need to buy several copies of the same book. Also the perceived value of a publication decreases with digital publications.

There is no doubt about it, it would take a generation change for the problems to get resolved. Sociological aspects aside, what should you do today? I think you should be very careful when you decide on pricing of digital editions. You pricing HAS to be perceived as fair. You are not competing only with your regular competitors. You are actually competing your yourself too! If you are still publishing on paper then the digital edition competes with the paper one. Otherwise you are competing with yourself from yesterday. It is the perception that your prices have gone up that you want to avoid. And the perception that your prices have gone up brings governments down and most definitely destroys companies.

Consider this, you are saving some money by not paying for paper and printing. You are also able to publish a bit faster, hence you should be bring in a bit more revenues. You HAVE to pass on the savings, i.e. sell for a lower perceived price!

A word of warning to companies that charge based on different licences; why are you asking people for more money for the same product? Did it cost you more? If the answer is no you should know that there is something wrong with your pricing strategy! What you can however, do if you are a consultancy that produces syndicated reports, you can include a presentation of the results and charge more because of the included extra seats at the presentation. Now I am not saying that is really the way to go. The point is that if you charge more you have to offer perceptionally more! The last thing that any business wants to do it make the customer feel cheated. If you do, you will pay the price sooner or later.

Anyway, pricing goes much further than this, but the thing to remember is that you are in a market place and a market place is where you and your customer come together in agreement! A quote from Bill & Ted’s Excellent Adventures comes to mind. I went something like “Be excellent to each other” and on that note I leave you …



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