I saw this tweet: #writechat RT @grumblecore People spend $3 for coffee that takes moments to pour but balk at spending $1 on ebook that took months to write.
— Josh Evans (@JoshKEvans) December 27, 2011
— Josh Evans (@JoshKEvans) December 27, 2011
This tweet is a common refrain among authors, in particular independent authors.
And it's one we need to stop making because it just reinforces the fact that we don't understand markets and economics.
And more importantly it shows you are focusing on the wrong people.
And it's one we need to stop making because it just reinforces the fact that we don't understand markets and economics.
And more importantly it shows you are focusing on the wrong people.
Starbucks Is Not About The Coffee
The first thing to understand about the price of a Starbucks coffee drink is that Starbucks is not about the coffee. Starbucks managed to change coffee from something that was a pure commodity where the goal for anyone who sold it was to sell it as cheap as you could. And the taste reflected that.
Starbucks pulled a Captain Kirk from Star Trek in the KobayashiMaru test - they changed the conditions of the game.
Instead of just pouring you a mere cup of coffee - they served dozens of varieties of coffee - served by baristas who were trained on how to expertly make these drinks.
Additionally they focused on the experience - nice comfy chairs, nice music and turned it into a destination.
Where you are not paying just for coffee - but rather the experience.
And people do pay for the coffee drink (really people don't buy coffee at Starbucks, mostly they buy sugar-water laced with a hint of coffee) - not just because it tastes good but because they like to be reminded of the experience.
Other factors also play into this - the need to look/feel hip (e.g. you're friends are drinking Starbucks so you want to too), the need to splurge a little luxury on yourself (as luxuries go Starbucks is affordable) and of course sugar addiction (chemically speaking sugar affects the brain similar as an opiate which is why it's so damn hard to give up).
And to their credit Starbucks did a very good job at managing the experience - almost too good. For example they forced McDonald's to update their restaurants to be more comfortable (we have a new McDonald's near my house and it has padded leather booths and even leather chairs). They even forced them to change their coffee - it's actually pretty good now (I prefer McDonald's plain coffee over Starbucks). You can despise McDonald's if you want - but you cannot deny their success at knowing what millions of people want to buy.
Though one twist on the McDonald's vs Starbucks - McDonald's is setup to be low-cost provider and to make money on things beyond coffee. So now they are gaining upper-hand on Starbucks in particular since they can leverage their ability to sell other things to cover costs for people who want to spend all day there.
On the other hand Starbucks has had to make their stores less inviting (notice how many hard-back wood chairs now) to discourage people from staying much longer than just having their cup of coffee.
Tip #1- Think about how you can help create experiences and not just books - example a UStream chat
Starbucks pulled a Captain Kirk from Star Trek in the KobayashiMaru test - they changed the conditions of the game.
Instead of just pouring you a mere cup of coffee - they served dozens of varieties of coffee - served by baristas who were trained on how to expertly make these drinks.
Additionally they focused on the experience - nice comfy chairs, nice music and turned it into a destination.
Where you are not paying just for coffee - but rather the experience.
And people do pay for the coffee drink (really people don't buy coffee at Starbucks, mostly they buy sugar-water laced with a hint of coffee) - not just because it tastes good but because they like to be reminded of the experience.
Other factors also play into this - the need to look/feel hip (e.g. you're friends are drinking Starbucks so you want to too), the need to splurge a little luxury on yourself (as luxuries go Starbucks is affordable) and of course sugar addiction (chemically speaking sugar affects the brain similar as an opiate which is why it's so damn hard to give up).
And to their credit Starbucks did a very good job at managing the experience - almost too good. For example they forced McDonald's to update their restaurants to be more comfortable (we have a new McDonald's near my house and it has padded leather booths and even leather chairs). They even forced them to change their coffee - it's actually pretty good now (I prefer McDonald's plain coffee over Starbucks). You can despise McDonald's if you want - but you cannot deny their success at knowing what millions of people want to buy.
Though one twist on the McDonald's vs Starbucks - McDonald's is setup to be low-cost provider and to make money on things beyond coffee. So now they are gaining upper-hand on Starbucks in particular since they can leverage their ability to sell other things to cover costs for people who want to spend all day there.
On the other hand Starbucks has had to make their stores less inviting (notice how many hard-back wood chairs now) to discourage people from staying much longer than just having their cup of coffee.
Tip #1- Think about how you can help create experiences and not just books - example a UStream chat
Focus On Creating Super Fans
There are three types of people who will read your books (or buy your music or your painting or movie):
- Super-Fans
- Fans
- Readers
Super-Fans
Super-fans are the audience you want to grow the most. They are the ones who will do the best job of promoting your books (for free!) and will spend the most.
What is a super-fan. A super-fan is someone who will spend thousands of dollars to come here you speak across the country (or as I did to fly across country to see Guns n' Roses in their first US concert in years because they are my all time favorite band and I never got to see them live as a kid and absolutely didn't want to risk the tour collapsing before they came to Dallas).
They are the ones who will pay handsomely for a Cemetery Dance edition of your book.
These are the people you will reward by letting them get free copies or cheap copies. Because they are the smallest portion of the three types. And they will help grow the next two groups.
These are the ones who will religiously check your website, Twitter, etc to look for updates on new stuff.
What is a super-fan. A super-fan is someone who will spend thousands of dollars to come here you speak across the country (or as I did to fly across country to see Guns n' Roses in their first US concert in years because they are my all time favorite band and I never got to see them live as a kid and absolutely didn't want to risk the tour collapsing before they came to Dallas).
They are the ones who will pay handsomely for a Cemetery Dance edition of your book.
These are the people you will reward by letting them get free copies or cheap copies. Because they are the smallest portion of the three types. And they will help grow the next two groups.
These are the ones who will religiously check your website, Twitter, etc to look for updates on new stuff.
Fans
Fans are people who read your books when they come out. If the price is right (e.g. less than a Starbucks coffee but doesn't have to a dollar) they might even buy as soon as they get prompted for it.
While they will not buy a Cemetery Dance version - they will understand why those who do - do. They might even wish to buy something like it if they have a particularly favorite book of yours (e.g. maybe a poster of the cover).
These are the most important ones to get on your mailing list because while they want to know when you have new stuff - they are not super-fans so won't be pro-active in searching you out.
While they will not buy a Cemetery Dance version - they will understand why those who do - do. They might even wish to buy something like it if they have a particularly favorite book of yours (e.g. maybe a poster of the cover).
These are the most important ones to get on your mailing list because while they want to know when you have new stuff - they are not super-fans so won't be pro-active in searching you out.
Readers
This is the largest group. It's people who read books but generally only after there has been some indication the book is any good (e.g. the fans have bought up copies and posted reviews).
This is the most price sensitive crowd - but it doesn't mean you should pander to them. The economics has to add up.
For example at $3.99 you only need to sell 5,000 copies to earn the same as you would if 40,000 people bought at 99-cents.
This is the group you're really testing your pricing strategy out on. Don't worry about those who bitch and complain about all books need to be free or a buck.
Instead do empirical testing - as you sell 500 books (or a 1000), increase the price of the book a dollar until the sales start to drop off. Because in reality nobody knows how much someone might pay for your book. That's why you need to test.
This is a strategy that ebooks enables that cannot be done in physical books.
Tip #2 - Focus your engagement on people who give you a review or real interest so that you can grow them into fans and super-fans
This is the most price sensitive crowd - but it doesn't mean you should pander to them. The economics has to add up.
For example at $3.99 you only need to sell 5,000 copies to earn the same as you would if 40,000 people bought at 99-cents.
This is the group you're really testing your pricing strategy out on. Don't worry about those who bitch and complain about all books need to be free or a buck.
Instead do empirical testing - as you sell 500 books (or a 1000), increase the price of the book a dollar until the sales start to drop off. Because in reality nobody knows how much someone might pay for your book. That's why you need to test.
This is a strategy that ebooks enables that cannot be done in physical books.
Tip #2 - Focus your engagement on people who give you a review or real interest so that you can grow them into fans and super-fans
Don't Do This For The Money to read more....
Mark Wilcox
Mark Wilcox
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