The magic of dynamic pricing

Check this post The magic of dynamic pricing from Seth’s Blog:

Status quo seekers in publishing are now talking about delaying Kindle and other ebook editions of their new books. The idea would be to come out with a hardcover, then a few months later an ebook, then a year later a paperback.

This is lame-brained thinking on many levels, one involving teaching the market a lesson. Leaving that aside, it ignores the magic of dynamic pricing.

When you produce a physical good like a book, it’s really hard to change the price over time, especially if there are retail stores involved. But changing the price on an electronic good is trivially easy.

So, for example, you could charge $24 for the Kindle edition for the first two weeks, then $15 for the next two weeks and then $9 for the year after that. Once it’s a backlist classic, it could cost $2…

Or, thinking about how you might create launch excitement, you could reverse it. $2 the first day, $5 the first week, then $9 later. Better hurry!

Or, to get more sophisticated, you could reward the market for getting excited. What if the price for everyone drops if enough people pre-order it?

This isn’t just about books, of course. It’s about anything where you have the ability to change pricing based on time or demand… tolls, music, phone calls, consulting… We need to stop assuming that digital goods are just like physical goods, but shinier.

Technology puts a lot more pressure on your imagination and creativity, even in pricing.

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