Harry Potter and the Pricing Problem

July 16th, 2007 · 13 Comments
by Kassia Krozser

As the planet enters the final lap of the Harry Potter frenzy, doom and gloom scenarios abound. No, not about the ending — apparently, there is an unspoken pledge among news agencies to keep that a secret (this is a limited time offer, naturally) — but about the money being made on the book. After all, if all goes according to plan, Harry Potter and the Deathly Hallows will be the biggest selling book ever.

Staggered release windows are so last century.

With one notable exception.

J.K. Rowling will certainly rejoice. Her agent will both rejoice and panic, what with no sequel on the horizon (one hopes said agent has been saving for a rainy day). Scholastic and Bloomsbury, the U.S. and U.K. publishers of the book, will make their investors happy. Hmm, seems like someone in the profit chain is missing.

Ah, yes, the booksellers. Booksellers are not dancing in the street. Make no mistake: booksellers fully anticipate roaring crowds and record sales. It doesn’t matter if you’re a so-called big box retailer or an independent bookseller. Customers will come through the front door (virtual or physical) in droves. They will buy.

The problem is that market pressures have required steep, steep discounts for the new title. There’s a word for it…hold on…yes, competition. The free market system. All that stuff you learned in econ that you were sure would not be useful in the future is now coming into play. Probably even supply and demand. Who knew that supply and demand would be important?

Oh right, anyone who has tried to purchase gasoline over the past six months.

As with unleaded gas, the price crunches are borne by the retailers. While surely some costs have increased for the publishers — recycled paper, advances, promotional costs — market efficiencies and all that (more econ, anyone?) have also made other costs lower. Heck, maybe I should take promotional costs out of the “increased costs” column as surely the biggest effort the publishers had to make was announce a final release date.

The cost of books is, like it or not, a major factor for many consumers. Paying $34.99 is an investment. I know the arguments: it’s a book, it takes months, years, decades to create, it’s valuable above rubies, etc. Yeah, well, movies take months, years, decades to make and they, in a manner of speaking, retail for far less than a book.

But, but, you sputter right back at me, it takes longer to read a book than it does to watch a movie.

True, I agree, because I am agreeable. If we were to price items based on the length of time it takes to consume them, then salt water taffy would be infinitely more valuable than hard candy.

Booksellers can take some solace from the fact that, despite years of warnings, the publishing industry hasn’t figured out how to recapture the magic (hint: publishing something that crosses generational lines and speaks to many belief systems). While booksellers see a long continuum of sales, Scholastic and Bloomsbury, specifically, are looking at their last hurrah.

But this isn’t about the lack of a future business plan, it’s about how books are priced to entice consumers. It is conceivable that the same sales level would have been achieved had every retailer chosen to adhere to the printed (therefore it’s official) retail price*. It is far more likely that many consumers would think twice about paying more than $30 for a book. Many consumers — and I sometimes wonder if the publishing industry really grasps its market — find paying hardcover prices beyond their reach. These customers decide they will wait for the paperback and the publishing industry hopes those customers will remember the book when it finally wends its way to mass market bookshelves.

Do not assume that customers creating shopping lists. “Okay, hardcover spotted. Check. Make note to purchase this in paperback one year from today.”

Staggered release windows are so last century. We want it all now, baby, we want it today. Why, as books are competing with so many other forms of media, would the publishing industry want to create a vacuum where one needs not exist?

And just as the movie studios were forced to cut their wholesale prices on videocassettes and DVDs, it might be time for the publishing industry to rethink its pricing model. It makes no sense at all that one side of the business makes enormous profits while the other struggles to stay afloat. Just as we hear stories about gas stations that are going under because pricing pressures from consumers require that profitability be sacrificed — while oil companies post record high numbers — we will see the same thing happening to booksellers.

* – Why still print the price at all?

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File Under: The Business of Publishing

13 responses so far ↓

  • Edward Champion’s Return of the Reluctant » Roundup // Jul 17, 2007 at 12:18 am

    […] So here’s some real Harry Potter news. Kassia Krozser exposes the book discount racket. […]

  • Ed - the Music Man // Jul 17, 2007 at 1:32 am

    I have read with interest ASDA’s battle here in the UK with Bloomsbury. The problem with a higher price is that the consumer pays in the end. The retailer simply becomes a middle man.

    I have no idea how much JK Rowling’s royalty is for this book, nor do I know how much the eco-friendly paper costs to make such a book, but to set a dealer price at such a high level ensures that the smaller, local retailers or mail order retailers such as I have little chance of competing.

    In the music business, large retailers such as ASDA and Tesco are getting up to 40% off dealer price or more. In time, they will become the distributors to smaller retailers or local high street shops and simply pass the the product on. And yet, this extra cost will go to the consumer.

    I hope that soon the publishers learn what the music business is learning – higher prices do not mean higher profits. Prince just gave away his latest album with the Mail On Sunday. I wonder if JK will give away her next book? I doubt it.

  • Shanna Swendson // Jul 17, 2007 at 7:23 am

    It seems to me that the booksellers are wasting a huge opportunity here because their focus is so exclusively on the Harry Potter books during the release frenzy. I know they’re swamped with that, but they’ve got hundreds of people trapped in each bookstore for hours, waiting for the new book. Why not use that time to try to sell other books? Yet they don’t want to deal with other authors during that weekend, even if their books might hit that same market. With previous releases I haven’t seen any store displays of what you might want to read after reading the new Harry Potter book. If they do any displays, it’s strictly children’s or YA books, totally disregarding the huge number of adults.

    It’s a golden opportunity to try to move the Harry Potter readers on to other things, and most bookstores totally waste it by acting like those are the only books that exist.

  • jill // Jul 17, 2007 at 8:41 am


    As a bookseller, I can tell you that this time is hardly the “golden opportunity to try to move the Harry Potter readers on to other things.” most readers are only interested in Harry Potter.

    Most Harry Potter fans are rereading the entire series in preparation for the final book. They did the same thing two years ago with the release of book 6.

    And yes, we’ve tried to move Harry Potter readers onto other things. It’s the logical thing to do, and it’s been tried before. It’s just that, for many different reasons, the readers don’t take. And these are with adult books, not YA (which is a pity because YA fantasy can provide a lot of gems for readers of all ages). I can see why someone who might really like Harry Potter might struggle with Jonathan Strange and Mr. Norell or His Dark Materials. Why Harry Potter readers still ignore Terri Pratchett even after it has been constantly recommended to them (both by booksellers and by the media), I will never know.

  • Don Linn // Jul 17, 2007 at 10:26 am

    Suppose Ms Rowling had sold the book in serialized electronic form one chapter at a time from her own website (or Bloomsbury’s for that matter), cutting out the retail channel entirely until the serialization was completed.

    If you were a fan, how much would you pay for the first chapter? The next chapter? For the final chapter? Would it be more or less than $35.00?

  • Shanna Swendson // Jul 17, 2007 at 3:46 pm

    All I know is that B&N owes me a commission from my experiences at the past two Harry Potter nights from all the books I sold for them. People milling around the store get bored, and I started recommending books that people ended up buying. I also watched people picking up the books on the front tables, looking at them, and putting them down. The usual bestsellers, lit-fic and Oprah books there didn’t seem to appeal to that crowd, so I sneakily moved a few books I thought these readers would like to the front tables and then watched all of them be carried up to the cash registers after people looked at them.

    I guess the chains are so tied to publisher co-op money that they don’t have room to re-do the front-of-store displays, but from what I saw, if they’d even done one front-of-store display of “what to read next” books instead of the usual new releases display, they’d have sold a lot more books that night. It’s a captive audience, and once you’ve made your wand and had your picture taken with a costumed character, you need something else to do, so you might as well shop for books. True, a lot of those readers aren’t looking for anything else, but with such a HUGE readership, even a small percentage being turned on to more would still be highly profitable and would make it more than worthwhile to set up a special display or two to help them find new stuff while they’re in the store, or maybe even have a discussion about other books as part of the night’s activities (for those who don’t want to make a magic wand).

  • Forrest // Jul 17, 2007 at 4:33 pm

    “Why Harry Potter readers still ignore Terri Pratchett even after it has been constantly recommended to them (both by booksellers and by the media), I will never know.”

    In the “Star Trek” episode of FUTURAMA, Fry says: “It made me feel like I could have friends, even though I didn’t.”

    HP has that characteristic of intimacy. Terry’s stuff (which I used to order from the UK because I couldn’t stand the wait) doesn’t. Very little fiction I’ve read does.

  • booklover // Jul 17, 2007 at 7:22 pm

    As one who is NOT looking forward to Friday night (one of the few bookstore employees who could care less about Harry Potter), I think your point about pricing is well made. My personal library has grown exponentially since I started in the biz, but that’s because I receive a nice discount as part of my employment benefits. If I was your average schmoe coming in off the street, I would choke if you told me I would have to pay $35 (or higher) for a hardcover book. And while you talk about bestsellers and books from major publishing houses, what about books from small presses or, heaven forbid, university presses. I recently bought a biography published by the University Press of Kansas that was lower priced than many, but still high at $45. When trying to figure out why our sales are down, I am greeted with blank stares when I suggest that someone who is paying $45 to fill his or her gas tank doesn’t have to (nor do they want to) spend that money on a book that will sit, most likely, sit on their shelf unread or end up in a yard sale being sold for a quarter. I’ve often thought that when publishers bring out books that maybe they should go ahead and release a trade paperback version with the hardcover. Those who collect the books will pay the higher price while those who just want to read it will pay less, but book sales might improve.

  • Kassia Krozser // Jul 17, 2007 at 9:57 pm

    Ed1 – Thanks for getting the last name right (g). I so appreciate it (and the shout out!).

    Ed2 – The ASDA thing is fascinating to me, but mostly because my background is a world where nobody stops shipment due to lack of payment. Adn when it’s cited as a reason for withholding product, well, that suggest there’s more to the story.

    Jill and Shanna – Love the back and forth and think there’s a lot of truth in what you’re both saying. Pratchett, for my money (and I’m admittedly not a sci fi/fantasy freak, though, oddly, I love the genre; I am a mass of contradictions), doesn’t grab me the same way. The Potter books truly cross generations. I didn’t get the same sense from Pratchett. For my money, Robin Hobb is a far better choice, though, like Pratchett, she’s creating denser, more adult worlds.

    Don — the cutting out the middle man thing is what’s happening in the music business. Your homework is to read the history of Clap Your Hands, Say Yeah. Mistakes were made but concepts were proven. The Stephen King experiment is often cited as proof that the model won’t work. I see it as proof that the model wasn’t well-considered. Give the people what they want, and, well, they’ll keep coming back.

    Forrest — great comment on intimacy. It’s a problem with fiction when the reader feels like he or she is distanced from the story. I mean, I want to be immersed in a world. I love it when I look up and realize I’ve been reading for hours. Nothing better.

    Booklover (presumably not your real name) — Price matters. Price really matters. I’m sorry, but the divide between rich and poor is like the Grand Canyon. Books must be affordable if they are to be read.

  • booklover // Jul 18, 2007 at 7:26 pm

    You are indeed correct that my parents did not saddle me with that name. But given that I toil in the nether regions of the book selling world, even at the lowest depths, keeping my identity a secret seems prudent, especially since I seem to have an uncanny ability to piss off said employers, if only for pointing out that sometimes they are moronic twits. Hope that’s OK.

  • Kassia Krozser // Jul 18, 2007 at 7:48 pm

    Pointing out moronic twits is always okay around here… especially if you get to make people mad!

  • Life After Harry Potter // Jul 19, 2007 at 1:42 pm

    […] Harry Potter and The Pricing Problem […]

  • Clive Warner // Jul 21, 2007 at 1:53 pm

    It makes no sense at all that one side of the business makes enormous profits while the other struggles to stay afloat.
    – As a publisher I would love to know which side of the business makes “enormous profits”. Something ending in “.com” comes to mind.