The first rule of car buying, other than don’t buy a lemon, is that only a fool pays sticker price. Everybody knows that is only the starting point in a long, irritating (“let me check with my manager”) negotiation. Actual prices are often the result of how much the retailer pays versus how much they need to bring in to make a profit.
We recently had a conversation where we discussed the rather quaint notion of MSRP — wherein the MSRP was a wink, wink, nudge, nudge concept. The publishing industry likes to put prices — MSRP — on every single one of its products.
Unlike other items, where the retailer determines the selling price based on various criteria (volume, traffic, promotions, local standards), publishers set the number up front (this holds true in the motion picture and music industries). There are many reasons for this, including the fact that royalties are often computed based on list or cover price.
As we all know, publishers don’t calculate royalties on gross sales numbers. These MSRP numbers simply represent thresholds for escalations or de-escalations in royalties. It’s a quaint holdover from days gone by. Again, you find these same machinations occurring in DVD and CD royalties. As you look deeper (okay, we’ll do it for you), you realize that this is because the accounting systems used by these industries all but require this type of mathematical nonsense.
On a positive note, the process also proves that some people will use algebra in real life.
Setting aside the fact that pre-printing prices on products save store employees tons o’time, pre-printed prices are something of a joke, as related by this:
However, Bill Samuel, Deputy Chairman of Foyles, felt there was some way to go. Manning the Foyles stand at the London Wine Fair on the day the £16.99 Richard & Judy Wine Guide was published, he explained: “A customer said to me: ‘My local Waterstone’s has that at £6 off’. On the day of publication, for heaven’s sake, with the middle-market appeal that Richard and Judy have, the largest chain bookseller can only think of promoting on price because the price is printed right there.”
Of course, the industry has institutionalized (not to mention memorialized in contracts) the way it sells its products to retailers. Those who suggest that the retail price printed on books reflect the value of the words inside are missing the point. In a world with discounters, loss-leaders, and used bookstores (not to mention online retailers), MSRP is a joke.
And by taking pricing flexibility away from the retailers, the industry is also doing itself a disservice. Value is in the eye of the beholder, and many people confuse low prices with value. Continual cheapening of books by forcing retailers to create false discounts furthers the notion that books are overpriced (but, hey, we’ll give you a deal).
