An American Editor

October 7, 2010

Ripping Off is Soooo Easy to Do: The Charade of Pricing

This past week the New York Times reported that two Amazon Kindle ebooks, Ken Follett’s Fall of Giants and James Patterson’s Don’t Blink, are priced higher than their hardcover counterparts. This is the result of the Agency 5 pricing scheme for the ebooks (for some background, see Agency in eBooks: Just the Start? and The Decline & Fall of the Agency 5) that allows the publisher to set the ebook price and the ebookseller to set the pbook price.

I hadn’t planned to note this “event” as it has been noted numerous times since its discovery, and I considered it just another rip off of consumers by publishers. I suppose the biggest fools in the unfolding of this event are us commentators who cry about the high price of the ebook in comparison to the pbook. Why are we made to look so foolish? Because thousands of the ebooks are being sold despite our negativism. So perhaps the publishers are a bit smarter than us in terms of sales, even if dumber than us in terms of actual revenue.

(In terms of revenue, booksellers pay 50% or more of the suggested retail price as the wholesale price on a pbook. Consequently, the publisher receives more per-unit-sold revenue on the sale of a heavily discounted pbook than it does on an agency price ebook. I know, the logic of that situation escapes me as well, but the chiefs at the Agency 5 get much bigger salaries and bonuses than I do and have the pleasure of telling shareholders how they are cutting costs by laying off the grunt workers.)

But I was finally agitated enough by the ripping off scenario to write today. The rip off today is a Barnes & Noble masterpiece of legerdemain. I am a B&N member whose membership “privileges” have been steadily eroded by B&N since the advent of ebooks. Yet today’s legerdemain is the best yet. Granted we aren’t talking big bucks on an individual purchase, but in the corporate world, pennies add up to dollars, and I’ve now gotten a glimpse into how Leonard Riggio plans to save his world.

Like all B&N members I received an e-mail touting new publications with offers of discount coupons — either for the store or online. First clue: I received 2 separate e-mails — one offering me a 30% discount (members save 40%) coupon and the second offering me a 40% discount (again, members save 40%). Apparently the offers have changed so that even nonmembers get these coupon offers. I do concede, however, that B&N can legitimately offer the discount to both members and nonmembers (but why would you want to kick your members, your most loyal customers, in both the stomach and the head?).

Clue 2: To take advantage of the online coupon discount, you need to click the Get Coupon button, which takes you to a special offer page at the website where you get the book of your choice (from among those being offered with the coupon) at the discount.

I am interested in buying Chernow’s George Washington. So the first thing I did was go to B&N’s online store to see what the price is. If I just buy it at its regular discount price, the hardcover cost is $23.40 — a 41% discount — and this price is available to everyone, member or nonmember. If I click the coupon for my special discount price, the price is $24.00, the member’s price. So for being a member of B&N, I get the privilege of paying 60¢ more than the price everyone who isn’t sucker enough to use the coupon pays.

Is this a rip off or not?

Of course, in B&N’s case they aren’t even matching Amazon’s current hardcover price of $21.60, which makes one wonder what life after death there will be for B&N. But Amazon doesn’t sit pretty here either. Just 3 days ago, as the New York Times reported, the Follett book was being sold by Amazon for $19.39. What happened in 3 days to cause the price to rise by $2.21? The need to make the Kindle edition, which is still $19.99, appear to be a bargain compared to the pbook?

Why shouldn’t an Amazon customer who wants to buy the Chernow pbook be angry today that the price has been raised? Especially when there is no assurance that it won’t rise or fall tomorrow. There is no logic to the changing prices other than to extract the most possible from consumers. We aren’t talking about precious metals that are traded on commodities exchanges that have price fluctuations based on availability. There is no shortage of pbook copies.

Bottom line really is that both B&N and Amazon (and probably other ebooksellers as well) are simply playing their customers for suckers — B&N by the coupon legerdemain and by offering all comers the same buy price at the expense of members and Amazon by shifting the price up or down as it sees the interest in a book wax and wane.

It’s a war of nerves for book buyers, because one has to guess when to jump on the offer and when to hold steady. Who ever thought buying a book would be a high-stakes poker game?


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