The folks at Forrester Research are out with a report telling e-book producers their pricing is way off base.
The price point sweet spot, writes Sarah Rotman Epps, is $50. (Oprah Winfrey endorsed the Amazon Kindle in 2008. Picture from Kindleaddict.)
Her piece comes with a chart showing that a $98 price point would be thought expensive but a worthwhile purchase by over half of regular readers making more than $75,000 per year.
Unfortunately that's less than half the price of current readers. Sony is now the value leader at $199 while the Amazon Kindle's latest price cut gets it to $299.
How do you square this circle?
One way is to take a page from Seth Godin's Permission Marketing. A transaction, he writes, is the lowest level of permission a customer gives you, but there are better places to go.
Think subscriptions and book clubs.
Your iPhone costs $99 because you bought a two-year subscription to AT&T's wireless service. The company is now offering a $100 rebate on Netbooks with a two-year data subscription.
What's the equivalent program for an e-book reader?
A book club.
Most current book club offers are 4-5 books free with a membership. That's about a $100 value.
The traditional model for a book club is they send you a regular selection of books at full or discounted prices. You pay for the titles you want and send back those you don't.
Such plans have a big problem. Distribution costs. It costs money to mail a book. For those who return the book it takes money to take it back and re-stock it.
But these costs go away with an e-book.
So here's the big idea. Oprah's e-book club.
Oprah's current book club mainly suggests a book and then offers online resources for discussion of the book. But if her members had e-book readers, they could all get downloads of the month's featured title instantly. You get an e-book, and you get a e-book, everybody gets a e-book.
Now here's where the money really starts to spin. Millions of us love Oprah. But not all of us do.
Within her own company, then, you could have this offer for a Dr. Phil Book Club, a Dr. Oz Book Club, a Rachael Ray Book Club.
Or let's skew male. The Gordon Ramsey book club. The Tiki Barber book club. The ESPN book club.
Or let's skew religious. The 700 Club book club. Like that ESPN idea, how about the A&E book club, or the Discovery Channel book club? The National Geographic book club. (They may have to wait for a color screen.)
For all these clubs you offer a similar deal. The reader is part of your $49.95 membership fee. You get 4-5 e-books downloaded free, the most recent top club selections. You agree to buy, say, 10 more books at the regular club price over the next two years.
When Sony dropped the price of its reader to $199, it also began offering popular ebooks for as little as $9.99. Kindle owners agree, $10 is the ebook sweet spot. That's a little more than one-third the price of a popular hardback book.
Think about it. You get the reader. You get free books. You get the best selections of your favorite celebrity for one-third the hardback price. The service collects $49 up-front and a commitment to getting at least $100 more -- that's a minimum. Plus you have this cool sales channel to a defined customer base.
I think we can do business here. What do you think?
This post was originally published on Smartplanet.com