How Amazon and Barnes & Noble Price Changes Affected Sales of HarperCollins Ebooks
On Sept. 11 and 12, new contracts went into place between HarperCollins and ebook retailers like Amazon and Barnes & Noble. The new contracts, instigated by a settlement between HarperCollins and the Department of Justice over the issue of ebook price-fixing, allowed Amazon and others to set the prices on ebooks.
The moment it was possible, discounting began on HarperCollins ebooks. Now that a few months have passed, we’ve taken a look at the data to see what, if any, effect the price changes had.
In the following five examples, I found that price decreases didn’t have much effect on sales ranking. If an ebook’s price is lowered from $10 to $8, for example, it needs to sell about 25% more copies to maintain the same level of revenue. I didn’t observe any sales rank bumps that would indicate a 25% bump in sales. Ideally, a title has more than a 25% increase in sales, justifying a price change as better for business overall.
All data below is provided by Iobyte Solutions and represent sales ranking data and not actual sales (although we are very confident that sales rankings are a suitable proxy for sales). The sales rankings for the below are all on Barnes & Noble’s Nook platform, which I chose to use because more data was available than on other platforms. I chose the titles below because they are exemplary of much of the changes I saw when exploring sales ranking data from Iobyte. Iobyte Solutions has much more data on these titles and others.
In the cases below, Amazon’s price changes prompted Barnes & Noble to change its own prices, I believe.
I’ll be presenting the data below and much more during a webcast with the Book Industry Study Group. Click here to learn more and register.
Similarly, we will be diving deeply into best-seller list insights from this data at Digital Book World 2013.
In the data below, I discuss how a X% decrease in price would require a Y% increase in unit sales to result in the same revenue. Just to be clear, the Y% increase needs to be above what sales would have been without a price decrease. So, it’s largely a theoretical discussion — but one that has impact on the bottom line.
The Rise of Nine by Pittacus Lore (HarperCollins, on sale 8/21/12)
After debuting at No. 6 on the Nook ebook best-seller list, The Rise of Nine had two price decreases which both seemed to have minimal impact on sales ranking. The first was a decrease of about 20% and the second was a 10% decrease. After the first price decrease, a 25% bump in sales would result in the same amount of revenue and after the second, a roughly 11% increase in sales would even everything out.
Though it should go without saying, on the chart below a lower number is better (it is better to be ranked No. 1 on a best-seller list than No. 20); this is true of all the charts below.
The Ugly Duchess, Eloisa James (HarperCollins, on sale 8/28/12)
After debuting at No. 11 on the Nook ebook best-seller list, The Ugly Duchess‘s sales rank degraded typically for a new title. Its price was lowered by about 14%, which would require about a 16.5% increase in sales to result in the same amount of revenue.
The Fallen Angel by Daniel Silva (HarperCollins, on sale 7/17/12)
After debuting at No. 8 on the Nook best-seller list, sales rank for The Fallen Angel degraded typically for most new titles. Its price was dropped in late July when it hit the New York Times best-seller list — a stipulation in the Apple agency pricing contracts. The title’s sales ranking continued to degrade, for the most part.
The first price drop was from $14.99 to $12.99, roughly a 13% decrease — requiring a 15.5% increase in sales to validate.
The second was from $12.99 to $9.99, roughly a 23% decrease — requiring a 30% increase in sales.
Divergent by Veronica Roth (HarperCollins, on sale 5/3/11)
Unlike the titles above, Divergent wasn’t released over the summer. Nevertheless, its price was dropped by 27% in early Sept. and then again by about 4.5% in early Oct. The first price drop had some effect on sales rank. The second seems to have had little effect.
State of Wonder by Ann Patchett (HarperCollins, on sale 6/7/11)
For this last title, the price was dropped rather precipitously to $9.35 from $12.99 (28%) and it seems to have resulted in a rather severe sales ranking improvement. However, the difference in unit sales between a book ranked around 900 and one ranked around 400 is not huge. While the title has fluctuated greatly in the period since, it’s in a zone where we can reasonably assume that sales have basically held steady.