A Pricing Argument for Textbooks: Channel is NOT Free
Some say that pricing is an art for even the most smart person. It is true, but pricing is also something solid and touchable, and is based on the value delivered to customers. You need to consider variables such as demand and supply, costs, attached services, and speculations and so on when you can finally decide what to write on a price tag. Price, as well as pricing, should both be specific and precise.
Recently my dad was invited to lecture for students of YS college. The arranged textbook was published about twenty years ago, tagged price much lower than that of its peers of these days. When the price was offered to the office of academic division, what has been believed is that this price, set by the publisher twenty years ago, is much favorable since inflation is not considered, but the counter-offer just went beyond my expectation and it included a 25 percent discount! The negotiator assumed he could reasonably apply the alleged practice in textbook distribution system to this case but how can a practice be stupidly transplanted into different circumstances without adjustments?
He is absolutely wrong.
The college is not the writer, nor the publisher, which means it cannot decide the cost of the physical textbooks. The college is not the lecturer who is going to provide the course (as the service), and this means the importance of the course and the quality of the course cannot be determined by those office staff. It is also clear this final batch of textbooks will not be reprinted (at least in a foreseeable period), so the academic division itself won’t be able to supply more to the course participants. Without seemingly considering the above issues, and a final but unilateral price is set to take your profit of 25%?
The Xinhua bookstore, the biggest textbook supplier, is said to allow 25 percent discount as a widely accepted ratio in this business. However, this amount of discount is actually a cost/markup for channel members or intermediaries. The purpose of providing such an incentive is to help facilitate the delivery of goods, to offset the expenses of maximized market coverage and to utilize channels’ capability since they are more closer to the end users and more professional in dealing with issues such as information gathering, complaint management and so on. But, our negotiator apparently doesn’t understand this and assumed his division had completed all the calculations correctly, taking it for granted his counter-offer was justified.
Sometimes, men are stupid. They view their profit not as one but as one fourth, but they will ignore the separate part of the entire product, the channel, which is definitely not free.