The power of promotional pricing

We’ve been running an ebook “$9.99 deal of the day” promotion for some time now, and customer response has been quite positive. There’s also some very interesting sales data coming out of these promotions.

It’s no surprise that promotional pricing increases sales; the balancing act is in making sure that overall revenue increases (offsetting the per-unit revenue decrease) as well as making sure that other sales aren’t cannibalized. If done right, promotional pricing is a powerful way to perform price discrimination — in particular converting people who would not otherwise buy at the higher price into paying customers at a lower one.

Since implementing several promotions (first an “ebook upgrade” offer back in October and then the “Deal of the Day” starting in January, followed by a “Buy X, get X free” offer in April), overall ebook revenue has increased significantly along with unit sales, even though per-unit revenue for a particular promotion is lower. Here’s the relative print/ebook revenue breakdown since January of 2008:


In fact, for the month of April, 23 of the top 25 selling titles from had more than 90% of their sales in ebook format. Obviously that’s driven heavily by the promotional offers, but it’s an indication that the flexibility to do more nuanced pricing promotions than would be possible with physical product is a benefit of ebooks well worth extensive experimentation. (Note also the uptick in print sales — April was up 26% on March for print sales on, presumably driven in part by the increase in traffic coming for the ebooks.)

The data above doesn’t include the promotion we ran on May 21, when we extended the “$9.99 Deal of the Day” to any title — our servers metaphorically melted from the demand, which far exceeded our expectations, driving more than a 20-fold increase in sales over a typical day. Here’s a graph showing the resulting sales spike:


Although that graph makes the days leading up to May 21 look low, they’re just low relative to May 21 — ebook sales have been tracking well above a 100% increase over 2009. It’s nice to see aggregate statistics like those provided by the IDPF, but it’d be great to see more publishers share this kind of direct data. There are often understandable limits about the specifics that can be disclosed (note the dollar scale has been removed from the charts above), but making even obfuscated data more public reduces the control over perception held by those putting out numbers framing things in their own best interest.

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