I posted this comment a few days ago over at Nathan Bransford's Forums. Thought I'd share it here.
An e-book hypothetical. This leans on Nathan's post about the "tragedy of the commons." What if traditional publishers, in order to level the playing field and make their e-books more appealing to consumers, that is--more appealing than the $0.99-$2.99 self-published books, used a graduated price increase. Let's say all e-books start at $0.99, until the hundredth or thousandth e-book sells--depending on the estimated number of sales, the author, the popularity of the series, etc.--and then when sales hit the target (dare I say, "magic") number, the price increases to $1.99. After the next hundred of thousand books sell, the price increases from $1.99 to $2.99. Publishers could sustain this model until the price hits the current $9.99, and then cement the price there. Or... publishers don't stop at the current e-book ceiling. Instead, it takes the price all the way up to $12.99 or $16.99 (the most common price of a juvenile hardcover). I would imagine that sales would decline around the current e-book new release average, $9.99.
The big questions are - What does this do to consumerism? How does it affect readers? How does it affect authors, publishers, and the likes of Amazon, Apple, and B&N (the people actually making money)? Does it have any effect at all? Am I a bumbling fool?
Well, the goal would be to drive readers to books early and often. There is probably a name for this type of business model, but since I teach English and creative writing and know little to nothing about business models, I'll leave the naming to someone who knows what he's (or she's) talking about. Whatever the name, you'd think this approach would have to create some sort of immediacy in readers.
Take a look at consumerism the day after Thanksgiving. Black Friday. It's still the biggest, most successful, shopping day of the year almost every year. Why? Because of limited time only bargains. Half off. Seventy-five percent off. But only for a limited time. People have to take two trips home from Toys R Us because everything doesn't fit in their van. I've seen it happen!
This could be the publishing industry. Every day. Imagine it. There are certainly times when more books are released than others. Spring and fall are hot beds for forthcoming titles. But there are always new books hitting the "shelves." With a graduated price increase, there would be an urgency to buy new releases--as they're released--as opposed to waiting around until the price drops or one of your friends buys it. Or, if your local library still exists, waiting for your library to acquire the title, which can take months.
Furthermore, how would this graduated model affect sales? Short term? Long term? Would most books open to tremendous sales and then taper off?
I guess that would depend on the reviews, acclaim, and overall popularity. If a book sold moderately at opening, and then caught fire with consumers (readers), you could be looking at the largest number of sales at a higher price point. Would this create more profit for everyone? The answer to whether this model would be successful or not would take more numbers than I have access to and more time than I'd like to spend away from writing stories. It would also take Amanda Hocking's and Barry Eisler's brains to navigate a spreadsheet and come up with a definitive solution.
Publishing is at a major crossroads. So, whatever the answer, why not try it?
*Note: This model is called Penetration Pricing, but I've been thinking that the Wymer Model sounds much better.