First, what do I mean by loss leader?
It’s term bandied about a lot in the book publishing world. A loss leader is a product sold at a discount in order to attract customers. Authors might offer a permanently lower price on one title to encourage readers to try the book, with the goal of introducing those readers to more of their titles, most of which will be at the original price. A lower price presents little risk to readers who are unfamiliar with an author.
The idea of loss leaders is not unique to books. In other industries, such as retail, vendors might reduce the price of one item, say a computer or even a Kindle, to get customers to spend money on other associated items and gizmos, many of which often come with a huge markup. With books, readers get to sample at a discount, usually without being gouged on the cost of other titles.
But with the free sample chapters available on Amazon (not to mention the volume of perma free books available), are loss leaders even necessary for authors? Does the lower price indicate an inferior quality book?
I decided to do a little experiment with my own titles to see what would happen. A little under a month ago, I reduced the eBook price of my first title Madness and Murder (which, so far, has been the best selling of all my titles) from its usual price of $3.99 to $0.99 with the intention of letting it act as a loss leader to entice readers to try my other books.
So far, the results have been quite interesting and, while not quite what I expected, what I’d hoped. I thought I’d sell more of the reduced priced title, yet I’ve noticed an uptick in all titles, and with sales of two of the full-priced titles outpacing the “loss leader.” The same story is repeated with sales in the UK. It’s hard to tell from the results if the loss-leader is working, but I’m encouraged by what I’ve seen.
So, as authors and readers, what do you think? How effective are loss leaders? How often do you go on to buy a full-priced title from an author offering a loss-leader?