The pain in the backside of stickering books

A recent Publishers Weekly article discusses net pricing. The current model is list pricing, in which the publisher sets the final price of the book, prints it on the back cover as a "suggested price", and sells the book to the distributor at a discount (like 50-55%). Bookstores are allowed to sticker a different price on the book, if they like so, but they prefer to avoid it because "stickering books is a royal pain in the backside", in the words of a bookstore owner. In certain countries (especially in Europe), the law may even forbid bookstores from stickering, except for used and damaged books or special promotions.

The consequence of list pricing is that customers expect that the prices of the books are the same in all the (physical) bookstores. This limits price competition among them, which was thought to protect their margins. That was until online bookstores entered the market, selling books at prices that they decided, usually different than the list price, and usually lower. Now list pricing + online retailing make very easy for the readers to find the best price of a book: just check the prices of online retailers.

In the net pricing model the publisher doesn't print a suggested price on the book. It sells it to distributors at a certain price, as it happens for most other products (from TV sets to parmesan cheese). The distributors apply a mark-up, which may vary from title to title, and set the price they ask to final customers or other distributors. This model is currently used by many bargain book wholesalers. The bookstores have the pain in the backside of stickering the books, but they can adapt the prices to local demand, using their information on customers. Independent bookstores are supposed to know readers well, so the advantages for these bookstores could cover the costs of stickering books.

However, the biggest benefit for physical bookstores is that under net pricing the market prices of books become more opaque to customers than they are now. There is not a list price anymore, each bookstore may have different prices, so the customers cannot be sure that the prices of online retailers are the lowest.

Of course, bookstores would like net pricing more if the costs of stickering books were lower. One of the bookstore owners mentioned in the article says that he still handles stickers with a price gun and standard address labels. Here there is room for technological innovation. Probably today one can invent something more efficient than price guns.

Bookstores could also experiment with formats that avoid stickers. For example, they could divide books in just a few price categories (e.g. $ 4.99, $ 6.99, $ 9.99, and so on) and put them in different areas of the stores or different shelves. This would also allow customers to browse books by price. I am sure that there are ideas that are even simpler. In any case, list pricing made sense for bookstores when it was effective in restraining price competition. Now that sales are moving to online retailers that use prices aggressively, net pricing (and/or efficient massive alternatives to book stickering) would give bookstores flexibility of response.