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¶ … Bury Price Elasticity
Will Bury's e-publishing invention that can produce both digital text and understandable digitally-read text quickly from published books has the potential to completely disrupt digital publishing, digital recording and a wide spectrum of other training-related industries. His early efforts at selling the recordings and downloadable book files online have been disappointing, showing an apparent lack of price elasticity in the market. One of the fundamental shortcomings of his pricing strategies is their lack of agility as it relates to a value-based pricing strategy. Will need to realize that the content of the books and their reputation for scarcity vs. ubiquity has a direct effect on their price elasticity curves (Xu, 2007). Will needs to also do a significantly greater level of experimentation with pricing to determine how the customers he is attracting to his website view the recordings...
ubiquity standpoint. Static pricing for digitally-enabled and distributed goods often fails to capture the nuances in product demand including an accurate assessment of the demand curve (Clay, Smith, Wolff, 2006). These are foundational elements of any pricing elasticity study, and Will has just a small proportion of the data he needs to define an optimal pricing strategy for the digitally enabled books and recordings. The following section provides an analysis of key questions that Will need to answer in order to grow his business and attain the highest level of profits possible from the invention itself, the process used for producing digitally-enabled books and recordings, and the selling strategies for each type of book and recording category he chooses to sell. Will also needs to factor in the implications of customer trust and how his pricing can also be…
a) How will you increase revenue?
It is counterintuitive to consider dropping prices to drive up revenues, which is what the majority of ebook sellers do in an attempt to gain greater market share (Xu, 2007). The faulty assumption that all markets, even ebooks and digital recordings have unitary to high levels of elasticity are erroneous, as digital good demand curves are more based on scarcity of the title in a given digital format, demand for the book as a classic or best-selling new volume, and the perceived value of the book's content to the reader (Xu, 2007). Will Bury needs to take these factors into account and not assume a highly elasticity demand curve, then proceed to rapidly reduce prices over time, as this will just drain gross contribution margin and over time force the venture to close.
To increase revenues, Will Bury needs to take a more methodical approach to managing the e-books and digital recordings. First, he needs to create categories of each, keeping in mind that the taxonomy he creates for the entire series of products will also communicate market positioning and imply value levels (Danaher, 2010). Second, he needs to being using more dynamic pricing to begin collecting data on the demand curves (Clay, Smith, Wolff, 2006).
Bottom line is that Bury has to increase sales and there are several cost efficient ways of promoting his products. At the internal level of his business operations, it has to be noted that the increase in sales volumes has to be supported by an increase in production levels. Given this necessity, combined with elements such as ease of use of the technology and the minimum skills requirements of the