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How to Sustain a Fair Price

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E-Commerce systems now allow most companies to test and find optimal prices that will maximize either volume or margins, but even more important is developing a pricing system that feels predicatable and fair to your customers. When The National Academies Press, the book-publishing arm of the National Academy of Sciences, began making PDF editions of its books available, many members felt the PDF version should be free. Fortunately for the long-term health of the organization, they decided to run tests of different pricing models.

Knowledge@Wharton: Marrying Marketing Science with the Front Lines. 2007-Dec-12

Pope said that because of the success of the pricing model, NAP decided to offer free downloads for users in developing countries and free downloads of titles which were lagging in sales. As Internet downloading popularity has increased, the PDF pricing was raised last year to 85%, Pope said. "The fact that I am still employed and standing in front of you means that we have been financially self-sustaining," Pope noted. "We have taken out profits and invested in the web site." Page views have soared to 18 million a year. Pope has been sharing the NAP findings with other leading booksellers, including Amazon.com, at industry conferences.

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