Underpricing your work is good
In every industry I’ve worked in, people have been obsessively concerned about underpricing their products.
Underpricing, they say, devalues the products (because, as Chris Anderson pointed out recently, they make the mistake that “the only way to measure value is with money”).
This “underpricing=bad” argument might have some mileage for products made of atoms, but when your products are made of ones and zeroes it becomes obsolete. That’s why it’s a nonsense to charge the same price for your ebook as you charge for the paperback (or, even worse, the hardback).
Of course, the ultimate underpricing is to make something free. Making something free doesn’t devalue it. I find a lot of value in Google, Flickr, Slashdot, numerous other websites and blogs, the Kubuntu installation on my computer, Mozilla Firefox, the WordPress software this blog runs on, PHP5 & MySQL, the NHS, Channel 4, free-entry to the collections at the Tate Modern (where I can gaze, without paying, at the Bacons, Picassos, Matisses…), even the free copy of the Metro newspaper I read on the bus every morning on the way to work. I value these things.
Telling people that you believe some things should be free can generate some aggressive criticism (as you’ll know if you’ve ever read the comments on, for example, Chris Anderson’s Long Tail blog). You can feel like you’re being accused of being a communist/hippy idealist with no idea about business models in the real world. I’m sure that those naïve hippy idealists at Google—who are making a killing with their business model in the real world—would disagree.
Why is it that so many people who see themselves as “traditional hard-nosed business” types are completely clueless when it comes to the internet, especially the more recent trends in social networking?
Because they’re desperately trying to impose yesterday’s business models on today’s business. Umair Haque points to the twin obsessions of “product” and “monetization”:
When you try and “monetize your users”, you accept the almost obscene assumption that people are meant to be pimped out, sold to the highest bidder, resources to be slashed, burned, and exploited.
Umair is certainly not against businesses making money. In fact he highlights the fact that many businesses’ attempts to make money on the internet can’t make any sustainable income (because they are so clumsily contemptuous of their customers in the pursuit of profit).
Actually he summarises his argument most succinctly while replying to a comment on that same post:
as for figuring out how to capture value - the point of the principle is that when we figure out how to capture value, we must do it in a way that doesn’t destroy any value we create.
How long would Google remain the search engine of choice by such a huge margin if it sold out its users and “monetised” its clean, clear, front page (which must be the primest piece of real estate on the net) by cluttering it with ads?
Meanwhile earlier this week Trent Reznor just grossed $1.6 million in the first week of sales of Nine Inch Nail’s new album. My friend Barry examines the pricing policy in more detail, but the pertinent point here is that Reznor gave away a 9-track download of the new release for free.
$1.6 million says that his fans didn’t think that the free tracks devalued his music…
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Jessie said,
March 15, 2008 @ 2:41 pm
Thank you, Paul, for posting this very valuable (and yet free!) information! You’ve certainly clarified a lot of internal conflicts for me, and I’m sure many others will benefit as well.
Paul matosic said,
March 16, 2008 @ 12:32 pm
Its an interesting conundrum that does affect all artists.
How do we make a living(or income) out of what we do if we do not charge realistic prices. Usually art is free at the point of consumption ie the gallery or indeed the internet. People can come along see the work take what they need and then leave. The artist having made the work gets nothing from this transaction. Of course there are the block buster exhibitions at the major galleries that attract the masses to queue up for hours and then shuffle past the work(s) in an overcrowded gallery. These exhibitions usually carry huge amounts of advertising (paid for by the by the punters) and often get further free advertising through the media coverage, because the nature of the exhibition is such that it carries the cache of “educative and cultural”.
Its interesting to note that at the grass roots level art is often derided or not taken seriously, often because of the price of the work perhaps this is because art at this level is often seen as a leisure time activity.
Often the artist has to have another job to support the art practice, This implies a level of leisure time activity rather than a serious profession. Therefore if you are not a professional making a living out of your work then .. well it cannot be any good .. therefore why the high price.
I could continue but .. well its sunday.. I should be out there doing some painting.
Paul Watson said,
March 16, 2008 @ 12:47 pm
Mr Matosic - good to see you stopping by!
I actually wrote a more artist-specific post on this subject on the YourArtMarketing forum in reply to a post by Jessie (who commented above). I think it’s going to be useful so I’ll repeat it below:
Barry Bloye said,
March 25, 2008 @ 12:11 pm
Here’s a good example of price not equalling value from Wired:
http://www.wired.com/techbiz/it/magazine/16-04/bz_opensource
Some quotes from the article:
While the software itself may be free (in the pricing sense and the ‘libre’ sense), open-source projects are able to make money by selling additional services that allow their users to get additional value from their products.
And because they attract a large user-base from making their software free, they often come with a huge, existing audience.
Graham J.D.Beattie said,
April 18, 2008 @ 7:22 pm
Great ! I am soon going to be promoting my business which is in another medium..music. I will underprice myself at the start..not that I undervalue my service; to the contrary I think my talent and equipment are above average, however no-one knows me in this neck of the woods yet.
There are some people who shop on price alone. They get very excited at getting a “deal”, and they will get a deal but with a high price product in my case. Those people usually expect a low price service as that is what they usually pay for.
When the high quality serice is delivered their excitement follows and they blab to everyone about you! You slowly raise your price when you are so popular that it is frankly, insane. I know, I’ve done it before.