Jeffrey A. Trachtenberg has an interesting article in today’s WSJ that deals with ebook pricing models, and the 99-cent “impulse” price point (E-Book Prices Get Slashed — note link may expire). An excerpt from his post appears below:

The book world is discovering the 99-cent special. Nearly two years after book publishers forced a sharp increase in the price of newly released e-books, a new low-price trend is emerging. A growing number of publishers are experimenting with 99-cent temporary prices on e-books, in hopes of persuading readers to sample a wider range of authors.

The latest example is George Pelecanos’s new crime novel “What It Was,” which goes on sale Monday. The digital edition costs 99 cents for the first month, and then $4.99 afterward. While Mr. Pelecanos is known for his work on HBO’s gritty Baltimore series “The Wire,” he has also authored 18 books. But he has never been a big seller.

I’ll eventually get around to posting my own take on e-book pricing from an “economics” perspective i.e. what is an “optimal” price if the economists were tackling the question, but I like the idea that the “big” names are suddenly realizing they’re getting their butts kicked by the mid-listers or the newbies. Why? Because competing on price is a really good strategy. It’s worked for hundreds of electronics firms, car companies, musicians, etc., to shift some of an industry’s revenue from corporate-backed big names to the little guy. So much so that a name like Pelacanos (profiled in the story) is willing to “experiment” with a price point that isn’t much of an experiment — everyone KNOWS it will sell at that price since everyone else is having success at that level. Best quote ever from Pelacanos though:

“It’s a gamble, but I want to be read.”

Welcome to the new digital world…it’s only unfortunate that his cut, roughly half what he would get if he had self-published the novel, might be deemed “unprofitable” to him and therefore a failure — given that his last hardcover had only 25K sales, not clear why he would think 100K digital sales could be a “failure” though.