Massive introductory discounts discussion

[John Hudson]

Oh I think it should be a well-advertised pricing structure. Although the calculations differ, the idea is the same as for a regular Dutch auction, to enable the buyer to make reasoned decisions within a predictable structure. Because Dutch auctions apply to limited commodities, there is an element of gamble involved in waiting for a lower price (someone else might be willing to pay more, and you'll be left with nothing). In my reverse model, with rising price, there is no gamble but there is pressure to buy early, increasing upfront revenue, but without the simple jump from deeply discounted to full price. I see it also as a useful tool for designers dealing with clients: "This is the font we want to use for your job, but the longer you delay decisions/budget/PO the more it is going to cost."

The other benefit I see in the model is that it provides a trackable progress of sales relative to price -- adjusting for other factors --, which is something sellers generally lack. The process by which the 'market' determines price is generally pretty much guesswork: a seller looks at similar products, and guesses how much he might be able to charge. He typically has no data to tell him whether he might, in fact, make more money selling at a slightly lower price or if he might sell the same volume at a slightly higher price. By gradually increasing the price over time, one can collect information on buying behaviour relative to price.

[Ralf H.]

End of the golden days for font designers? Perhaps it's been a bubble that's about to burst.

Quite the contrary! The prices fall because of the higher demand! There is no definition of »normal« font prices. It's just what we are used to. A photolettering disc did cost 20 times what a font costs today and it only had around 200 characters and could not be used indefinitely, let alone be copied to 5 machines.
There is nothing wrong with falling prices when the number of sales rises, especially with digital goods.

[Nick Shinn]

…fear these huge discounts: they might create a market where nothing but extremely cheap or discounted fonts sell well.

That’s not the way the Long Tail works, and MyFonts is very much a Long Tail marketer in a Long Tail product category.

For instance, Shinntype rarely has fonts in the MyFonts top 50 and doesn’t offer huge introductory discounts or free anything, but this distributor provides us with a steady income from incremental sales of many typefaces, some of which (Beaufort and Handsome) have been there since MyFonts started over 12 years ago.

Fonts differ from most (consumer) products in that they are not fundamentally subject to rapid obsolesence or the immediate hard sell of a special offer. When someone is looking for a font for a particular project, especially when doing a keyword search, they will consider a variety of typefaces, not just what’s hot at the moment. They might remember something that caught their fancy several years ago, but which they haven’t yet had the opportunity to use.

Typefaces can become fashion items, but they are also extremely durable, both stylistically and technologically.

Ultimately, if one applies the Long Tail or Zipf distribution to itself, it becomes apparent that while one end of the curve is subject to fashion, price, and popularity, a large part of the market does not follow these principles.

For instance, the Scotch Modern is not presently considered a good text type, and the Shinntype version is very expensive, has never been discounted, and has never made a best-seller list. Yet once in a while someone somewhere decides they gotta have it. Niche.

[hrant]

Ralf, what's a good reason a foundry would not offer steep discounts?

John:
1) What about introducing a gamble element by limiting the discounted pricing not by time, but by number sold? I think Tankard does this, or at least a hybrid mixing time and number.
2) Do you think some potential buyers would be turned off by a pricing model they might feel is contrived?

hhp

[metalfoot]

If I may jump in one more time, I think the reality is that because certain fonts are ubiquitous, and it is only a subset of users who are even interested enough to care, the niche for fonts is just that, a niche; if it works better for designer "A" to build extremely high-quality fonts with full character sets and s/he is able to sell that work at a price which is fair to their efforts, great. On the other end, if designer "B" is just messing around and wants to sell some of their hobbyist labours for $5-20 a shot, and they sell a few, great. I know my co-worker at the small office where I work is pretty oblivious to fonts, whereas to me, they mean and signify a great deal.

So maybe it's like the book market; mass-market low quality Harlequins sell because they fill a niche, and high end literary books sell because they fill a niche. The Harlequin will generally make a greater profit, but there is no question which is the better quality book.

[tmac]

When I started noticing these 90% discounts I thought, "This is an industry on its knees." As a consumer it made me feel very uncertain about my vendors (ie: people I buy fonts from). 90% discounts indicates an uncertainty about product value, as well as a great deal of semantic ambiguity when we try to define price and value to our end clients using product terminology that applies to physical objects, even as an analogy (any discussion about piracy, EULA, licensing fees tends to wander into this word-territory).

When I go and spend 600 euro on a font I will email the designer and ask if they respect their product enough to not go and have a fire sale next week. And if there is a fire sale, I want a refund on the difference. Granted, this discussion mostly pertains to new releases.

I like John Hudson's idea. It's rational and it provides motivation for buying. And that's the key: it's rational. The massive discount model (a discount ending when? and why?) has no explicit rational foundation -- by which I mean the buyer or end-user can't determine the reason. Sure, I'm seeing the reason in this thread, but not at the point of purchase.

And the real end user, the final client, what do I say to them? "Well, this font's not as good but it costs 99 cents at a 95% discount." Most people have never heard of discounts like that except on flawed or blemished goods; goods that don't work properly; children's toys made of lead at a night market.

Ultimately, I want beautiful work-horse typefaces that I have to pay a fair bit of money for and not everyone can afford. Snobbery? Yes: an arbitrary taste-making distinction. Fortunately, I'm well served by dealing directly with the foundry.

All of this leads me to think the 90% discounts harm the myfonts brand more than anything else. Mostly because their top-seller charts are unreliable indicators.

[Chris Dean]

Side question: Out of curiosity, how many people here follow the stock value of Monotype Imaging Holdings Inc?

(go to http://ca.finance.yahoo.com — their symbol is TYPE)

[tmac]

Wow, 2012 was a good year:
http://finance.yahoo.com/news/monotype-announces-fourth-quarter-full-120...

[5star]

Side question: Out of curiosity, how many people here follow the stock value of Monotype Imaging Holdings Inc?

I do.

n.

[Chris Dean]

And they’re giving it away for free, post merger announcement.

“May you live in interesting times.”
~Ancient Chinese curse

[hrant]

What are they giving away for free?

BTW, what big thing went right for Monotype towards the end of last year?

hhp

[Chris Dean]

@hrant: http://www.linotype.com/6987/linotypewirdmonotype.html

[Ralf H.]

When I go and spend 600 euro on a … And if there is a fire sale, I want a refund on the difference.

Try that idea on the stock market. ;-)
When you buy something, you and the seller have agreed on the “worth” of that product at that time. That's it. The deal is closed. If the font is cheaper tomorrow, how does it affect you? It's the same font. Nothing has changed. You have willingly agreed that the font was 600 Euros worth to you and you got it for that price. There is nothing that you can or should do.

Mostly because their top-seller charts are unreliable indicators.

Indicators for what? Certainly not for quality, because that doesn’t work in any branch.

[tmac]

Ralf -- see, again I will have to fall back to physical objects. Many retailers guarantee your paid price, and will refund the difference if the price drops or if you find it cheaper elsewhere. That's after the purchase and for a limited period of time. I recently had this conversation with a foundry. It's a strange conversation to have. Fortunately, they did not share your opinion. Because we are two human beings.

The stock market is something else entirely where the assumption of risk is understood.

Maybe I'm a dreamer but I still believe trust is an essential aspect of a commercial transaction. Trust is the underwriter. If we didn't have trust (and humanity) as part of the transaction, then I would just steal fonts.

*unreliable indicators
I was thinking of it as an indicator of the quality of a font. Not the quality of the typeface. Of the font itself, which is measurable. I'm probably delusional on this one.

[hrant]

There is nothing that you can or should do.

If you think a seller has acted inappropriately, you most certainly should do something. Also, this black-and-white view clearly does not correspond to reality, especially not in the US: people get sellers to give them money back without "having to" all the time. When Apple dropped the price of the iPod (or maybe it was the iPhone) by a big amount a few years ago, people complained and Apple gave recent buyers a $100 voucher. So go ahead and complain away! No human needs to be forgiving towards a corporation, only other humans.

hhp

[daverowland]

John,
I like the reverse Dutch auction idea, especially if governed by units sold rather than time. At present, this style of discounting is not possible at MyFonts, where you can put your fonts on sale for a set period of time, and must wait another set period of time between sales. I think (I considered it!) it might be possible to do by issuing voucher codes, but then you have the situation where you have to find a way of publicising those codes. I guess foundries with enough following could do this pre-release on Twitter, but then these foundries probably don't need the discounts to shift fonts.

[hrant]

Todd, very well expressed.

Ralf, the reality is that many customers simply don't think the way you describe. If the price drops a great deal on something bought the day before, many people don't just feel unlucky, they feel betrayed. And quite often that feeling is entirely rational because companies don't decide to lower a price 5 minutes before, they've already decided at the time you bought it for the higher price. And when people feel betrayed by a company, the company pays for it - either by having to give back money or credit, or by losing a future customer (often due to word-of-mouth).

In many US department stores when you're about to buy something at full price, they will actually tell you to wait until the next day when the item will be discounted! Are they stupid to do that? I think they're very clever. And try using an expired coupon at almost any fast-food place: does it work? Yes. Think about why that's the case.

Retail businesses don't get rich by being fascist about rules.

hhp

[daverowland]

The difference between clothes and fonts is that clothes aren't launched at massive discounts to boost sales, they're reduced in price *after* new, more fashionable clothes are released. Do any font retailers put the prices of their old fonts down when they release a new one? I once tried an offer whereby a purchaser of a new font could choose another from my library for free, thinking this would add to the desirability of the new font without hindering any possible performance in the sales ranking. I think it kind of worked - something to consider as another possible marketing strategy...

[JamesM]

It's fairly common for larger stores to refund the difference (if requested) if an item you bought goes on sale within 30 days.

When I was in college I worked part-time in a department store and I can assure you that some customers get very bent out of shape if an expensive item goes on sale a few days after they purchased it. Typically they assume the salesman knew about the upcoming sale, which isn't always true.

[Ralf H.]

If the price drops a great deal on something bought the day before, many people don't just feel unlucky, they feel betrayed.

Funny, that this only works one way, isn't it? No one who gets a sale price ever complains about having paid too little.

[Anthony Noel]

Has anyone actually seen one of these massive discounts applied to a family at any time other than during its introduction?

This discussion about someone having paid full price for a font family, only to see it become available for a fraction of the price they paid a day or so later seems pretty hypothetical.

[Ralf H.]

Linotype has started doing it. Last month you could get several full families (like Syntax Next) with over $700,- discount.

[quadibloc]

I do think that people will be reluctant to buy X at ten times the price X was available at last week.

On the other hand, with fonts, the only reason someone has to have X, instead of Y or Z, is because it's what everyone else is using, it's what is fashionable. Popular, recognized typefaces get specified by name.

So low prices work, in that they remain profitable if the ultimate sales volume is high enough. And high prices don't make sense for the thousands of me-too fonts.

It seems to me that it's very hard to be a financial success from designing new typefaces.

[hrant]

No one who gets a sale price ever complains about having paid too little.

Yup. That's the difference between a human and a company.

hhp

[Anthony Noel]

Linotype has started doing it. Last month you could get several full families (like Syntax Next) with over $700,- discount.

The Linotype sales are rather interesting examples – limited to just a few hundred units sold and for only a day or so (whichever comes first).

In terms of techniques to cut through the avalanche of very similar products and promotions, it could be very effective.

It might not make the most of the extra exposure new fonts are automatically granted on MyFonts, but doing some moderate discounting later on in the life cycle of a font might be an alternative option.

A.