Newsagents in the UK are understandably unhappy at the cut in cover price for Full House magazine as evidenced by this item from the NFRN website:
With magazine sales in serious decline, some might think it a bold move by Full House Magazine to be investing in a new look and re-launch from issue 18 (on sale April 23). That is until one looks at the new price of 50p, versus the existing price of 68p. This means that, at a retail margin of 25 per cent, gross profit on sale is reduced from 17p to just 12.5p per copy.
The retail flyer also suggests that retailers display “Full House” next to Real People (Cover price 70p and retail margin of 17.5p) and Chat (Retail Price 78p and retail margin of 19.5p). Why would retailers want to sell a title that offers them a lower profit?
Of course, whilst overall profit is derived from a combination of margin and volume, “Full House” must think that retailers are idiots and will not see the real purpose behind this move, which, of course is all about driving advertising revenue. Not only do retailers not see a penny of that advertising revenue but “Full House” is expecting retailers to pay for their “investment in volume sales” through a lower price and lower margin.
This is not the first time that a publisher has pulled this stunt. Retailers are alert to the tactic and will see that “Full House” is seeking to gain an advantage over their competitors at their expense, by reducing their income, whilst at the same time devaluing the market and making it more difficult for other titles to increase prices.
Not only is this a very high risk strategy (and it will be interesting to see whether “Full House” has found a winning formula or whether this move back-fires and loses them the game), but, unless publishers adopt a more responsible attitude towards prices and retail margins, they need to understand that they are likely to be hastening the day when retailers say, “enough is enough” and take the control of pricing into their own hands.
Well said. Retail costs rise significantly each year. Rent increases for many newsagents by 5%, labour by between 3% and 5% and general business costs by 5% or more.
I am not sure of how a UK newsagent says enough is enough. Here in Australia taking such action is a challenge with some magazine disributors.
Slightly off-topic, but the ultimate drop in retail price (and margin) has to be the Targa Tasmania Rally Guide. The rally starts next week (April 28) and the official magazine has been in Tasmanian newsagencies for the past two weeks selling for $6.95. Today it is available free with Trading Post for $2.50 with the only difference appearing to be a large “Free” where the barcode and price is in the original edition. This leaves agents with a stack of useless magazines that are naturally due for return the following month.