Pricing Strategies: Barnes & Noble

"Although price has never been the number one reason book buyers cite as a factor in choosing where to shop, it has becoming progressively more important. And, of course, it is even more important online."

-Leonard Riggio, Chairman of Barnes & Noble, Inc.


Fixed pricing

Barnes and Noble makes good use of a fixed pricing strategy. Keeping both their online and offline sales consistent, Barnes and Noble applies the same pricing strategy online that a customer would experience in one of their stores. However, because of its online ordering system and fully automated distribution center, Barnes and Noble is able to ship products directly from their warehouses, adding additional savings for the consumer. Barnes and Noble's fixed pricing strategy includes the application of markup pricing, volume based pricing, bundling pricing, and promotional pricing.

Mark-up pricing

Mark-up pricing (the cost of buying the product from the producer plus amounts for profit and expense) is used by Barnes and Noble and other book retailers alike to sell such items as books, magazines, DVDs, music, and related merchandise. Barnes and Noble, in addition to these items, uses mark-up pricing to sell such items as their calendars, video games, toys and games, as well as home and gift items.

Volume-based pricing

Volume-based pricing, which includes establishing separate price levels based on quantity purchased , becomes very useful for any online retailer, including Barnes and Noble. Barnes and Noble offers bulk order discounts, with purchases amounting to over $25 receiving free shipping and delivery. Barnes and Noble offers such existing discounts as receive any Mother's Day tote for only $4.94 with the purchase of any two eligible items, and also buy any two paperbacks and receive the third one for free. Barnes and Noble is also able to establish discounts for bulk orders which include over 50 copies of the same book.

Bundling pricing

Bundling pricing-the strategy used to establish the price for a combination of more than one product/service-works well with a large retailer such as Barnes and Nobe because it has many available items in addition to books. Discounts in the past have included savings on orders that include both hardback books and paperback, or a combination of music/movies along with book orders.

Promotional pricing

Promotional pricing is a key strategy employed by Barnes and Noble, with particular short term discounts or incentives provided through becoming a Barnes and Noble club member or Barnes and Noble Mastercard holder. Barnes and Noble makes frequent sizable discounts available to its customers that hold club memberships. Barnes and Noble sends email alerts to club members informing them of available store discounts in addition to specialty discounts made available only to members. Barnes and Noble includes a special feature called "This Week at Barnes and Noble" which is included in the emails that are sent to members, enticing them to come into a local store that week or make a purchase online.

Dynamic pricing: Personalized pricing

Barnes and Noble has earned great financial success through its online component, but it is the dynamic pricing strategies that are included within its business plan that allow Barnes and Noble to remain at the top of the book retail business. Personalized pricing strategies allow for customization of price options for an individual customer. Barnes and Noble's online store makes great use of this strategic tool because consumers browse the website longer in order to finalize their order so that it provides additional discounts. Within their annual report for 2008, Barnes and Noble emphasizes the importance of increasing discounts to their best customers in order to strengthen their long term position in the marketplace. The Barnes and Noble card membership really helps to administer personalized pricing to include coupons for the week and loyalty discounts for simply being a member.

The Membership Program of Barnes and Noble has been extremely valuable. In 2007, Barnes and Noble added record high new members to the program, which included more new members than in any year since the program was launched in October 2000. Barnes and Noble was able to drive up club membership by increasing the discounts made available to its most loyal customers.

Barnes & Noble has been able to hold onto their title of top book retailer, with their brand name being their strongest competitive advantage due to the quality of both its products and services.