“How Much Does it Cost?": The Value Proposition

K|N Consultants

The Value PropositionSession 4D: “How Much Does It Cost?” versus “What Are You Getting for/doing with the Money?” An Overview and Discussion of the Open Access Journal Business Model, (Lack of) Transparency, and What Is Important for the Various Stakeholders

Rebecca Kennison, Principal, K|N Consultants Society for Scholarly Publishing Annual Meeting Arlington, Virginia | May 29, 2015

Standard Pricing Practices- For products, three main strategies:

- What the market will bear (WTMWB)

- Gross profit margin target (GPMT)

(P - C)/P, where P = Price and C = Cost of Sales

- Most significant digit pricing (MSD)

$29.99 instead of $30

2

Standard Pricing Practices- For products, three main strategies:

- What the market will bear (WTMWB)

- Gross profit margin target (GPMT)

(P - C)/P, where P = Price and C = Cost of Sales

- Most significant digit pricing (MSD)

$29.99 instead of $30

- For services, additional complications: - Perceived value of service and quality

- Keystone pricing (e.g., double wholesale cost of production) doesn’t account for service value

3

What are we selling?A product? A service? Both? Neither? If both, then does one matter more? If neither, then what?

The elephant in the room?

What kind of business …

What kind of business …

… is scholarly communication?

What kind of business …

… is scholarly communication? … is open access publishing?

A different kind of animal entirely??

How open is open?

How open is open?

Or … what do we mean by transparency?

What transparency matters?- Full openness, as in to-the-penny accounting of costs, is not needed.

What transparency matters?- Full openness, as in to-the-penny accounting of costs, is not needed.

- What is?

What transparency matters?- Full openness, as in to-the-penny accounting of costs, is not needed.

- What is?

- What products and services are being provided?

- At what price?

- And what mark-up?

What transparency matters?- Full openness, as in to-the-penny accounting of costs, is not needed.

- What is?

- What products and services are being provided?

- At what price?

- And what mark-up?

- Services do not need be at cost, but providers should be transparent about what value is being offered.

Emptor informari.

K|N Consultants

Rebecca Kennison K|N Consultants Email / rrkennison@knconsultants.org Twitter / @knconsultants, @rrkennison