Pricing Analysis | jrowepml1609

Pricing

Analysis

While performing a pricing analysis on the digital product sales for McGraw-Hill Education, time is the most important factor of cost. As you can tell in the event simulation flowchart above, some adoptions will take a considerable amount of time. The sales representative must invest a huge amount of their time and efforts and sometimes the sale may or may not justify the time spent on the acquisition. There will be times that a representative must determine if the customer is indeed worth the amount of effort required from multiple individuals and departments within the company. There are also times when this expensive process appears to be a great investment but may turn out to be more of a waste of time and resources.

The chart to the left was published in an article by TechnoBuffalo in 2011 estimating the projected increase of Digital Textbook Sales from 2010 to 2017.

The chart to the right from Statista 2015 highlights the actual increase of Digital Textbook Sales leading up to 2015.

Above you can see a detailed Causal Loop Diagram that can be used to visualize the complex relationship of the cost analysis for this type of implementation and adoption for a new domestic customer.

Expanding into foreign markets increases the complexity of the above types of diagrams by also factoring in the added costs of travel for sales personnel as well as training costs associated with possible language barriers, unusual implementations and other restrictions. Maintaining stock for new foreign customers would be particularly challenging and would add the following process to the already complex process above:

Although the sales of the company depend on much more than just the e-Book sales or digital products, these sales do account for a large percentage of the company's revenue.

McGraw-Hill Education's financial success relied solely on sales of paper textbooks for the majority of the company's existence.

One of the main reasons that publishers such as McGraw-Hill Education have had to focus their efforts on migrating away from paper textbooks and increasing the focus on digital products and e-Books can be further explained in the article "A Tough Lesson for College Textbook Publishers" published by the Wall Street Journal. Click the link below to read more.