I Told You So!

By | Tuesday, June 02, 2009 1 comment
Excerpt from this post I made last December...
Let's say a Marvel comic costs $2.99 and it sells 30,000 issues a month. That's $89,700 in revenue. If Marvel jacks up the price to $3.99, they will inevitably lose readers. How about we assume 25% for the sake of simplicity? If a dollar price increase drops monthly sales by 25%, Marvel will actually bring in more money. 22,500 x 3.99 = 89,775. Yes, that's only a $75 increase in this example, but that's also just using off-the-top-of-my-head figures. I suspect Marvel has done some number crunching and figured that they won't lose nearly that many readers for most of their books.

What Marvel realizes here -- and I've heard Marvel editors speak to this point directly -- is that Marvel comics are what economists call price inelastic. That means that the price you pay can fluctuate quite a bit without a change in your buying habits. Gasoline is a more classic example of having price inelasticity. But, as we've seen recently with gas, there IS a point at which people will start changing their buying habits based on price. But, in the case of gas, that didn't really start until after we'd staying north of $3.50 a gallon for several months and we started seeing that reflected in the price of moving goods around the country. Marvel is betting (accurately, I'd wager) that a $3.99 cover price won't send away too many of their customers.

Consumers don't have an infinite bank account, though, so that price change is going impact them. But, I'd bet (as I'm sure Marvel is) that most of their customers are going to drop books from other publishers before theirs. Sure, the folks who buy mostly DC books and only one or two Marvel books are more likely to drop the Marvel books over their DC ones. But the bulk of Marvel's readership, I'd guess, is comprised of people who buy mostly Marvel comics. Most superhero fans seem to have a preference to which universe they visit, and the Marvel fans which comprise the majority of their overall readership are more likely to drop non-Marvel books. Especially in this era of perpetual company-wide crossovers. Does it make more sense to drop Final Crisis (which doesn't really make sense unless you're also reading a half dozen other DC titles) or Secret Invasion (which ties in with another dozen or two books that you were already reading anyway)?

The issue I'm sure many of you have thought of is, of course, that this will likely have a detrimental impact on smaller publishers, as people drop their one Slave Labor title to afford their Marvels. This will, overall, almost certainly hurt the industry and I expect we'll see Marvel actually increase their market share with regard to dollar value. It doesn't strike me as a positive move for the industry overall, but I'm pretty sure the bean counters at Marvel aren't focused on that.

It was an absolutely cynical outlook on how Marvel's running their operations on my part, but I think the recent investor conference and subsequent internet chatter show that I was entirely justified in that thinking. Marvel (and DC) know they've got their customers by the cajones, and can pretty much put out whatever they want, charge whatever they want, and most of their current customer base will continue to buy it.

Let me ask this... how many people will stop buying Justice League because Dwayne McDuffie got fired? Oh, I'm sure there are some people who were reading ONLY because McDuffie was on the book in the first place, and they're gone to be sure, but will that impact the sales numbers? Not appreciably. I rambled on about this whole notion over a year ago...
From a practical point of view, each of us a finite amount of resources with which to procure comics. As a company, marvel (and DC and Dark Horse and everybody else) wants to garner as much of that as possible. So if you've devoted yourself to marvel comics, then you're going to drop whatever you comic allowance is on their products. Even if you switch from Captain America to Thor, they still get the same chunk of your change. Their business model is largely predicated on the fact that you're going to continue giving the same amount of money every month, and it's largely irrelevant on which titles you actually buy.

A lot of jokes have been made over the years about the toxic relationship many comic book fans have with their Local Comic Shops, but the relationships they have with their publisher(s) of choice are just as bad anymore. And that's one (but certainly not the primary!) reason why I stopped buying Marvel and DC books on a regular basis.
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Marvel has (at least) forty years worth of sales data regarding price increases. (Twenty-some years of direct market data.) Marvel can plot circulation, index it to percentage increase, and spot the trends. (Dedicated fans can do the same, using ICV2 data and projected sales via PW Beat.)

I kicked my Marvel habit in the early 90s when I had too many issues each week, and not enough cash. So I'd put stuff back, vowing to get it the next week. And that would repeat, until the next issue came out and I realized I didn't miss the story.

Currently, the only Marvel I purchase are the humor titles and the occasional mini-series (Oz, Animal Avengers). My reading is all over the comics spectrum, from non-fiction to literature to superhero to humor to erotica to whatever is good.

Is Marvel also raising the cost of the graphic novels? Does anyone notice?