Perennial Seller by Ryan Holiday

Author:Ryan Holiday
Language: eng
Format: epub, mobi
Publisher: Penguin Publishing Group
Published: 2017-07-17T16:00:00+00:00

If Not Free, Cheap

Earlier I mentioned one of my favorite restaurants in Los Angeles: Clifton’s Cafeteria. The venerable downtown dining institution with the tree rising up through the middle of the floor and the neon sign that’s been glowing since Franklin Roosevelt was president? It was once a sprawling restaurant chain across Southern California. Its downtown location, Brookdale, featured a waterfall and taxidermy and even a mystic chapel (if that sounds familiar, it might be because it was all mentioned in Jack Kerouac’s On the Road). Seventy-five years later, the location is still open, having been purchased, remodeled, and updated for a new generation in 2015. As its new owner, Andrew Meieran, reminded us earlier, much of Clifton’s success as a cultural institution resides in its sense of timelessness. But I think we can attribute its seven decades of success as a business to something else, something simpler: They kept the food cheap. Not only was it cheap, during the Great Depression it had a “pay what you can” policy. As Meieran described it to me, “This fostered a sense of community and belonging that created a very loyal guest base that encouraged generations of repeat customers.” Authors like Ray Bradbury and Charles Bukowski were a part of that community—they enjoyed the free lemonade and cheap food while they were poor, and when they became successful, they came back and paid. Bradbury, for his part, celebrated his eighty-ninth birthday there.

Free is a great strategy, but of course it doesn’t work in every situation. Traditionally publishing this book, for example, limits my options in that regard. Though I’d be fine giving large numbers of copies away because I’m able to monetize that readership in a variety of ways, my publisher isn’t—because it cannot (its business is selling books). Even after giving a lot of books away to drive discovery, at some point I would have to begin to charge, or that discovery wouldn’t be worth much. It’s quite rare where “free” is a strategy that works indefinitely. This is business, after all.

Clifton’s found this too. The owner so loved serving people and was so willing to give food away free—slogans included Dine Free Unless Delighted! and You Supply the Party, We Supply the Cake!—that he nearly went bankrupt. Obviously, that’s not going to help anyone. You can’t make up a constant per-unit loss simply with volume. Today, Clifton’s isn’t free. In fact, the new owner put millions of dollars into improving the food and decor so he could charge fair, sustainable prices to keep the business around for another century. Like all things, it’s a balance.

The question, then, is: What is the right price to create a perennial seller? This is going to be controversial, but my answer is: as cheap as possible without damaging the perception of your product. (And by the way, with the exception of ultra-high-status premium brands, I think damaging the perception of your product through price is very hard to do.)

The reason for this is that

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