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E-book Pricing

My post on royalties earlier this week generated some interesting responses, particularly with regard to e-book sales.  My e-book sales were, at best, 4.3% of my total sales (for The Stepsister Scheme).

Several people said my e-books were priced too high.  The printed book cost $7.99 (U.S.), whereas the e-book was available for $6.99.  If the price were lower, I’d sell more e-books.1

Well … sure.  And if the price of the paperback were cheaper, I’d sell more of those.  That’s basic economics.

Beneath those responses is, I think, the belief that e-books just aren’t worth $6.99.  We’re still arguing over the value of an e-book, meaning both how much does it cost to produce, and how much are people willing to pay?

There’s an assumption that e-books should be cheap because there’s no printing cost.  But printing costs are only about 8-10% of the overall cost of producing a book.  Shipping and storage are also a factor, but the majority of the costs aren’t about the physical book.

For the sake of argument, I’m talking about professional, commercially produced books.  You have to pay the author’s advance and royalties, the cover artist, the editor, the copy editor, the typesetter, the sales force, and that doesn’t even get into distributor costs or the percentages taken by retailers.

“But then how do you explain all of those cheap/free e-books on Amazon, Jim?  If they can do it, why can’t you?”

I can, actually.  I’m planning to re-release Goldfish Dreams as an e-book, and it will be significantly cheaper than my other books.  This book has already been commercially published once, and the rights have reverted to me.  So a lot of the professional work has already been done.

When the rights revert to me for my other books, I may consider doing something similar.  Cheap e-books seem like one good way to keep an author’s old backlist in print.

But those initial production costs have to get covered somewhere.  Sure, I could skip straight to self-publishing for my next book and bypass the publisher, but I don’t have the expertise to produce a good product, and I don’t have the sales force or distribution to get that product out there.

One thing I’ve considered is that it might be cool if the e-book price dropped 50% a year or two after a book came out, assuming the book earned back most of its costs in that first year.  But then, why couldn’t you do the same with the print book?  (I’m sure there are reasons; I’m just letting my mind wander a bit now.)

I don’t know what the “right” price for an e-book is, or if there’s one correct, fixed price point.  $6.99 seems reasonable to me, but it’s obvious some people disagree.  I’m personally reluctant to buy an e-book for more than $10 … but if the alternative was a $25 hardcover or waiting a year for the paperback, I might go for the e-book.

I know this is an old and ongoing debate.  But I wanted to put a few of my thoughts out there as to why “Just make the e-books cheaper!” doesn’t strike me as the answer.

Discussion welcome, as always.

  1. Please note that I have no control over my book prices. Those are set by the publisher.

Mirrored from Jim C. Hines.

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( 128 comments — Leave a comment )
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jhetley
Oct. 7th, 2010 01:38 pm (UTC)
And a lot of the discussion assumes that a writer has control over book pricing . . .

Ebook versions of some of my novels were priced the same as a trade paperback. No wonder those editions didn't sell. But the publisher set that price, not me.
jimhines
Oct. 7th, 2010 01:41 pm (UTC)
I had *just* updated the post with a footnote to that effect :-)
(no subject) - jhetley - Oct. 7th, 2010 01:57 pm (UTC) - Expand
acrimonyastraea
Oct. 7th, 2010 01:50 pm (UTC)
Do you think that as the prices of ebook readers fall that there will be less push to lower ebook prices? A lot of the sales pitch for the tech is about how much money you will save by buying ebooks, to justify a high up front cost of the reader.
jimhines
Oct. 7th, 2010 01:59 pm (UTC)
I honestly don't know. The thing is, you don't even have to buy a reader. You can just download the software to read e-books on your computer or laptop or smart phone or whatever. I know it's not the same experience, and e-readers are a little nicer on the eyes for long-term reading, but I don't know how significant a factor the cost of that e-reader is or should be.
(no subject) - beccastareyes - Oct. 7th, 2010 02:24 pm (UTC) - Expand
(no subject) - sageautumn - Oct. 7th, 2010 02:55 pm (UTC) - Expand
(no subject) - dqg_neal - Oct. 7th, 2010 03:06 pm (UTC) - Expand
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barbarienne
Oct. 7th, 2010 01:55 pm (UTC)
One thing I’ve considered is that it might be cool if the e-book price dropped 50% a year or two after a book came out, assuming the book earned back most of its costs in that first year. But then, why couldn’t you do the same with the print book? (I’m sure there are reasons; I’m just letting my mind wander a bit now.)

-->I have to go to a meeting right now, but I'll be back in an hour to answer this.
jimhines
Oct. 7th, 2010 02:00 pm (UTC)
I look forward to it. I love having people more versed in the industry who can explain why my ideas are brilliant or stupid or anywhere in between ;-)
(no subject) - barbarienne - Oct. 7th, 2010 04:08 pm (UTC) - Expand
lurkerwithout
Oct. 7th, 2010 02:00 pm (UTC)
Right now the only e-book I buy are the Grantville Gazette anthologies from Baen's webscription store. IIRC they run six bucks each, less if you buy them in larger sets...

Ok, yeah checking it was $6 individual, $15 for 3 or $40 for sets of 10. Of course in this case there are over 30 online volumes and currently..five print ones...
jimhines
Oct. 7th, 2010 02:03 pm (UTC)
Are they the equivalent of an anthology, or closer to an issue of a magazine in terms of how much fiction/content you're getting?

Baen has been trying a lot of cool things with electronic publishing pretty much from day one, as far as I can tell.
(no subject) - longstrider - Oct. 7th, 2010 07:18 pm (UTC) - Expand
(no subject) - (Anonymous) - Oct. 18th, 2010 04:34 am (UTC) - Expand
sinboy
Oct. 7th, 2010 02:05 pm (UTC)
While making e-books cheaper sounds good, at this point, most publishers have no idea in advance how much or little an e-book will sell through, so why should they make them cheaper? With physical book sales, they generally have a basic idea because buyers buy a number of books. There are returns, but you expect a certain percentage to sell through.

That's the heart of the problem. There are fixed costs in producing a book, e-book or otherwise. If no one is willing to assume them on behalf of the publisher, then we won't see cheaper e-books.

One thing I’ve considered is that it might be cool if the e-book price dropped 50% a year or two after a book came out, assuming the book earned back most of its costs in that first year. But then, why couldn’t you do the same with the print book? (I’m sure there are reasons; I’m just letting my mind wander a bit now.)

If we did that, bookstores would go under, most likely.
jimhines
Oct. 7th, 2010 02:36 pm (UTC)
Do you expect that to change in the long term? I know publishers do a P&L on titles beforehand, so with time and more data, I'd imagine they could put together a more accurate P&L projection for e-books as well. But right now, things are new and in flux and I'm seeing a lot of people talking about The Answer to E-books without all that much data to back it up.

"If we did that, bookstores would go under, most likely."

Hm ... good point. And what would you do with year-old stock that had the old price? I could see that leading to an increase in returns and pulping of books.
(no subject) - sinboy - Oct. 7th, 2010 03:06 pm (UTC) - Expand
meallanmouse
Oct. 7th, 2010 02:17 pm (UTC)
I have always thought that regardless of what format you're buying a book in, you're ultimately buying the months/years of work and the intense creative work that went into creating a story - not a format.

Granted, some may say that I'm a writer (in the videogame industry no less) and that this makes me biased due to the piracy there, but the fact is, I felt that way long before I ever started working in this field or being paid to write, too.

I'm not buying a process, when I buy a book. I'm buying a story. And for my part, hey - I'm willing to pay for that, regardless of the format it's in.

(Especially taking into account that any price deduction will most likely always hit the writer the most, ultimately? Yeah, that.)
ckd
Oct. 7th, 2010 02:22 pm (UTC)
To some extent, the price drop idea has been done; I've seen many e-books over the years that came out at hardback-ish pricing, and later dropped to mmpb-ish pricing (not coincidentally, around the time the mmpb came out). Unfortunately, there were also many books that didn't. (In more than one case, a book "sat on the shelves" at Fictionwise with an hc-esque price long after the mmpb had gone out of print; used mmpbs on Amazon were going for under a dollar, not the $20 that Fictionwise was stuck charging for the e-book.)

I don't have a problem with there being an "early buyer premium" even on e-books; I have the choice to buy it or wait. It shouldn't be as much of a premium as the hc/mmpb analogy would imply, since you're not getting a more durable version of the book....
jimhines
Oct. 7th, 2010 02:38 pm (UTC)
I'd have a hard time justifying $20 for an e-book to myself, but I can also see the value in the early premium. Part of that high price is for the more durable hardcover, but part of it is also the opportunity to read the book now rather than waiting a year for the paperback. I dunno ... still sorting it all out in my head.
(no subject) - barbarienne - Oct. 7th, 2010 04:20 pm (UTC) - Expand
stargatedragon
Oct. 7th, 2010 02:25 pm (UTC)
I suspect part of the problem is that a certain ebook fanatic author (coughKonrathcough) is bleating over and over again that NO ebook should be priced over $2.99 because that's where he's getting HIS sales. And the high royalty from Amazon.

I'll pay $9.99 for a hardcover book in ebook for if I want it now and can't wait for it to come out in paperback - or if I have a guess that it won't come out in paperback, there's a few of those. If it's a genre that's not that hot like poetry (Basho haiku analysis) or nonfiction that's just not popular I expect to pay a bit more.

I'll pay up to the mass market paperback price, but no more. And with a lot of books moving to trade paperback size it's still a deal at $9.99.

As far as publishers go...

Samhain Publishing has my superhero novel, "Blaze of Glory", set at $5.50 at Amazon. Most places discount it to $4.40. When it comes out in trade in February 2010 it'll be priced at $15.00.

Same with my steampunk western, "Wild Cards and Iron Horses". Same with almost all Samhain books, unless they're novellas and thus not going into print.

And Samhain does pretty well for a small publisher. So I don't buy that ebooks have to be under $3.00 or no one will buy them.

I'm rambling and under the influence of sinus meds - off for tea and to wait for the responses...

*falls back onto sofa*
jimhines
Oct. 7th, 2010 02:41 pm (UTC)
Good medications sometimes make for the best conversations :-) (I've had some really fun chats with my wife when she's recovering from knee surgeries...)

JK's approach is working for him, which is great. But a lot of what I get from his blog is that it works for him, so it will work for everyone, and furthermore this is the way we should all be doing it. And I don't buy that.

I know there are a lot of cheap/free e-books out there, but I'm curious how many *new*, pro-quality (whatever that means) e-books are available for those cheap prices, or if it's mostly reprints, public domain work, and ... well, stuff that got rejected from the publishers.
(no subject) - sinboy - Oct. 7th, 2010 03:08 pm (UTC) - Expand
(no subject) - mzmadmike - Oct. 7th, 2010 05:33 pm (UTC) - Expand
sarraceniaceae
Oct. 7th, 2010 02:29 pm (UTC)
My problem with ebook pricing has nothing to do with the cost of buying an ebook (which I do generally think is pretty reasonable, honestly), so much as the fact that with DRM, it's basically a lease of unknown length of the book. And that's pretty much impossible to judge how to price, just because you have no actual idea how long it'll last. But to someone like me who rereads good books for years, it's certainly worth less. For people who read books once - I doubt they care, but then they're more likely to use a library than buy, I would imagine.

Not to mention the other flaws with DRMed ebooks - you can't share them and you can't give them away. I've made a real effort to switch over to ebooks lately, and there's been a couple of books that I absolutely would have lent out or given away if they hadn't been ebooks. There's a real loss in value with DRMed ebooks. It doesn't reduce the initial cost needed to recoup things, obviously, but it does reduce their value to the customer.

I don't have a solution, really, since obviously the publishers don't want the loss of control that comes with unDRMed stuff. But I'd guess it's only a matter of time before some company manages to convince people to start selling non-DRMed ebooks, judging by the way mp3 selling went, and the second they do, they are going to be my primary ebook provider.
adamheine
Oct. 7th, 2010 02:34 pm (UTC)
Hm. My comment below just said that an e-book is worth the cost of a paper book minus the printing cost, but you make a good point. DRM does decrease the value a little (though probably not to the extent that some are arguing for).
(no subject) - longstrider - Oct. 7th, 2010 07:29 pm (UTC) - Expand
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adamheine
Oct. 7th, 2010 02:31 pm (UTC)
I think e-books get a crap deal because they're "just text," as if making copies were the hard part. Nobody questions dropping $20 on a movie or up to $60 for a computer game -- do they think they're paying for the DVD and the cardboard box?

My point is they're the same. Movies, games, and books all have lots of work put into making them (meaning people's time and money). The unit cost is a reflection of what that work is worth, regardless of whether it's printed on discs, paper, or electrons.

So if a paperback is worth $10, then an e-book is worth $10 minus the cost of printing, or about $9.
corinneduyvis
Oct. 7th, 2010 03:39 pm (UTC)
Nobody questions dropping $20 on a movie or up to $60 for a computer game

I actually haven't spent more than €6 on a DVD in years. (Thank you, Play.com!) Most of my friends would laugh out loud at the thought of dropping $20 on a movie. So I'd take out the 'nobody', there *g*

I generally agree that you're paying for the content, not the format - which is why I'm also heavily in favour of bundling paper + ebooks - but, well, I buy my books cheap. Most of the books I've bought in recent years were anywhere between €3 and €6, including shipping. (The Book Depository has absurdly cheap pre-orders.) I tend to shy away from ebooks because they're rarely cheaper than the price I can get for the paper book. Why bother, you know?

I understand it's probably not feasible for publishers to put all ebooks at such a low price, but, yeah. Just offering one more perspective.
(no subject) - adamheine - Oct. 8th, 2010 12:12 am (UTC) - Expand
(no subject) - nihilistic_kid - Oct. 8th, 2010 03:58 am (UTC) - Expand
charmingbillie
Oct. 7th, 2010 02:35 pm (UTC)
I think publishers need to get over the idea that if readers only understood their many costs they'd happily pony up 3 or 4 more dollars a book.

Publishers seem to keep saying--you just don't understand us--and not addressing readers concerns about e-books and the reasons they're worth less TO READERS. I can't re-sell an e-book. I can't share it with my friends. It's not even easy to pass it over to share a particular section.

Publishers will occasionally respond to readers who have little grasp of reality ('e-books should all be 3.00 or less!') but I don't see them asking reasonable readers of which there are many--what's your price point for e-books and why. I think that would be valuable information for publishers to work with.

All that said, 6.99 is a totally reasonable price for an e-book from a major publisher that's out in paperback. Where I'd like to see change is not pricing debut authors at 13 and 15 dollars. Not pricing e-books above paperbacks. Not dropping the price on an e-book after two or three years.
jimhines
Oct. 7th, 2010 02:44 pm (UTC)
"Not dropping the price on an e-book after two or three years."

Why not? They do the same thing with printed books, releasing it in hardcover first, then in paperback. Part of that high price in the beginning is for the more durable format, like I said above. But part is also that "early reader" premium. If you want to read it right away, it will cost more than if you're willing to wait.

I don't see that working well for new authors, but for bigger sellers and better known names, it seems like a model that could work. Whereas if you want all e-books to be $6.99 from day one, you're going to severely cut into the hardcover market, if not eliminate it altogether.

Not trying to argue; just curious where you're coming from on this.
(no subject) - charmingbillie - Oct. 7th, 2010 02:47 pm (UTC) - Expand
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deliiria
Oct. 7th, 2010 02:38 pm (UTC)
$6.99 is a perfectly reasonable price for an ebook. I especially love the fact that I have a Canadian source now (kobobooks.com), which means that the $6.99 really IS $6.99 :)

I'm used to paying 8.99 & up for a paperback, and I go through about a book a day, so my reading habit is EXPENSIVE. ebooks are cheaper, and about a zillion times more convenient and now I really won't buy deadtree unless I have no other option.
(Deleted comment)
jimhines
Oct. 7th, 2010 02:45 pm (UTC)
I'm curious what those publishers in #2 are doing differently.

I know why smaller publishers can't do cheap paperbacks as easily ... where larger print runs mean cheaper per-book costs. But $3-4 is a pretty significant cut from what the larger publishers are charging, and I'm curious where/how they're cutting that cost.
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marycatelli
Oct. 7th, 2010 02:42 pm (UTC)
The idea that the physical production of the book is the expensive part is very deeply rooted. One reason why books have gotten longer -- people don't complain if you jack up the price with more pages, and the pages themselves don't cost that much.
mzmadmike
Oct. 7th, 2010 05:48 pm (UTC)
On an $8 paperback, $4 goes to the store, $1 to the distributor. Baen and I get 80c each. The rest is production, distribution, marketing, warehousing.
(no subject) - jimhines - Oct. 7th, 2010 05:56 pm (UTC) - Expand
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amberdine
Oct. 7th, 2010 02:43 pm (UTC)
I feel like there is something disingenuous about book and ebook pricing, and it really bugs me.

Sure, printing is, say 10% of the cost of book production, but publishers sell books wholesale and take returns. The actual money they get from a paper book is not a large portion of the retail price.

Publishers sell ebooks almost directly, using agency agreements with content providers. They set their own prices. They get a much bigger portion of the retail price, and there are no returns. THAT is where the big pricing difference ought to be reflected: going from wholesale to direct/agency sales. And largely it's not.

Honestly, I don't care about the absolute end pricing. If the industry said, "Hey, new format, new opportunity to make money -- we're going to charge as much as we can and see what the market will bear." Or: "We can't price this any lower or it'll cannibalize too much from the print version, and we want to remain a print-centric company," I'd be fine with those. I pay premium for a lot of things whose base costs don't justify the price, because I find value in the product.

But this constant whining and lying out of publishers is immensely annoying. Oh the paper is too expensive. Oh the shipping is too expensive. And, oh, the returns are much too expensive! But now that all those excuses are gone, they were never really costly at all. Gee.
cathshaffer
Oct. 7th, 2010 03:47 pm (UTC)
Totally agree. Personally, I don't think I would ever be willing to pay more than 50% of the paperback or hardcover price of a book for an ebook version. It's not as permanent, and I have to invest in some kind of pretty expensive equipment to read it--an ereader, a laptop, a cell phone, whatever.

The thing is that the cost of goods are determined by both the cost of production and the price that the market will bear. If production costs are greater than what consumers want to pay, you can whine about your production costs all the way to bankruptcy court--it doesn't matter. Publishers should be experimenting with price point. It is fine to try higher prices, but it is senseless to argue with customers who don't want to pay those prices. If sales are poor and there are significant complaints, then it makes sense to try a lower price point and see if the production costs can be made up with higher unit sales.

I don't give the publishing industry much authority on this subject, because I have been told by reliable sources that in the case of at least one major house, they refuse to do marketing studies because they are afraid of what the results will be. They are afraid that the results of marketing studies will force them to stop choosing "books they love" and start publishing some other categories of books that will sell better. As long as publishers are using their multimillion dollar companies to stock their own private dream libraries rather than providing a product for the market, their business model will be in peril.

As authors, we have to remember that we are not married to our publishers. We should be agnostic to business model, creating the best product we can and offering it to the publisher that can offer us the best deal. We would be wise to handle electronic rights carefully with the expectation that the value of those rights will increase in the future, and that the current print publisher may or may not provide the best service for those rights.
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