Thursday, December 22, 2011

The Price Point for E-Books

It still amazes me how in only a matter of a few years, e-books have become the norm. According to this breakdown of a Harris poll, 1 in 6 Americans use e-readers (only a year before it was 1 in 10), and another 1 in 6 plan to get one in the next six months. I just got a Kindle myself in November.

Let's face it. E-books aren't going away. Will they eventually replace hold-in-your-hand books? Probably not. I've heard them compared to how paperback books were introduced into the marketplace in 1935 and quickly took up real estate in what used to be almost exclusively a hardcover marketplace. I can see that happening more than I can see e-books actually replacing physical books.

Author James Scott Bell had a fascinating post called Field Report From the E-Book Revolution in which he espoused on this subject. Read the comments section too as there's more info there.

The biggest "problem" I see (and this is addressed in that post and comments) is the price point for e-books. Most publishers have been charging just about the same price for the e-book version of a book as they are for a trade paperback. Given the choice between electronic and hard copy, I'm always going to go for the hard copy if the price is the same. I think others are too.

I believe the only way publishers are going to truly make money off of the e-book revolution is if they charge less for them. And by less I mean much less. $2.99-$4.99 for a full length novel is the current going rate (with some promotions even selling them for $.99). I never understood why publishers haven't figured that out.

Now it makes a little more sense. Because most authors signed their contracts before the boon of e-books, their royalty rates are going to be based on what has been the norm---hold-in-your-hand books that generally retail for $12.99 (softcover) or $24.95 (hardcover). Using that standard contract, if an author's royalty rate is say, 15% on the wholesale price, then they'll make a buck or so each book that's sold. But if the book is priced at $4.99, then they make much less.

One publisher I've seen jump on the band wagon in a good way is Marcher Lord Press. I spoke with MLP founder Jeff Gerke about their methods, and he said, "Our model is something like this: New e-books at $9.99 for six months, then down to $6.99 and eventually $2.99. Series/trilogies: First book in the series is lowest ($2.99 or lower), second book is $4.99, third book is $9.99 when new and $6.99 after six months. Our lower selling books, or ones we just want to hook people with, or on short-term promotionals are as low as 99 cents."

Not sure how much the authors actually make on these sales, but I would venture to say MLP has taken this into account in their contracts. This methodology is what more publishers need to embrace for them to succeed in the ebook marketplace. That may require new contracts and agreements, but as an author myself I would be happy to make changes along those lines because I know it would end up in more sales overall.

The playing field is wide open. Exciting things are on the horizon for authors and publishers alike! No need to fear this new frontier. Everyone's learning and exploring together, and that makes for some interesting times.

What do you think?


Martha A. said...

I agree, I look at the price of eBooks and can't buy them! Yes, if they were under $5, I might, but more than that, I can't.
My brother had the idea of a bundling option, if you buy the print book and the eBook, you get a deal. $20 for both the print book and eBook....or something like that. I just got a kindle and I enjoy it, but only for certain things. I like to be able to read the back cover, while reading the book, and feeling pages in my hand.

Rebecca said...

I thought I was holding onto my money too tightly by having $9.99 as my absolute max for an ebook, but it sounds like I'd actually be willing to pay more than I should! ;)

I've had my Nook for about 18 months and mostly snag free or heavily discounted books ($3 or less). I love to see 99 cent books, so if a publisher or author is going to release older or out-of-print books, I'd definitely be hooked with that price! I might even consider adding books already in my print collection when they're at that price, for the convenience factor of carrying them in my portable digital library.

I agree that books should drop in price after a time, so MLP has a great strategy there. And hooking people on a series with the first book free or very low-priced is just right.

I like Martha's idea of bundling books as they've done with DVD and Blu-Ray. I think it should be cheaper than $20, though. Maybe my max price of $10 would be bumped to $12 or $13 if it were a bundle. (You might guess I rarely buy hardcover because of the price. I'm a paperback-only collector when it comes to print.)

WordVixen said...

One thing that I've noticed since getting my Kindle is that I'm a lot more likely to make spur of the moment purchases of very cheap e-books. $1-2 lets me pick up books that I'd normally not give a second glance to (unfamiliar authors with a summary that doesn't super snag me). At $3-4, I pause and think about it. I'm more likely to buy if I already know the author, in which case I consider it a good deal. At $5+, it goes on my wishlist just like any other book that I want to buy but am not yet ready to read.

I think MLP's pricing plan is just about perfect for enticing readers. My only real concern is whether the author is getting a fair deal or not. BUT, the fact that I'm buying many, many more books that I normally would not, I also have to assume that an author would do well by sheer volume, if not by royalty percentage.

Chris Well said...

There are apparently several authors who've have figured out how to make a hefty profit on low-priced eBooks -- because the lower price-point leads to an exponentially larger number of sales. (It also requires a higher percentage of the sale going to the author; which, given that eBooks do not require many of the hard costs associated with physical books, does not sound out of line.)

Martha A. said...

I just heard about an author who when she sold her eBook for .99, she is selling 5K a month......and making a large income now from her eBook sales. So, cheap prices sometimes means you are making more as you are selling more.

WordVixen said...

Oooh, another great point about e-books, is that authors aren't limited to novel length books that have to go through their publisher now. Camy Tang wrote a novella to finish off her Sushi series, and Erynn Mangum wrote two novellas that are only available as e-books. I bought both of them (haven't had a chance to read them yet). The downside is that if the author doesn't carefully edit their own work, they can destroy their writing reputation, which will make them less desirable to the publishers. But, if they edit themselves well and keep the quality high, it can be a nice supplement to their published works, as well as an enticing sample to new readers. You can also offer cut scenes or prequel type writing for $0.99 to fans instead of the old method of free on the website, free for joining an email list, or not at all.

There are a lot of ways that ebooks can work hand in hand with traditionally published books, which I think is the most exciting aspect. (sorry for the off topic)

C.J. Darlington said...

Fascinating subject, isn't it? Thanks for commenting, everyone.

Gail said...

Great comments.

I just got my Kindle after wanting one for the last 4 years.

Here are my very personal thoughts. I absolutely LOVE books -the real deal. I love the smell, the pictures, all the front and back cover stuff. I love writing in my book and thoroughly using it up, and if money were no object, I would always have BOTH the hard copy and the electronic for every book.

The primary reasons I wanted to go to an e-reader were because I have NO ROOM to store any books and there are piles of books all over my place. Since I know that I am going to always buy books, I cannot keep buying bookcases, or wonder where to put them all and I won't get rid of them. So everything has to be electronic for now (although - cookbooks?? really? Not yet..).
Another reason was the cost. If I were able to get a book for less money, then of course.
But, one of the main reasons was because I have visual impairments that are worsening and reading was becoming so difficult that I stopped, and was becoming so sad missing my first love. :)
Having an ereader makes it CLEARER for me as well as being able to change the font and size.

I do agree that the temptation to buy more books is there (which is why I didn't get the 3G!) and that would defeat the cost savings but my budget doesn't HAVE the leeway anyway so that prevents me from doing so. Still, the temptation is there.. :)

Onesimus said...

I can't see myself turning to ebooks no matter what the price.

Give me a book with paper pages any day.

The only disadvantage with my preference is lack of storage space.

-Tim (onesimus)

ps I'm currently reading Thicker Than Blood and I'm loving it.

Judith Briles said...

I agree on your point. As a reader of ebooks myself, I would rather see myself buying physical books if the price of an ebook is already nearing the price of its physical counterpart since I can really feel the book and see my money going to a more reasonable purchase. Besides, physical books are reasonably priced at more than $5 considering its added expenses.

House of Leoj said...

The contracts need to be changed so that authors get MUCH more for e-books than physical, as the cost to the publisher is much lower. Or, authors need a good way to self-publish the e-books on several platforms.