i write. i make up stuff. i adventure hard, so you don’t have to.



EBooks: The Price Is Right…or Is It?

Published July 10, 2011 in Writing - 12 Comments

When you walk into a US bookstore to pick up a paperback, you expect to pay between $7.99 and $9.99.  If you buy a hefty new-release hardcover, which looks admittedly impressive on the library shelf, you’ll pay between $25 to $35.  Books are more expensive in Canada, the UK, and Australia; even so, customers know about what to expect to pay.

However, when you go online to buy an eBook novel by your favorite author, or a new author you’d like to try, the price varies wildly, like a racecar driver swerving and skidding out of control on a patch of black ice.

Several years ago when my wife bought her first electronic book—a collection of Dennis Miller’s rants for her Palm Pilot—I was astonished.

I was appalled.

I was offended.

Twenty-three dollars for an unformatted text file?  A digital book with no material cost was priced the same as the new hardcover book one could buy and hold in the bookstore.  Twenty-three dollars for what was little more than a glorified email containing a Word file? You’ve got to be kidding!

No wonder eBooks took so long to catch on.

The expanding popularity of the Kindle, Nook, Sony eReader, iPad, Kobo and other devices have driven the prices down, but even so, most new titles from traditional publishers cost between $9.99 and $16.99.  My most recent novel with Brian Herbert, Hellhole, sells for $12.99 in eBook form.  My newest book from a traditional publisher, The Key to Creation, goes for $9.99.

Meanwhile, however, individual authors are staging—and winning—a revolution right under the noses of the lumbering giants.  We are putting up backlist titles—good solid novels that have been out of print and unavailable to most of our fans—for a lot less.

I have the text files for most of those books; if not, I can scan, convert, and proof the text. Then (with the skill of my genius wife Rebecca) we put the books up for sale on Amazon, Barnesandnoble.com, Smashwords, and any other eBook sales venues—exactly the same places, in fact, where traditional publishers put their books.

And I get to set the price.

If a reader wants to buy a book by, say, Kevin J. Anderson or by Frank Herbert, does she pay more attention to the publisher’s imprint than she does to the title, subject matter, and book description?  Readers generally don’t care who releases a novel; they are interested in the author or the book itself.

We’ve chosen to put all of our novel titles up for $2.99-$4.99.  Maybe it’s just my instinct as a long-time reader, but I feel that five bucks is about the right price for a book. $10 is too much, $16 is way too much, $23 is downright appalling.  There’s no physical manufacturing cost, no sales reps to go out to brick-and-mortar bookstores, no shipping costs, no warehousing costs, no return costs.  As I said above, it’s a glorified email being sent out to the consumer.  Once a file exists on a server, it can stay there forever at no additional cost.

Publishers insist that they need to keep the price point at $10 or more to support the prices of their physical books sold through actual bookstores.  Well, who wants to pay ten bucks for a file on an eReader when a physical paperback costs the same amount?  I might pay $30 for a brand new hardcover, because it has a higher perceived value than a disposable paperback I could buy later for a third of the price.  But a text file is a text file—why is one eBook $16, while another sells for 99¢?

When Amazon distributes these eBook files through the Kindle marketplace, they keep 30 percent and give the remaining 70 percent to the “publisher” (or the author, if she does it herself).  If the author puts up her own eBook novel for sale, she keeps that 70 percent—$7 on an eBook at the $9.99 price point.

If Big Traditional Publisher uploads the file (exactly the same thing the author can do), they generally keep 75 percent of the net amount that comes from any eBook vendor.  Only 25 percent of the net goes to the author—one quarter of the $7 the publisher gets from Amazon, or $1.75.

Hmmm, $7 per copy or $1.75 per copy. I know which I’d rather have.

Now, the publisher will say that file conversion is difficult, that teams of crack computer experts spend days cleaning up the electronic file (which they already have from when they typeset the book).  The publisher might claim they have to pay for and secure the electronic rights to the cover art…but the thumbnail image for an eBook cover is exactly the same as the thumbnail you’ll find on the online catalog listing for the hardcopy book. It makes no sense.

You’ll find self-published authors putting up their books generally in the range of $7.99 all the way down to $.99.  Let’s look at some numbers.  If I price an eBook at, say, $2.99, my Amazon royalty on each copy is $2.10.  On the other hand, for a traditional $9.99 paperback book that you would buy in a bookstore, the author earns about 99¢ per copy.  So the author earns less than half as much from a traditional $9.99 paperback than she earns from a self-published eBook priced at $2.99.

I’ll say it again—how does that make sense?

There’s a big price barrier at $2.99 because of Amazon’s rules.  Amazon pays 70% net royalties for all titles $2.99 and above. However, that rate goes down to only 30% for anything priced lower.  So, if I price my new book, Alternitech, at $2.99, I’ll receive $2.10 for each copy sold.  However, if I drop the price by a penny and charge $2.98, then I receive only $.89 per copy—a whopping difference.  $2.99 it is.

Many authors put up their titles at 99¢ just to attract bargain shoppers.  They consider those titles loss-leaders and occasionally generate large numbers of sales.  On a recent trip, however, I spent a lot of time with my Australian publisher’s representative discussing eBook pricing and the intrinsic value of a book.  She made a very good point about undervaluing a book’s worth.  “If you work for a year writing a novel, what are you saying when you give it away for 99¢?”  I think she might have a point.  We don’t want to drop the prices so much that the vast pool of readers out there decides that a book is worth less than a dollar. (After all, most people pay $10 or more just to see a matinee movie.) That’s why I think $3.00 to $5.00 is about the right point…but that’s just my gut feeling.  I do, however, put up some of my short stories at 99¢, hoping to entice new readers.

It’s a whole new world, giving the proper value to the customers and maintaining control of my own titles.  When I look at my own royalty statements, I can see that my obscure or long out-of-print titles that I price at less than $5 are selling as many or more eBook copies—in actual quantities and also in cumulative royalties earned—than major publishers are selling of much more prominent and heavily advertised titles.

Now, I’m just an author who tries to pay attention to the business and manages my career as best I can, but you’d think some high-end marketing genius at a major publisher would run the numbers and realize that they’d sell more copies and generate more income if they didn’t charge such high prices!

Looking at the online listings, my fans will find Blindfold, Climbing Olympus, Hopscotch, and many other titles for under $5, or other titles from traditional publishers for as much as $12.99. If they like my writing and they’re looking for a good book to read, which one do you think they’ll choose?

I certainly don’t mind. I think the price is right.

My eBooks are available at wordfirepress.com.