Kevin J. Anderson’s Blog

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

EBooks: The Price Is Right…or Is It?

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.

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Comments

12 Responses to “EBooks: The Price Is Right…or Is It?”

  1. Ken says:

    They are desperate to protect the old business model, which is physical books. If publishers price ebooks lower, it eats into traditional sales of the same book. Even if the book makes money as an ebook, why do you, the author, need them to perform that service? Well, you don’t. Instead of looking for a service marketing the ebook, to attract customers they are panicking and trying to save the status quo. The company I work for, Borders books, may very well be liquidated because the publishers will not work with them. What happens when 30% of book retail goes away? The biggest pressure on Borders and Barnes and Noble right now is books being sold as loss leaders by Target, Costco, Walmart and Amazon. The publishers allow that. No one in the industry seems to be thinking ahead and anticipating. The whole thing is a problem of risk aversion. We’d rather be safe than actually survive.

  2. I think you’re right on target, Kevin. While admittedly giving up a free story each week for the summer, I’m distressed by too many folks giving away .99 novels. Reminds me of Harlan Ellison’s video comments about “paying the writer.” (You know the one?)

    So, good post!

    And thank you for DRUMBEATS, which I did buy for my Kindle. A fan of you both, I’d welcome more collaborations by you & Peart should the opportunity ever arise.

  3. RK Charron says:

    Hi Kevin 🙂

    Thank you for the great post.

    I heartily agree!

    Another of my favorite authors, Michelle Sagara West is doing the same thing with her back catalogue.

    Thank you for sharing,
    RK Charron

  4. Andrew Timson says:

    As an ebook reader, I think that your prices are just right – they’re not low enough to devalue your work, and they’re not higher than the print versions like most “mass market paperback” ebooks are.

    As an ebook reader, I also wish that you did your own ePub editions instead of just letting Smashwords or B&N convert from Word for you, though I understand why they’re an easy and convenient option for you. 🙂

  5. Mary says:

    A lot of unknown/independents will post the first book of a series for .99 to get you hooked. I have bought book one for .99 then paid 4.99 for books two, three, and so on. it works… on me anyway. 😀 I got KC May’s Kinshield Legacy for .99 – book two is due out the first part of August and I fully expect to pay 4-5 times as much for it.

  6. Can Uzun says:

    “Well, who wants to pay ten bucks for a file on an eReader when a physical paperback costs the same amount?”

    Well i do Mr. Anderson 🙂
    But i believe not many people want this. If you ask why, carrying an ebook reader with you is easier, storage of physical books are a real problem for me. If you read too much and -i can hardly throw away or sale my favorite books- physical copies might be a problem. I also know that reading a real (physical) book is still the best way, but not most comfortable way.

    Another thing is that, you are absolutely right about ebooks prices and being equal to physical ones. Maybe they should be cheaper because of the reasons you have mentioned, “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.”

    On the other hand, a book is a book, text file or hard-copy we don’t pay for the type, we pay for the stories. So i don’t think any book should be below 7$ or so, but that’s just me. Yet again a hard-copy and soft-copy can never be at the same price, it doesn’t make any sense.

    And one last thing, amazon and barnes&noble does not sell ebooks outside US. So sometimes i have to buy your books physically from amazon.co.uk or ebay based book stores, because i truly believe you -or any writer- deserve that, and then i download ebook version on other sites which is not legal but i dont have any other options. Physical copy gets into my shelf untouched. Thanks to sites like smashwords, we can get some of your books.

    Thank you for this post, nice to see things from a writers point of view.

  7. Shane Downton says:

    Is the price right? last christmas my lovely wife brought me an Amazon Kindle. Whilst I love it now I was initially hesitant, I felt I was ripping off my favourite authors by not buying a hardback. I love the feeling of a real book whilst not environmentally friendly it feels personal, something an author has gone to the trouble of sharing by putting in long hours showing us just how good their imagination is. I made a trade off, I will only buy a select few purchases of real books from favourite authors and where possible I will purchase the ebooks and not further clutter up the overflowing bookshelf. much to my wifes slight anger I arrived to the Sydney Supanova with my copy of Hellhole hidden in my satchell bag, what’s that for?? Well…. I cant ask Mr Anderson to sign my kindle now can I. And much to the joy of this reader I was able to meet and get a great book personally signed.Priceless I say. As to the question of price? It doesnt bother me to pay a little more as long as I enjoy said book. Its the way of the future and I like that authors are taking it to the epublishers and demanding how their livelyhood is sold.
    Thanks so much

  8. I’m a self publisher, and was looking into ebooks, and found that it’s just as easy to allow free pdf downloads as it is to charge even 99cents for an ebook. I think I will not be selling my books as ebooks. I’ll sell the hard copies, and give away the digital copies. Of course I’m still looking for an audience. My opinion might change if I ever get big.

  9. patrick says:

    I would use your matinee movie price of $10 as a justification that an ebook should be less than $1 because a movie usually has one or more stars each being paid over $1million. Plus that ticket to the matinee is not only getting you the product but also leasing the hardware by which to use the product (dark room, good sound and video production). To me, then, if I got the ereader free, then I would think that the cost of the ebook should be $5 (a portion shared with the hardware producer?) as most books created by a typical level author are not star caliber level.

  10. “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.”

    I’ll quibble with that, because it’s pretty much a crapshoot these days whether a non-bestseller novel will actually be published in paperback.

    (Case in point: Stephen Zielinski’s BAD MAGIC, published in hardcover by Tor in 2004. I didn’t want to pay hardcover prices for a first novel, even if it sounded interesting and was getting good reviews, so I decided to wait for the paperback. Except there’s nevr been one; no trade paperback either.) (Poor sales on the hardcover? Maybe. Probably didn’t help that the cover was dreadful.)

    So, for the most part, I tend to buy either discounted hardcovers or book club editions these days, rather than wait for a (only possible) trade or paperback edition.

  11. Rick York says:

    I agree with you Kevin. I have been mystified by the quaint pricing algorithms publishers use for pricing eBooks. It reminds me of how the recording industry calculates lost revenue for pirated music. Somehow, in one court case they came up with $34,000 per CD. Huh?

    As for $1 per book that Patrick mentioned, that’s way too low. First, artists should be able to charge a decent price for their work. Second, everyone interested in the subject of book pricing and the publishing industry should read Charlie Stross’ series of posts on the subject. Here’s the URL:
    http://www.antipope.org/charlie/blog-static/2010/04/common-misconceptions-about-pu-1.html

    In brief, he points out that there are many costs associated with commercial publishing besides the cost of print production.

    I think the $9.99 price for newly published books is not unreasonable. But after 6 months or after paperback publication, the ebook price should be $5.99.

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