Faith Mortimer-author of crime, suspense, romance & action
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What price eBooks? A Writer has to eat!

14/6/2011

4 Comments

 
Today I'm going to talk about eBook pricing. I'm sure all of my readers have noticed that there's a wide variety of eBook pricing schemes out there, ranging from giving it away to charging even more than for the hardcover edition. Who's right?

Pricing of anything is not an exact science, but it seems like eBooks have even further to go than other media as eBooks do have a "perceived value". On the other hand, it is possible to drop too low, the fact being that most people in a capitalist society interpret "free" as "low quality". After all, if it was any good, why wouldn't you charge money for it? By the same token, how often do you hear, "you get what you pay for"? Most consumers are going to think that a $1 eBook won't be as good as a $10 eBook. It's the way we're conditioned. If you charge too little, people think it's not going to be good enough to be worth their time in the first place.

So what's the answer?

The first thing to ask yourself in pricing is what are you charging for? I agree that authors should be compensated for their work, and that publishers have to pay their bills as well. Maybe content should have some sort of base price, the value of the information itself. Onto that publishers could tack on the actual cost of producing the media.

Let’s set up a model as an example.

Let's suppose the "base price" for a typical novel is $4.00, split evenly between the author and publisher (to cover editing, publicity, etc.). That's already much more than most novelists make per copy sold. So onto those four dollars, we add: 
  For an eBook, which has minimal production cost, and just the cost of maintaining the server and ecommerce system as overhead, we'll tack on one dollar. EBook Price: $5.00
    For a paperback, which costs about a dollar to produce and another to distribute, we'll add two. Paperback Price: $6.00
    For a hardcover, we'll add about four dollars to cover production and another two for distribution. Hardcover Price: $10.00
    For an audio book, we'll add about four dollars to cover the production and cost of media. Audiobook Price: $8.00
In this model, writers get what they'd currently get just for hardcovers for every copy sold, publishers get a fair share of the pie, and the rest of the saving are passed on to the consumer. The actual content costs the same, regardless of media, and the price differentials are based only on the consumer's choice of medium.

So how does an author set the price of their eBooks?
Lots of ideas came to mind. Below is just a few of what I thought about.   

 What is my book worth to me as an author?

 Everyone will be different with their thoughts and it will depend on many factors. I have included the time it takes to write a book. The cost preparing the book for publication- inexperienced writers can take weeks designing book covers, formatting, self-editing and proofing their book. Professional services are invaluable but come at a high cost. Most writers with little capital will defer turning to an editor at first.

What will customers pay for a book written by a relatively unknown author?

 With a relatively unknown author, quality is an unknown part of the equation. The reader’s perception of the quality of the work is a serious obstacle for the author of a new book to overcome.

 Can I change the price?

Whatever price is set, it can be changed to either increase, or decrease the retail price. I would think that a writer could become known for their pricing, so strategy could be a problem.

 Does the market place govern price?

 Pricing strategies have changed rapidly in the eBook market. Traditionally more eReaders on the market increased eBook sales. Last year Amazon announced commission structure changes, many authors reduced, or increased their price to the minimum $2.99 to give them the 70% commission ($2.00 royalty). Others stayed at, or reduced their prices to $0.99, which would only give them 35% commission ($0.35 royalty.) Two things happened. A lot who increased their price saw a dramatic drop in sales (but not necessarily income.) while others who chose $0.99, saw their sales take off (but not necessarily their income). Those authors with books set at 0.99′s seemed to win out as their books gained higher rankings, which can escalate the overall sales of a book. The inevitable happened and many reverted to a $0.99 price, together with new authors joining and setting this price to gain a reader base. Now the $0.99 price no longer has the same effect. For traditional publishers, the reverse seems to be happening; with quite a few of their new eBook releases priced the same as their printed books.

 If I set a low price, how will my work be perceived?

 Some readers’ opinions as to the quality of cheap books are. “You get what you pay for.” Some say they will never buy books at $0.99 after a bad experience. Reviews and word of mouth go a long way in the writing place. Some readers will purchase at this price point to give the author a chance.  From my understanding, readers will generally pay up to $5.49 for an indie book, but only after looking at every aspect of what is on offer, which may include reading a sample.

Why would I change my price –what would make me do this?

  Indie Writers are at the mercy of the eBook distributors. Up until now they have been quite happy to allow Indies to publish their eBooks at low prices and sometimes to offer books for free. For some readers new to buying devices, it makes the offering tempting against buying printed books when they see the low prices of eBooks. This situation is changing as the market matures. There is nothing for the distributors to be gained by offering books free in terms of revenue and it would be easy for them to alter commission structures, or have minimum prices to generate additional revenue when the market becomes stale. They could also alter the algorithms of their system to favour the visibility of higher priced books, or newly released books. I think it is worth experimenting with price. There is nothing wrong with trying a higher price first, or moving the price upward once a book gains momentum by achieving a rank.

 Why do some writers put their work out for free?

7. Saying all that, free can be a useful marketing tool, it can be used to give away short samples of your work, in the hope of convincing readers that your longer work is worth buying and create a following for yourself. Before you do though, think about the following. Some people will only ever download free books and will not buy your other works. Some will download everything in sight, to the extent that they will never get round to reading it. This is the same for other price points.

For me, at the end of the day I wish to be fair, honest and not avaricious. I also have to eat! So I have priced my book, The Assassins’ Village at $2.99. My other book, The Crossing is published in London and the price is controlled by my publisher, so it may be slightly higher – but at 130,000 words it is a Quality, long read!

Last year, Amazon decided it wanted to negotiate prices for with traditional publishers to retail at no more than $9.99. McMillan and others fought this. The result was that Mc Millan’s catalogue was pulled. The loss of McMillan meant that Amazon no longer had the number one best seller, other than through third parties. As the largest retailer of books, for Amazon, this situation would have given consumers a reason to buy other that the kindle platform. This year they caved in to McMillan. This is the reason customers are now complaining as new releases are coming through at prices in some cases of dearer than the paper book.

Traditional publishers see the future as flexible pricing for their products. e.g., starting at say$15.99 at release and reducing over time to $5.99. This situation gives the indie a price point to work with between $0.99 and $5.49, to remain competitive and to overcome the notion of quality to price for indie books.

It also gives the indie a price point to work toward when formatting for POD to remain competitive and to be able to retail a paper book at $9.99.

Good reading!

Faithx

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4 Comments
Bradley Convissar link
15/6/2011 05:51:40 am

Very interesting article. it is a fine balance when pricing the book, because, like you said, there are many people out there who won't buy a $.99 book because of percieved quality, ESPECIALLY b/c at this price point, its impossible to afford professional editing. And there are errors in almost every $.99 book by Indie authors just starting out. But, $.99 is the bets price point to entice people to read what you are writing. What you mentioned about free books is interesting: I just had a collection of short stories, 20,000 words, published for free on Amazon. It was downlaoded over 100 times in the first 24 hours. But like you said, how many people are actually reading it? And how many people download it just because it is there and free. You know, I can only watch as reviews come in and if sales of my other stuff go up in the next couple of weeks

Reply
JR Tomlin link
18/6/2011 01:43:22 am

99 Cent pricing still works to some degree. Every time, for example, that I lower the price on Freedom's Sword to 99 Cents my sales on it at least triple. This doesn't mean more money--it's less. But it does mean many more potential readers for me OTHER historical novels at higher prices. This is not a factor an author can overlook.

Reply
Scath link
19/6/2011 06:11:17 pm

I'd argue against taking into account your time spent writing when selecting a cover price if you're self-publishing.

As has been said many times, by people with better experience than myself, self-publishing ebooks is a marathon, not a race.

Pricing with thoughts of how long it took you to write a particular story tends to lead to pricing yourself out of potential sales. I've seen first time authors self-publish their fiction novel masterpiece, and price it in the $10-$15 range. Then they moan about how it only sells a copy or two a month.

Meanwhile, those pricing their ebooks 99c to $5 are selling a dozen to hundreds or even thousands of copies a month.

To be honest, I'm not a fan of the 99c price point. I've experimented with it off and on. Up until this year, dropping to that price always put an instant stop to sales. In fact, until this year, any lowering of my cover prices, by myself or vendors, resulted in my sales freezing.

However, I've begun to think that 99c does have a place in my own pricing strategy in the future. Whether how I'm going to utilize will work out is anyone's guess.

But that's okay, as a self-publisher, because we can change prices until we find the sweet spot for each ebook we put out. :)

My personal opinion is that $2.99 is too low for a novel length work. Doesn't mean I won't snap up novels priced that for my Kindle, but I do think it's too low.

When I first self-published, nope, no editor. I released two ebooks, and saw sales. But after those, I hired an editor. One of them was then edited (I retired the other ebook around the same time). I've used an editor since then, and so every ebook I've released begins with red ink now.

I don't have extra money just lying around, so it's a commitment to my work to hire someone to edit it, but I want the best I'm capable of at any point in time to be what people see.

Not my unedited stuff, even though I'm far better at editing than I was starting out (which I know because my stories come back from the editor with less red pen markings now). ;)

Reply
Russell Blake link
26/6/2011 05:59:30 am

My feeling is that the 99 cent price point is useful as a limited-time introductory price. That's how I used it on my first self-published thriller, Fatal Exchange. But I've always planned to price it at minimum $2.99 once it has a fair number of reviews and has gotten traction. Same for the next couple of novels in the pipe - I think 100K or so word action/intrigue/thrillers that can hold the reader are worth more than a buck - but in the end, it's the madding crowds that will decide.

Reality is that what we as authors believe our work is worth is immaterial to the market, which is generally a race to the bottom on pricing. A song costs 99 cents. Many books cost 99 cents. Will consumers make distinctions and pay more? Only time will tell. I believe if the quality is there in the product, if the writing and plot are evolved enough, that yes, the consumer will be discerning and pay a bit more.

Having said that, I've read more than my share of 99 cent novels, and most are pedestrian affairs with conspicuous plot, grammatical or character flaws. I've also read some that are great. Alas, they are the exceptions, not the rule.

I think the most positive thing we can do as authors is produce our best possible work, market it in as effective a manner as possible, price it at a level that is appealing yet accessible, and then let God sort 'em out.

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