Wednesday, February 6, 2013

How Much Should an e-book Cost?


By Andrew E. Kaufman

It seems to be a question that has yet to find an answer, with about as many theories as there are books.

Back in the days of paperbacks and hard covers (remember those?) it seemed the price for a novel was pretty standard—they weren’t all the same, but at least they hovered in the same neighborhood. Since the advent of the e-book, however, it seems anything goes. The scale is frenetic, to say the least, with prices falling on average anywhere between free and about $12.99.

As an author, I find it disconcerting, and as a reader, even more so. While shopping for books, I often shake my head at some of the prices—and I also wonder: what makes one book worth more than another? Amazon tried to level the field by setting a fixed price for e-books, putting them all at a reasonable $9.99, and even taking a loss on profits, but then legacy publishing fell into an uproar and put an end to it.

So now the question remains: what makes one book worth more than another? Should they be based on prior sales? The author’s reputation? If those were the criteria, one might expect each book to be as good as the last, and that’s simply seldom the case. How about the length of a book? More pages no longer equate to more paper, but they still mean more work—should the author and publisher be compensated accordingly?

Of course, I’m just throwing out variables here, and really, I don’t know if there’s a reasonable answer. I suppose the logical theory from an economic standpoint would be that a book is only worth as much as people are willing to pay for it, but these days, even that answer seems a bit vague, because most readers have different standards on what they’re willing to pay. Some base their price cap on how much they can afford, others on how much of a risk they’re willing to take on a new author. Then there are those who set a firm cutoff point and won’t go over a certain price no matter who the author is. Yet another variable (as if there weren’t already enough) is the pricing on indie books vs. traditionally published ones. Some readers are still uncertain about paying a higher price for the former.

But whether independent or mainstream, it seems authors and publishers are just as uncertain on the matter. One might think that finding the magic price point were as complex as charting a quantum theory. I decided to take an informal survey of Amazon’s top 12 bestsellers to illustrate my point. Here’s what I found:

1. Safe Haven (Nicholas Sparks): $6.64
2. American Sniper (Chris Kyle, Scott McEwen, Jim Defelice): $8.99
3. Wait for Me (Elizabeth Naughton) .99
4. Crazy Little Thing ( Tracy Brogan) $3.99
5. Gone Girl (Gillian Flynn) $12.99
6. House of Evidence (Victor Ingolfsson) $4.99
7. Collide (Gail McHugh) $3.99
8. Hopeless (Colleen Hoover)  $3.99
9. Beautiful Creatures (Kami Garcia, Margaret Stohl) $5.80
10. The Pain Scale (Tyler Ditts) $1.99
11. Alex Cross, Run (James Patterson) $12.74
12. Rush (Maya Banks) $7.99

See what I mean? All over the map.

I suppose prices will eventually settle once the market does—or at least, I hope so—but in the meantime, what do you think? How much are you willing to pay for an e-book, and how do you arrive at that decision?

37 comments:

  1. The good news for readers is that prices for digital books seem much more reasonable than they were two years ago. Paying, on average, the same price as a mass market paperback seems logical and fair, as the production costs should be similar. So that's my guideline. In other words, I'll wait until Gone Girl goes on sales before I buy it.

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    1. LJ, surely producing an e-book has got to be a lot cheaper than producing a mass market paperback, considering the cost of paper, printing, distribution and store shelving?

      I expect to pay less for an e-book than for the same book in paperback.

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    2. Jodie, many of the fixed costs are the same: acquisition, editing, cover design, etc. Printing paperbacks in mass quantity is very cheap, less than a dollar per unit. The shipping adds to the cost, of course, but digital distribution isn't exactly free either. And I was talking about a range, just as mass market paperbacks sell for a range from $5-$9.

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  2. I have a friend who reads more than most. She's angry at the publishers who refuse to drop the prices much at all for their ebooks and is also rather unhappy with indie authors who seem to have an inflated perception of their value. She believes quite strongly in this and my bet is that even if she was interested in all twelve of the books on your list, she would purchase half of them—or less.

    For me, unless it's a friend or the book comes strongly recommended, I always download a sample before I buy. And I'm not going to spend more than a few bucks for the ebook version.

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    1. I agree 100% with Peg on all counts. I don't get why anyone would price their e-book over $9.99, unless it's dictated by their publisher. And I'll very rarely go over $4.99 for an e-book.

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  3. I read that publishers charge more for eBooks in the hopes it will stall the digital sales and help more paperbacks/hard cover copies sell. I guess the ploy does work to an extent; I paid over $20 for 11/22/63 in hardback because I refused to pay $17.99 for the eBook - the publisher got what they wanted if everyone else did the same.

    Like Peg, I will not pay more than a few dollars for an eBook - I don't care who wrote it. With so many great books on the market I'm never short of something to read and can easily wait for a high-priced eBook to come down in price (or skip it altogether if it doesn't).

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    1. I don't understand how it is to the publisher's advantage to sell paper books over e-books, given the increased costs for production and distribution...?

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    2. Jodie:

      Because the publisher has a fixed-cost in the print books; the costs of production, flooring costs (storage), returns, etc. They want to move those first, before the digital versions, which have an unlimited lifespan, a lower return rate and no warehousing costs.

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    3. So why not just cut back on their print production and save on all those costs? And maybe make bigger profits on e-books? I'm sure I'm missing all kinds of stuff here! LOL!

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  4. If it's a book I'm dying to read, I'd go 7.99 for an ebook. If it's one I'm less sure about, between 2.99 and 4.99.

    Just seems to feel right.

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  5. I am on a fixed income, and I have a lifelong addiction to books. In an ideal world, I could buy all the books I want, digital and print. I have an e-book in mind, published a couple months ago, by a very prolific author who is well known in certain sub-genres. I'd like very much to read the book, I've read the sample--but I cannot bring myself to pay $6.02 for it. So I'm waiting till the print price reduces, and I can pick up a used one.

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  6. I am so grateful that you wrote this post, and covered many of the suggestions that I've been puzzling over. I have six books, all paperback and four of those i ebook formats. I hired a formatter to meet the stringent requirements of Smashwords. I priced the ebook versions lower than the paperback, as there is no cost to me for the digital version. I also tried free and 99 cents as a price, but saw no rise in sales (in fact, a decrease) when I returned them to a moderate price (or what I thought was a moderate price.) I think the ease with which Indie-ebook prices can be changed has prompted most buyers to wait for the sale, or the freebie, and has damaged the market. Four of my titles are non-fiction, and I felt lowering their price in a marketing attempt lowered their value in buyers' eyes.

    As to what I will pay - I think $5 is probably my upper limit for an ebook. I most often look on Amazon for 'used' prices on paperback, and often pay more for the shipping than for the book. I used to go to Border Books brick and mortar store and easily spend $100 twice a month, but since retirement, and the closing of the stores, I find myself shopping on line for bargains. Such is life in today's economy as a retiree.

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  7. Depends on the author. If I don't know them, chances are 4.99 is as high as I'll go. The latest from Woody Guthrie (one of my personal heroes) is $12.74 and I'll probably pay that. Also if it is a textbook - I'll pay more. Fiction tho, is generally kept to around 6.99 or less - even if I love the author.

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  8. I just saw this from a library system near me in Colorado:
    http://evoke.cvlsites.org/files/2013/02/DCLPricingReport2-1-13.pdf

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  9. Thanks for raising an interesting discussion, Drew!

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  10. The price has to seem reasonable to me. A little nebulous, I know, but I'm not sure I can be any more specific. Here's one example of what I'm talking about, though - I've been dying to read GONE GIRL, by Gillian Flynn, but I simply refuse to pay $12.99 for an ebook. In fact, a quick check at Amazon reveals you can score the HARDCOVER edition of the same book right now for $13.75!

    That makes no sense to me, given the difference in cost between producing and distributing a hardcover as opposed to an ebook.

    Now that I think about it, maybe I'll go order the hardcover...I wonder if Ms Flynn would consider signing it for me...

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  11. Everyone is on a fixed income. It isn't like we are athletes and can refuse in the middle of a contract to play anymore until we get a raise. Some of us are just at a fixed level way lower than others.

    I purposely took that into account with my new e-book and priced it at .99 cents. Not because I didn't value my work. I did it because I wanted it to be as cheap as possible for the widest possible reader base.

    If I was still able to work and Sandi didn't have cancer again and therefore was working, I could see paying four to five dollars for an e-book I really wanted. But, my reality is that I am permanently disabled and getting worse (most likely due to MS apparently) and Sandi's cancer is back in a major way and she is on unpaid leave from Wal-Mart. That means that I am still not buying books and still heavily patronizing the library.

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  12. Al and LJ: I actually cracked and paid full price for Gone Girl, Al--but only because I've been a fan of Gillian Flynn since her first book and didn't want to wait. This is not the norm for me, but with a few of my favorite authors, I will do it simply because I look forward to their work and hate to wait. I'm kind of an instant gratification sort of guy.

    From the comments here, it seems about 4.99 is the cap in many cases. That feels about right for me when considering an unproven or unfamiliar author. Personally, I don't think it would be prudent for me to price my own books any higher.

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  13. Great topic. I think authors and publishers are still experimenting with what works. Some authors/publishers do the 99 cent route or $1.99 to generate reviews and discoverability. In the same way, authors/publishers use the Kindle FREE 5 days option when they do the 90-day Amazon exclusive. Others elect to rice low when a series is complete or almost complete by making the first book in the series nearly free to get new readers to the series as a whole. Then, there are still the unknown self-pubs who use 99 cents as way to introduce themselves to the world.

    In looking at your top 10, it seems most prices are between $3.99 and $7.99 which matches to what paperbacks used to cost and it seems reasonable to me. The two outliers likely have explanations on pricing relating to my suggestions above.

    I know, for example, that Elisabeth Naughton's ebook versions typically begin between $6.30 and $7.99 (retail is the $7.99)on release, then settle into $4.99 when the next book comes out.

    Her 99 cent offering for Wait for Me, a single title novel, is a time-limited sale price to get the book noticed. And it seems to have worked.

    Elisabeth is a USA Bestselling romantic suspense writer, her readers know her for her three series and tend to auto-buy in those series. In this single title offering (originally published in Fall 2011) she decided to offer it at a sale price to get more attention. She occasionally does that for an older series book as well. Right now the fourth book in her Eternal Guardian series, Enraptured, is offered at $1.99.

    I'm not sure what her decision process is for when to raise or lower prices, and which book in a series to do it for, but I'm sure but I'm sure there's a logic behind it. It would be great for people to share their own logic (if they have one) or if it is still trial and error for them.

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  15. Well, it seems obvious to me, from the comments here, that there is still a perception that the value of a "book" isn't the content, but the medium. Why is a story worth more in print than it is in digital form? Everyone's talking about "lesser production costs," but the truth is, many self-published authors who are remotely competent with Word or MS Publisher can produce a print book at Createspace for *less* than they can a digital book,as many have to pay a professional formatter to do the latter.

    So, the gist is, everyone seems to be talking about what they think is "fair" based on what their *perception* is of how much it cost the publisher (self or legacy) to PRODUCE the book, rather than a) the value of the story as entertainment, or b) the ROYALTY earned by the author. My question is: why is an author entitled to a lower royalty for having made his book available in Kindle, rather than print?

    When did we decide that the value of the entertainment was the medium in which it is delivered, rather than the entertainment itself? And believe me, I understand the impulse to pay less for digital books, as my own emotional response is exactly like that--but WHY is that? If you parse the argument, it doesn't make sense. Either way, you obtain the story, and get to read it as many times as you wish. There is, from my perspective, an unchangeable perception about "ownership" that attaches to a physical book, that makes people think that it's worth more, even though, by all accounts, our belief OUGHT to be that the value of the story is the value of the story...not the dead trees and ink.

    Just my $.02

    Hitch

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    1. Hitch, I think authors make a larger royalty for e-books than print books. I make 70% on my e-books, compared to authors making 10-15% for print books published by a big publisher.

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    2. Even though content trumps medium every day of the week, I've been warned enough times that I've begun to pay attention… I don't really own a damn thing on my Kindle. It can be taken away at any moment.

      Right?

      If that's correct, than there is more "value" in my DTBs. More security. Content I can collect vs. content I could lose. Yikes!

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    3. Jodie:

      That's your PERCEPTION. Your assumption is stemming from the idea that the author self-published. But what makes you think that the author published by, say, Tor, isn't just getting a straight percentage based on sales price? And if the author publishes in print, you have no way of knowing what his or her margin is on that print book, versus the ebook.

      Peg: You can easily save the files from your Kindle to your Amazon Cloud storage or your own computer to prevent losing the files.

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    4. Hitch, I obviously have so much to learn about all this that the mind boggles! LOL! But I do know how to increase the chances of a novel making far higher sales by giving it a thorough edit!

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    5. I can't comment on Createspace as I've never used it. And I'm not much of a marketer, but isn't price derived somewhat from perceived value? Take non-fiction. I'm a landscape architect by profession. Some professional books (hardbacks) sell for $150.00 or more; the ebook version may sell for $90.00. As for fiction, if your story is great, your writing is as good as you can make it, and your constantly putting out new books to satisfy your raving fans, jack the price up to at least $4.99. By the way, Dean Wesley Smith talks has a lot of good stuff on pricing on his website.

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  16. It may not be a bad strategy for a new indie author to sell his first ebook at $0.99, as a way to draw in readers who may become fans. But I wouldn't stick to that price point. I think $4.99 is a fair price for ebook novels or short story compilations. I sell my novelettes at $2.99. I'd love to see more authors price their ebooks at the higher $4.99 price point than the $0.99 price. The quality of the book should reflect the price. Publishing drivel at $4.99 is a bad idea; but so is publishing really good work at $0.99. If you're putting out good books, publishing regularly (say one or two books a year), and gaining a fan base that's starting to get antsy waiting for your latest opus, than by all means charge accordingly!

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  17. Jane Friedman posted a lengthy debate about ebook pricing on her blog (or one of them), but I can't find the link. (Must be the missing pizza and beer my wife promised.)

    From what I've seen for fiction, independents run from $0.99 for shorts or introductory works to an average $2.99 or $3.99 for not yet well-known. That seems to be the price point, so $4.99 may also be reasonable.

    I saw a discussion about ebook/print with traditional publishers - (beer, beer, beer said the private - actually, it's the single malt Scotch that gets my brain going. And bancha tea. Not together, obviously. Or at the same time) - that echoed Hitch's comments to Jodie.

    ebook production costs are minimal; distribution costs nil. But editing, cover design - the making of the book (as opposed to physically producing it - printing it, chiseling it on stone, sharpening the clay stylus for cuneiform class) has costs. Marketing costs - something.

    CreateSpace has a minimum price, based on pages. Print-On-Demand has much lower physical production costs, because there's no warehousing and it ain't ink-by-the-barrel.

    Here's one place where demand/market will settle things. Name-recognition, how much the folk involved in creating the product need to survive, price point, etc.

    I think Richard's got some good advice.

    I know this: at 70% royalty we need to sell a lot fewer copies to make a living, so we can price lower and build a loyal audience accordingly. Or even 35% royalty. Steven Pressfield has a series of 2 minute clips with Shawn Coyle, discussing this issue in conjunction with Black Irish Books (their venture) and their first book Turning Pro (great read). Pressfield has done both independent and legacy, ebook and print, so he knows whereof he speaks.

    Great discussion, and I'm caught up. :)

    Here are a few other resources I found to add to the discussion:

    http://www.forbes.com/sites/jeremygreenfield/2012/08/27/are-consumers-sensitive-to-e-book-prices/

    http://www.guardian.co.uk/books/2012/sep/18/ebook-price-war-discounts

    http://proactivewriter.com/blog/the-shocking-secret-about-ebook-prices-that-will-help-you-price-your-ebook/ (This guy did a self-analysis, but he also offers editing services. An interesting self-case study, but it may be grain-salt worthy.)

    http://terribleminds.com/ramble/2012/05/02/thinking-the-wrong-things-about-e-book-pricing/ (Many of his points were made here, but he's brash and I like that.)

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  18. I refuse to pay more than a few bucks for an e-book. I realize I'm probably missing out on some great books, but I can't make myself do it. An example that strengthened my resolve: A favorite author released a new book a couple of years ago. The price was $14.99. I wanted it desperately, but I didn't buy it. A few months ago, it was on sale for $3.99. I bought it immediately. Thrilled. UNTIL... I realized it was only ninety pages. None of the rave reviews mentioned this. I was disappointed. If I had paid the $14.99 for ninety pages, I would have been beyond upset. I don't care who the author is or how good the book is. I just won't pay the same or more than I could get a paper book for.

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  19. Knowing Drew a bit from the talk he gave at our writer's group, I know he works extremely hard at personal branding and attracting and maintaining loyal readers. IMHO, this and fine writing help his ability to keep his e-books priced fairly and competitively.

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  20. I simply stand by my view, which is this: the story is the value. People go to movies ALL the time, and are entertained by something which they cannot bring home with them. They pay whatever the ticket price is, and that's what they get in return.

    But we seem caught in this mindset that for some reason, our "value" of entertainment is less for a digital version of the story than the print version. Nobody has yet answered this question on this discussion--they've simply gone back to discussing costs. But isn't the value of the story the value of the entertainment? Thus, I'll ask again:

    Are you less entertained by the digital copy of the book than the print? You can read each multiple times, so it's not like a movie where you go, and come home empty-handed.

    WHY do people think that the entertainment value of an ebook is LESS? What is the rationale? Or are we going back to this argument about "how much money the publisher/author made/is earning?" This is like the recent discussion on MR that nobody would buy the newly-issued Travis McGee's in ebook at $7.99 because "his family already made ENOUGH money." I wish I understood that mindset, but I don't.

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    1. I feel wonderful whenever I walk into a room with filled bookcases lining the walls. It has nothing to do with the entertainment differences between physical books and ebooks, because I agree, there are none. It has everything to do with a visceral sensation… both calming and stimulating, that only filled bookshelves can offer. There is value to that. But then, I'm old.

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    2. I feel the same way as Peg. I love to pick up my craft-of-fiction books and leaf through them for some info, or my fiction books to look for examples when I'm writing my posts and books on how to write compelling fiction. Mostly habit, I guess, but I prefer it to trying to find the stuff on my Kindle. And could chalk it up to my generation, too! LOL (Peg, you're not old! :-) ). Cuz if you are, then I am! LOL

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    3. Hitch, I think some people have a strong emotional connection with their books. It can be similar with movies as well, and if they do, many will go to Walmart and pick up the DVD so they can have a physical representation of it. Many won't even watch the thing again, but they like having it to look at and hold. It's like a souvenir or a memento. I think this is human nature--a kind Bird in the Hand mentality.

      Does that make sense?

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    4. Oh, almost forgot. I agree with you: I don't see any difference between digital books and paper where entertainment value is concerned. Yes, I still buy my favorites in paper, but that's more my attempt to decorate my office than a need to hold or have it.

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  21. That's one swell conundrum you've gotten us into, Mr. Kaufman. Here's my take.
    The work of fiction itself has the same value in any medium. But the medium itself also has value. I can purchase used, printed books, but I can't buy used e-books. With that in mind I'll seldom pay more for an ebook than I would a used book.
    I recently struggled with pricing some e-content. Big struggle. Lots of research. Lots of googling. I finally arrived at the one and only approach that fit every parameter under discussion--I'm winging it.

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    1. Wish there was a "like" button for blog comments.

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