Posts Tagged ‘ebook pricing’

The pricing of e-books is a tricky balance. On the one hand, publishers and booksellers don’t want to undercut their print editions; on the other are ebook buyers who demand lower prices for a digital product that they can’t lend, resell or transfer.

“The concept that because a book is an e-book it should automatically be priced significantly lower than a paper book is one we don’t agree with,” said Carolyn Reidy, chief executive of Simon & Schuster. “What a consumer is buying is the content, not necessarily the format.” – NYT May 16, 2009 “Steal This Book (for $9.99)“

Publishers, who sell ebooks to Amazon for 50% of their set retail price, no matter what the Amazon.com sale price is, are worried that Amazon’s pricing of ebooks at $9.99 is leading to reader expectations of cheap ebooks which may cease to exist when Amazon stops subsidizing the price of Kindle editions.

Simba Information has released a report noting that ebook prices between July 2008 and June 2009 have dropped at both Amazon.com and Sony’s ebook store.

In July 2008, the top 25 titles on Amazon’s bestseller list for the four weeks averaged $9.25 and the top 25 in June 2009 averaged $8.04 after decreasing fairly steadily during the interim. For Sony, after starting at $10.13 in July 2008 then increasing to $11.68 in November thanks to a few well selling bundles, the average price of the top 25 fell to $9.97 in June.

It’s true that a publishers costs do not disappear entirely with digitally delivered books. The costs of writing, editing and marketing are the same no matter how a book is published. A digital edition, while avoiding costs associated with shipping, warehousing, printing, binding and returns, still has some added costs incurred in conversion and testing.

And while sales remain low, those costs might actually keep publishers from earning as much as they’d like with their ebook editions.

However, like all publishing, there is an economy of scale here. If you spend the money to produce an ebook and only 200 copies are sold, each copy has cost you a considerable amount of money, so you’re probably losing money at $9.99 per book. If 2,000 copies are sold, your cost per copy is less and profit is greater.. If 2,000,000 copies are sold, your cost per copy is negligible, and $9.99 is a darn good price indeed.

The problem is that if you begin by pricing your books higher than the ebook buying public is willing to spend, you’ll never reach the scale where ebooks are a major profit center.

So, perhaps Amazon is doing publishers a favor by cutting their prices and taking the hit while it tries to take ebooks to the masses.

Readers have vehemently told the market that after paying for expensive readers with the promise of lower cost digital editions, they’re not willing to spend more than $9.99… even for their favorite authors. Rather than rant about what the market demands, publishers should pick a side. Either stop creating ebooks for Amazon and Sony bookstores, or work with digital booksellers to push sales to a point where the books can comfortably be supplied at the price the market demands.